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. 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
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. 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. 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. Physical Goods
• These tend to be governed by certain
attributes
– Level of quality
– Features
– Styling
– Brand Name
– Packaging
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. HOW DO THE DIGITAL WORLD AND THE
2 “I”S AFFECT THE DIGITAL PRODUCT?
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. 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. WHAT IS THE DYNAMIC NATURE OF
DIGITAL PRODUCT PORTFOLIOS?
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. 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
17. WHAT IS DIGITAL PRODUCT
DEVELOPMENT AND HOW DOES IT
ENABLE ELECTRONIC CUSTOMER
RELATIONSHIPS?
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. 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. 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. 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. 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. 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
