Intro
You can learn a great deal about your customers by offering them a menu of products and seeing which one they choose.
versioning
It means offering your information product in different versions for different market segments.
two basic principles
Offer versions tailored to the needs of different customers. A full line of information products will maximize the total value of the information you are providing.
Desinging your product line
How self-selection?
the key
: identifying dimensions of your information product, such as timeliness, that are highly valued by some customers yet of little importance to others
-> offer verions that differ noticably in ways designed to apppeal selectively to each type of customer
delay
information is like an oyster
: has the greatest value when it is fresh
strategic information
ex) stock market, interest-rate movements
the fact that your information customers want the latest information means they will pay more for fresh
key point
: cosumers differ widely according to how eager they are for various types of information
delay
: tried and true tactic for companies selling various services, not just informatino
ex) Federal Express offers two class of service,
1) premium class that promises delivery before 10 A.M.
2) nest day service that only promises delivery some time the next day
to encourage the senders to self-select, Fed Ex will make two trips to an address rather, than deliver nonpremium pakages before 10 A.M.
information provider can offer early delivery of information at a premium
EX) PQWWS Financial Network charge $8.95 per month for a portfolio accounting system that measures stock values using twenty-minute delayed quotes
user interface
:provide high-paying customers with more powerful search capabilities
:offer different search interfaces to experienced and inexperienced users
: experienced users tend to be users with high willingness to pay -> customers who first signed on to purchase the information and generally use it most intensivly
: allowing high-paying users -> more elaborate search capabilties!
<-> there is little or no incremental cost associated with a more elaborate interface
smart design of user interface
: more elaborate interface for more experienced users
<-> causal users welcome a stripped-down interface
=> search interface an ideal candidate for versioning
ex) Knight-Ridder company Dialog
use this strategy in its Web-accessible databased
information professionals, on-line searchers, researchers, and other professional
<-> much cheaper and less powerful product, DataStar offers a subset of the full Dialog database with a much simplified user interface
Convenience
versioning strategy that is closely related to delay is control of convenience by restricting the time or place at which an information service is used
: also restric access by location rather than time
EX) some on-line database providers have offered libraries licenses that allow unlimited use by patrons within the library bust restrict use by off-site patron
on-linepatrons VS off-site patrons
Image Resolution
use visual resolution to discriminate between users
EX) PhotoDisk has a library of photographs on the Web
Professional users want high-resolution images that can be printed in commercial journals; non-professional want medium or low-resolution images for newsletter
Once user choose the image they want using the lowresolution version as a guide, they can then download a medium or high-resolution version, depending on their needs
요즘, 화질 좋아게 만드는 사이트가 존재함
화질이 유저간의 차별화할 수 있는 전략인지 생각해볼 필요가 있음
Speed of Operation
When selling software, a common strategy is to sell versions with different capabilities
EX) Wolfram Research sells Mathematica, a computer program that does symbolic, graphical, and numerical mathematics
EX) hardware, IBM LaserPrinter Series E
functionally identical to the standard LaserPrinter
BUT printed five pages per minute rather than ten pages per inute
EX) Intel
386SX chip, designing the chip with an integrated mathematical coprocessor that was then disabled
-> low-priced chip to those who didn't need floating-point calculation while still maintaing a relatively high price for the math-enabled CPU
Flexibility of Use
Important dimension of information that can form the basis for versioning is the ability to store, duplicate, or print the information
요즘 정보뿐만 아니라 데이터 사업 굉장히 많음
마이데이터 사업
데이터거래소
EX) software comapnies sold two version of their software: a low-priced version that could not be copied and a high-priced version without the copy protection
EX) Lexis/Nexis impose charges on some users for printing or downloading information
Capability
products are distinguished by the total size of the vocabulary included and by the addition of vocabulary appropriate to specific professions
dramatic difference in price
: high-end version for surgeons is a hundred times more expensive than the entry-level software
Features and Funcions
Ex) Intuit's versioning of Quicken
how to use the feature set of a product to segment a market
: offer a mutual fund finder, mortgage calculator, an insurance needs estimator, and other features valued by high-powered users
Comprehensivness
some customers will pay a big premium for more complete information
Managers often value information that is broken down by customers of offers lot of details about historical purchaing patterns
EX) how people use Dialog
Annoyance
EX) nagware
form of shareware that is distributed freely but displays a screen at the start or end of the session encouraging you to pay a registration fee
Public television use this strategy in their fundrasising drives
EX) public television statio -> fundraising drives
Support
technical support
EX 1) Netscape
browser available for free in a download
a price on a CD that came with a manual
EX 2) McAffe Associate
virus detection software in a free
dangerous
WHY?
1) if your customers really need technical support, they may decide your product is of low quality
2) costly to provide
1. Adjusting Price and Quuality
Goal in versioning information product is to sell to different market segments at different prices
Low-end and high-end versions of product, can sell the same thing to customers with significantly different levels of willingness to pay
If premium-price, high-end product attract some low-end customers!!
