Network Products in Networked Network Products in Networked MarketsMarkets

The last decade has witnessed a shift from a focus on the value created by The last decade has witnessed a shift from a focus on the value created by a single product to an examination of the value created by networks of a single product to an examination of the value created by networks of products (product ecosystems or products (product ecosystems or NETWORKED PRODUCTNETWORKED PRODUCT).).Network products emerge at the intersection of three types of networks:Network products emerge at the intersection of three types of networks:

User networkUser network Complements networkComplements network Producer networkProducer network

Key Claims:Key Claims:

Any or all of these networks Any or all of these networks add value add value or enhance the attractiveness of the or enhance the attractiveness of the associated focal product.associated focal product.Consumers Consumers allocate resources allocate resources among competing products based on the among competing products based on the perceived value added of any or all of these networks.perceived value added of any or all of these networks.

The Networked Product:The Networked Product:

Focal Product

Producer networkProducer network Other companies producing the same or similar product or service

Complements networkComplements networkServices that permit consumption

User networkUser network Other consumers

Linux as Networked Product:Linux as Networked Product:

Ex.: Linux Operating System

Producer networkProducer network Other companies producing the same or similar product or service

Complements networkComplements network•Application developers•Maintenance and Repair •Service Companies

User networkUser network number of other companies that are using Linux (moderated by size, reputation, industry, etc. of these companies)

Remember:Remember:

If you are dealing with a focal product that is a If you are dealing with a focal product that is a networked productnetworked product Consumers allocate resources not only based on the Consumers allocate resources not only based on the

objective and perceived quality of the focal product objective and perceived quality of the focal product but but based on the perceived value added to the based on the perceived value added to the focal product by the networks it hasfocal product by the networks it has. .

Marketing of a networked product therefore is no Marketing of a networked product therefore is no

longer limited to developing a marketing mix and a longer limited to developing a marketing mix and a strategic position for the focal product. strategic position for the focal product. Rather, Rather, marketing needs to support network strength as marketing needs to support network strength as wellwell..

Examples?Examples?

Focal Product

Producer networkProducer network Other companies producing the same or similar product or service

User networkUser network Other consumers

Complements networkComplements networkServices that permit consumption

Video game marketSatellite RadioHDTVCars?

Epistemic Objects Epistemic Objects

Post-social RelationsPost-social Relations

There is no lack of relationsThere is no lack of relations

New forms of relationsNew forms of relations

Relations with objectsRelations with objects Provided these objects carry certain Provided these objects carry certain

characteristicscharacteristics

New forms of New forms of relationships/involvement/loyalties!!relationships/involvement/loyalties!!

Traditional Theories of the Traditional Theories of the ObjectObject

Use valueUse value

Sign valueSign value

Communal valueCommunal value

Value for the self/identityValue for the self/identity

Traditional Theories of the Traditional Theories of the Object RelationsObject Relations

Consumers decommodify and singularize Consumers decommodify and singularize objectsobjects

Consumers form emotional attachments to Consumers form emotional attachments to consumption objects (to tell stories, to consumption objects (to tell stories, to remember, to represent, to remember, to represent, to commune/socialize)commune/socialize)

Consumers become involved with objectsConsumers become involved with objects

The knowledge-based The knowledge-based economyeconomy

Objects contain more knowledge Objects contain more knowledge componentscomponents

As consumers learn about the object, As consumers learn about the object, more knowledge reveals itselfmore knowledge reveals itself

The Epistemic ObjectThe Epistemic Object

Objects of knowledge Objects of knowledge

Change what they are and meanChange what they are and mean

Interaction, observation, use, examination, Interaction, observation, use, examination, and evaluation reveal them progressively, and evaluation reveal them progressively, by increasing rather than reducing their by increasing rather than reducing their complexitycomplexity

Object characterized by ‘lack’Object characterized by ‘lack’

Map of the MarketMap of the Market

Object as Life Form Object as Life Form

Object can never be fully attainted by the Object can never be fully attainted by the consumer because it exists only as a consumer because it exists only as a sequence of absencessequence of absences

It is never quite itself It is never quite itself

Any “fixedness” of the object is a Any “fixedness” of the object is a temporary moment of stability in a chain of temporary moment of stability in a chain of changeschanges

IndividualizationIndividualization

Social theorySocial theory

Break down of traditional social institutionsBreak down of traditional social institutions

““Condemned to be free” – SartreCondemned to be free” – Sartre

Modernity characterized by dissolution of Modernity characterized by dissolution of social web and social relationssocial web and social relations riskrisk

Postsocial RelationsPostsocial Relations

There is no lack of relationsThere is no lack of relations

New forms of relationsNew forms of relations

Relations with objectsRelations with objects Provided these objects carry certain Provided these objects carry certain

charactersiticscharactersitics

New forms of New forms of relationships/involvement/loyalties!!relationships/involvement/loyalties!!

Opportunities for MarketersOpportunities for Marketers

insert knowledge/interactivity/poly-activity insert knowledge/interactivity/poly-activity into products.into products.

Seek for ways to bring objects “to life.”Seek for ways to bring objects “to life.”

Enable quasi-social relationships between Enable quasi-social relationships between product and consumer.product and consumer.