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