Lecture 07 Digital Product
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Transcript of Lecture 07 Digital Product
Digital Product
5A 3190 DMCMDavid Edmundson-Bird
Digital Product
• So what’s the problem?– You have to produce a digital marketing strategy
poster– You have to create a market segmentation
exercise– You have to describe a typical digital customer
voyage– You have to produce a digital customer experience
Digital Product
• So what do you need to learn?– How we define “Digital Product”– How the Digital World affects “Digital Product”– How the 2 “I”s affect “Digital Product” – What the dynamic nature of digital product
portfolios is– What digital product development is– How digital products enable electronic customer
relationships
WHAT IS A DIGITAL PRODUCT?
The Fundaments of Digital Product
• A digital product exists for the purpose of a digital transaction
• Core Benefit– The fundamental value of the digital product
• Basic Digital Product– Minimum digital product offering needed to deliver the
core benefit a customer expects from a digital product• Augmented Digital Product
– Features that go beyond the customer’s minimum expectations
Digital Product Value Hierarchy
DIFFERENTIATION
CoreBenefit
Basic DigitalProduct
Augmented DigitalProduct
Does the product taste good? Is it dependable and consistent?Does it offer good value? Is it packaged conveniently and pleasingly?
What does the product offer? Thirst quenching? Refreshment? Stimulation?Relaxation? Staving off hunger or satisfying it? Nutrition? Weight control?Enhancement of health/fitness? Improved performance in athletic endeavours, energy,mental activity, sex or simply alertness?
How will I feel about this product? That I've made a smart choice?That it's a product I can trust? That I've done something good for me?That it's simply something I'll enjoy that will make me feel good?That I'd like people to see me choosing it?
e.g. Choosing Drinks
Defining Digital Product
• Generally 2 sorts– Tangible Goods
• Easily understood because the buyer can see and often experience their benefits prior to buying
– Services• Actions that companies offer to customers for the
purpose of transaction
• What about a lifestyle offering or a brand?
Physical Goods
• These tend to be governed by certain attributes– Level of quality– Features– Styling– Brand Name– Packaging
Services
• These tend to be governed by 4 characteristics• Intangibility
– Can’t be touched or possessed – not a physical good• Simultaneity
– Producer and consumer need to come together at a single time for exchange
• Heterogeneity– Subject to variability
• Perishability– Excess capacity to provide cannot be stored
HOW DO THE DIGITAL WORLD AND THE 2 “I”S AFFECT THE DIGITAL PRODUCT?
Types of Digital ProductType of DigitalProduct Main Purpose Digital Attribute e.g.
Digital Goods Core benefit comes in a digital format
Create once, reproduce many times, transferable
Software, news, music
Service Core service is digital Standardised service, producer and consumer are separate in time/space, vivid
Online games, search engine, financial advice, banking
Retail/Distro Digital sales/ brokerage/distribution for real-world delivery
Disposal of inventory, aggregation of demand
Online book store
Augmented Product Add extra service or features to a product or service
Low cost approach to differentiation
Parcel tracking, online investment portfolios
The Effects of the 2 “I”s on Digital Product
IndividualisationIndividualisation InteractivityInteractivity
DIGITAL PRODUCTDIGITAL PRODUCTEasy to convey prices to individualsAllows more targeted price promotionsDifferent presences cater to different segmentsDynamic pricing presences can keep individuals informed
Allows for responsive service interactionsproviding augmented value to product Allows organizations to quickly gathervaluable customer data (e.g. preferences)Customers directly involvedin the product development
WHAT IS THE DYNAMIC NATURE OF DIGITAL PRODUCT PORTFOLIOS?
The Digital Product Portfolio
DEGREE OF INNOVATIONDEGREE OF INNOVATION
EXISTINGPRODUCTS
EXISTINGPRODUCTS
LINEEXTENSIONS
LINEEXTENSIONS
NEWPRODUCTS
NEWPRODUCTS
None BreakthroughDiscontinuous
Incremental
New to the organisationNew to the marketNew technology
Effect of Entry Order to Digital Market
First tomarket
FastFollower “Me Too!” “Slackers”
Hockey StickAdoption Curve
MARKETADOPTION
TIME
Rule of thumb: First to market & fast followers often have sustainable CA
Digital Product Lifecycle
BIRTH GROWTH MATURITY DECLINE
SALES
TIME
WHAT IS DIGITAL PRODUCT DEVELOPMENT AND HOW DOES IT ENABLE ELECTRONIC CUSTOMER RELATIONSHIPS?
MANAGEMENT REVIEW
MANAGEMENT REVIEW
MANAGEMENT REVIEW
Conventional Product Development Process
IDEA GENERATIONIDEA GENERATION
IDEA FILTERINGIDEA FILTERING
CONCEPT DEVELOPMENTCONCEPT DEVELOPMENT
PRODUCT DESIGNPRODUCT DESIGN
PROTOTYPINGPROTOTYPING
MARKET TESTMARKET TEST
COMMERCIALISATIONCOMMERCIALISATION
BUSINESS ANALYSIS
Convergent & Divergent Thinking in Digital Product Development
STARTSTART
TIME
DivergentThinking
ConvergentThinking
Task
Sep
arat
ionBRAIN STORMING IDEA SCREENING
FINISHFINISH
Ideas increaseover time
Critical evaluationallows you to narrowthe focus over time
Numberof ideas
New Digital Product Development Measures
ENABLING MECHANISMS
BUSINESS DRIVERSCustomer Business
ProcessesPeople Technology
Objective? Generate more existing business?Attract new users, or keep existing?Customer expectation of particular imagery or positioning?New product fulfill needs/aspirations?
Extending existing brand name or new?Fit with portfolio?Fierce, nonexistent marketplace?Economic potential?Role of the channels?
How measure performance?What incentives?Resources and skills needed?
Timing for market introduction?Do we have resources? How long & how much? What is the required business model?
Can we do it or do we need help?Sufficient existing capacity?Does the technology exist?Managed internally or outsourced?
Digital Product Development Process
IDEA GENERATIONIDEA GENERATION
CONCEPT DEVELOPMENTCONCEPT DEVELOPMENT
ITERATIVE PRODUCT DESIGNITERATIVE PRODUCT DESIGN
ITERATIVEPROTOTYPING ITERATIVEPROTOTYPING
ITERATIVE MARKET TESTITERATIVE MARKET TEST
COMMERCIALISATIONCOMMERCIALISATION MARKET
Digital Customer InputDigital Product Design andDigital Communication ToolsDigital Experimentation and Testing
Digital Product Levers by Relationship Stage
Acquisition Conversion Retention Dissolution
Core BenefitPackaging &presentation
Presentation & packagingAttributes & featuresPresales supportFulfilmentAvailability ofcomplementary productsCustomer-specificattributes & features
UpgradesCustomer-specificattributes and featuresPost-sales supportTiered servicePersonalizationCustomer care
Migration to differentproduct in the portfolioCustomer care
What We’ve Covered Today• We’ve defined “Digital Product”• We’ve looked at how the Digital World affects
“Digital Product”• We’ve seen how the 2 “I”s affect “Digital Product” • We’ve investigated what the dynamic nature of
digital product portfolios is• We’ve looked at what digital product development is• We’ve shown how digital products enable electronic
customer relationships