Theories of Network (or Theories of Network (or Interactive) MarketingInteractive) Marketing

What is Interactive Marketing?

Is it perhaps...

…selling over the Net?

…advertising over the Net?

…distributing over the Net?

…producing using the Net?

…others? What do you think?

MyMy Definition:Definition:

Network Marketing is the Process of Building and Maintaining Customer Relationships Through Building and Maintaining Value-adding Electronic Product and Service Networks using the Power of Information.

So why does a company like So why does a company like Carrier do Network Marketing?Carrier do Network Marketing?

Because the NEW NETWORK supports one or more of these efforts:

Increase Market Share

Improve Profitability

Increase Product Cycle Times

Enhance Customer Enhance Customer RelationshipsRelationships

E-Business

Carrier: Smart Products

carrier.com, totaline.com, hvacpartners.com, myappliance.com

Do We Need “Central Internet Air Conditioning”?

The Product:The Product: A Internet-Enabled Comfort Choice Thermostat

What are the Benefits for Consumers?

1) Web-Enabled Micromanagement of Temperature.

2) Added-Value Through Cost Saving.

And for Carrier?

1) Bundling Smart Services allowsto Maintain Prices in CompetitiveMarket.

2) Carrier, a B2B Company, is now VERY Close tothe Customer (User Data).

3) Last but not Least: Image of Being Cutting-Edge

Does Carrier Make Anyone Else Happy?

Yes, Long Island Power Authority...

Get 45,000 customers into the Carrier program and it'll conserve the equivalent of a small power plant…

Concepts of Networked MarketingConcepts of Networked Marketing

Information as “Dematerialization”Information as “Dematerialization”

CoproductionCoproduction

Product EcologiesProduct Ecologies

The informational mode of productionThe informational mode of production

Information management has been Information management has been labor intensive, therefore high cost, labor intensive, therefore high cost, high overhead.high overhead.

Castells: The IT revolution makes Castells: The IT revolution makes knowledge work productive through knowledge work productive through automation.automation.

““network marketing”network marketing”

When messages are transported at When messages are transported at network speed, network speed, andand production is production is decentralized, the result is FLEXIBILITY!decentralized, the result is FLEXIBILITY!

Doing Networked Marketing:Doing Networked Marketing:

CustomizationCustomization: Change segments on the : Change segments on the fly—even make segments of one!fly—even make segments of one!Co-productionCo-production: Bring in the customer: Bring in the customerMulti-channel solutionsMulti-channel solutions: real-time click : real-time click and brick sales pitch.and brick sales pitch.

For each of these marketing innovations, For each of these marketing innovations, find examples and evidence in the find examples and evidence in the readings for last week and this week.readings for last week and this week.

Link Concepts:Link Concepts:

How can you conceptually combineHow can you conceptually combine the multi-channel retail systemthe multi-channel retail system Customization of segmentsCustomization of segments And co-production?And co-production?

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 add value or enhance the attractiveness of the Any or all of these networks add value or enhance the attractiveness of the associated focal product.associated focal product.Consumers allocate resources among competing products based on the Consumers allocate resources 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. Rather, strategic position for the focal product. Rather, marketing needs to support network strength as well.marketing needs to support network strength as well.

……think imode…think imode…

Midterm Prep Questions:Midterm Prep Questions:Linux versus Microsoft Server OSLinux versus Microsoft Server OSWhat is the focal product?What is the focal product?What constitutes the:What constitutes the: User networkUser network Complements networkComplements network Producer networkProducer network

Which one adds most value to the focal Which one adds most value to the focal product?product?What are the marketing implications of What are the marketing implications of your analysis?your analysis?