Exhibit 7.1: Product Value Hierarchy
Product in
Product
Differentiation
Digitial
Marketing

Source: Mohammmed R. A., Fisher, R. J, Jaworski B. J.,
Paddison G. J. (2003), Internet Marketing: Building Advantage
in a Networked Economy, McGraw-Hill
Exhibit 7.2: Internet Product Types
Digitized Good
Service
Retail or
Distribution
Service
Product
Augmentation
Being
ecological

After-sales
service

Assist. Prof. Dr. Ozge Ozgen
Product Type

Primary Purpose
Internet Properties
Is not used up in
consumption; easily
reproducible;
transferable
Standardizes service;
allows producer and
Performs core service consumer to be
benefit online
separated in space and
time; adds vividness to
intangibles
Sells, brokers, or
Helps dispose of
distributes product
perishable inventory;
delivered offline
aggregates demand
Adds extra services
Differentiates at low
or benefits to a
incremental cost
service or product
Provides core benefit
in digitized form
online
Extended
warranty

Online
support and
meetings

Individual diet
and exercise
plan
Augmented Product

Engine

Advice

Tires

In-Depth Information

Radio
Transportation
Traditional:
Automobile

Basic Product
Dieting Information
Core Benefit
New Economy:
e-diets.com
Real Estate Agent: Virtual Tour Example
Examples
Downloadable software,
music, newspapers
netflix.com, eDiets.com,
booking.com
Amazon.com, priceline,
Kangurum.com
FedEx, Fidelity
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PRODUCT AUGMENTATION –
Presale support, fulfillment options, postsales support,
customer care
The Effects of the 2Is on Product
Individualization
Exhibit 7.7: Product Portfolio
None
Existing
Products
Incremental
Line
Extensions


Degree of Innovation
Breakthrough or
Discontinuous
Users can redevelop
aspects of the product
to meet individual
needs and
preferences

Firms can provide
more targeted,
personalized products

Increases “stickiness”
as customers invest
time and effort to
personalize

Enables responsive
service interaction to
provide augmented
value to the product

Allows companies to
quickly gather valuable
customer data such as
preferences

Customers can be
directly involved in the
product development
process
Product
Line Extention: Netflix.com

New to Firm
New to Market
New Technology

Interactivity
The Netflix website launched in April 1998 with an online version of a
more traditional pay-per-rental model
Netflix introduced the monthly subscription concept in September 1999
Now....

The movies are delivered individually via the United States Postal Service
from an array of regional warehouses. As of March 28, 2011, Netflix had 58
shipping locations throughout the U.S
New Products
2
Market Adoption
Exhibit 7.8: Order of Market Entry
Effect
Fast
Follower
“Me Too”
Entrant
Exhibit 7.10: Stage-Gate New
Product Development Process
Laggard
First to Market
Time
Netflix’s wrong decision

Exhibit 7.14: Product Levers by
Relationship Phase
On September 18, 2011, Netflix
Four Key Stages of Customer Relationships
announced its intentions to rebrand
and structure its DVD home media
Awareness
Exploration/
Expansion
Commitment
Dissolution
rental service

totally separating DVD rentals

Core benefit


Presentation and
packaging
Presentation and
packaging

Attributes and
features

Presales support

Fulfillment

Availability of
complementary
products

Customer-specific
attributes and
features
and streaming

independent subsidiary
company called Qwikster

The announcement led to a flurry
of negative reception at Netflix's






Upgrades
Customer-specific
attributes and
features
Post-sales support
Tiered service
Personalization
Customer care

Migration to
different product
in the portfolio

Customer care
Facebook and Twitter pages...
3
4