Lecture 07 Digital Product

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Lecture 07 Digital Product

  1. 1. Digital Product 5A 3190 DMCM David Edmundson-Bird
  2. 2. 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
  3. 3. 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
  4. 4. WHAT IS A DIGITAL PRODUCT?
  5. 5. 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
  6. 6. Digital Product Value Hierarchy DIFFERENTIATION Core Benefit Basic Digital Product Augmented Digital Product 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
  7. 7. 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?
  8. 8. Physical Goods • These tend to be governed by certain attributes – Level of quality – Features – Styling – Brand Name – Packaging
  9. 9. 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
  10. 10. HOW DO THE DIGITAL WORLD AND THE 2 “I”S AFFECT THE DIGITAL PRODUCT?
  11. 11. Types of Digital Product Type of Digital Product 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
  12. 12. The Effects of the 2 “I”s on Digital Product Individualisation Interactivity DIGITAL PRODUCT Easy to convey prices to individuals Allows more targeted price promotions Different presences cater to different segments Dynamic pricing presences can keep individuals informed Allows for responsive service interactions providing augmented value to product Allows organizations to quickly gather valuable customer data (e.g. preferences) Customers directly involved in the product development
  13. 13. WHAT IS THE DYNAMIC NATURE OF DIGITAL PRODUCT PORTFOLIOS?
  14. 14. The Digital Product Portfolio DEGREE OF INNOVATION EXISTING PRODUCTS LINE EXTENSIONS NEW PRODUCTS None Breakthrough Discontinuous Incremental New to the organisation New to the market New technology
  15. 15. Effect of Entry Order to Digital Market First to market Fast Follower “Me Too!” “Slackers” Hockey Stick Adoption Curve MARKET ADOPTION TIME Rule of thumb: First to market & fast followers often have sustainable CA
  16. 16. Digital Product Lifecycle BIRTH GROWTH MATURITY DECLINE SALES TIME
  17. 17. WHAT IS DIGITAL PRODUCT DEVELOPMENT AND HOW DOES IT ENABLE ELECTRONIC CUSTOMER RELATIONSHIPS?
  18. 18. MANAGEMENT REVIEW MANAGEMENT REVIEW MANAGEMENT REVIEW Conventional Product Development Process IDEA GENERATION IDEA FILTERING CONCEPT DEVELOPMENT PRODUCT DESIGN PROTOTYPING MARKET TEST COMMERCIALISATION BUSINESS ANALYSIS
  19. 19. Convergent & Divergent Thinking in Digital Product Development START TIME Divergent Thinking Convergent Thinking TaskSeparation BRAIN STORMING IDEA SCREENING FINISH Ideas increase over time Critical evaluation allows you to narrow the focus over time Number of ideas
  20. 20. New Digital Product Development Measures ENABLING MECHANISMS BUSINESS DRIVERSCustomer Business Processes People 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?
  21. 21. Digital Product Development Process IDEA GENERATION CONCEPT DEVELOPMENT ITERATIVE PRODUCT DESIGN ITERATIVEPROTOTYPING ITERATIVE MARKET TEST COMMERCIALISATION MARKET Digital Customer Input Digital Product Design and Digital Communication Tools Digital Experimentation and Testing
  22. 22. Digital Product Levers by Relationship Stage Acquisition Conversion Retention Dissolution Core Benefit Packaging & presentation Presentation & packaging Attributes & features Presales support Fulfilment Availability of complementary products Customer-specific attributes & features Upgrades Customer-specific attributes and features Post-sales support Tiered service Personalization Customer care Migration to different product in the portfolio Customer care
  23. 23. 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

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