If stuck to the low-end product -> more revenu from them
= pay to make high-end product as attractive as possible
Cannibalization
기업이 자사의 제품이나 서비스가 다른 제품이나 서비스의 판매를 뺏는 현상, 한 제품의 성공이 다른 제품의 성과를 약화시키는 경우
avoid this
1) Reduce the price of the high-end product to make it relatively more attractive
2) reduce the quality of the low-end product to make it relatively less attractive
ex) 저가판 제품이 고가판 제품의 고객을 끌어들여서 고가판 제품의 판매를 약화시킴
Disounting Your High-End product
When creating low-end information products, have to cut the price of high-end product to keep high-value customers happy
should think about this choice the same way you think about pricing to meet the competition
If you discount the high-end price, will the increase in sales compensate you fore the price reduction?
하이엔드 가격을 낮추는 게 판매 상승을 보장하는가?
high-end sales lost to your low-end product still contribute to your revenues
Value-Subtracted Versions
versioning information has some special features
physical good
: expensive to produce an extra unit of the high-quality version
EX1) Lexus > Camry expensive
EX2) nineteen-inch TV > fifteen inch TV
But with information
costs just about as much to distribute the fancy version as the plain version
production of the low-quality version : additional cost
WHY? degraded form of the high-quality version
EX1) Delay
EX2) Resolution
images have to be scanned using a high resolution and degraded to produce the low resolution
EX3) Speed
Wolfram Research had to build or purchases a floating-point emulation library in order to produce the student version of its software
-> Once you've got your high-value, professional product, you often want to eliminate features to create a lower-value, mass-market product
2. Pitfalls- and how to avoid them
Although customers may not like some of the practices we have sugggested, best strategy may be to offer the high-end product only, and offer it at a premium price.
3. On-line and off-line versions
interesting point about on-line information
Between on-line and off-line quality difference
ex) many readers feel that it is easier to read text on paper than on a screen.
two way
1)
the fact that text quality is poorer on the screen than on paper
-> offer documents on-screen for free, offer documents on-screen for free
2)
much cheaper to sell information on-line
-> you treat your on-line content as if it were free
ex) National Academy of Sciences Press
The key question to ask yourself is whether the online version is a complement or a substitute for the offline version.
1) If the online version is a substitute for the offline version, then you'll want to charge for it, recovering costs through sales, fees, or advertising, or version it so that it doesn't directly compete with your offline version.
2) If it complements your offline version, then you want to promote it as aggressively as possible, since it adds to the bottom line by encouraging sales of the offline product.
Merely posting something that is available in print on-line doesn't add value to it, so you won't be able to sell it for a premium price
if you don't come up with ways to add value to your on-line content, your competitors will surely come up with a way to add value to their content
4. How many versions?
the first issue that comes up is how many versions you should offer.
First, one version is too few
There are two general strategies: analyze your market and analyze your product.
Analyze your market
whether your market naturally subdivides into different categories of consumers and whether their behaviors are sufficiently different that they want (or are willing to tolerate) different quality classes of product.
ex) Airline
- those who traveled for pleasure
- those who traveled on business
Analyze your product
You should take a hard look at your product and identify its key attributes, with an eye on segmenting the market according to one or more of these attributes
attribute: delay, user interface, resolution, speed, format, capability, or features to segment your market?
a common strategy
: produce the high-end product -> degrade it in some way to get the low-end version
designing product from the topo down offer two advatages
1. it easy to meet the competition it arise
if your competition comes out with a high-resolution product at mass market prices, you can respond by repositioning your high-end product for the mass market.
2. you can use the low-end version of your product as a way to "advertise" the high-end product.
Goldilocks pricing
If you can identify many different constituencies for the information you sell, and there is little likelihood of user confusion
만약 판매하는 정보에 대해 많은 다양한 이해관계자를 식별할 수 있고 사용자들 사이에 혼란이 거의 없다면
-> offer litte different versions.
ex) airplane manufacturer
by filtering and sorting the information, offer information
<-> BUT
mass-market software offer just one or two version
WHY?
1) network effect
Users want to be able to exchange electronic documents, and it is much more convenient if there is only one version of the product.
2) naive users often have trouble identifying which product is appropriate for them
but turned around and even used to your advantage.
ex) if you buy a new digital camera, you are likely to get a stripped-down version bundled with your camera.
but what can you do if you can't figure out what the "natural" user classes are?
two version - professional, standard - not the best choice
standard, professional, and gold version
WHY?
"extremeness aversion
Consumers normally try to avoid extreme choices
risky to go for the top or the bottom of the product
<-> much safer to choose something in the middle
ex) Itamar Simonson and Amos Tversky describe a marketing experiment using microwave ovens
When the choice set consisted of a bargain-basement oven at $109.99 and a mid- 72 Chapters range oven at $179.99, customers chose the midrange oven 45 percent of the time.
When a high-end oven at $199.99 was added to the choice set, the same midrange oven was chosen 60 percent
How can extremeness aversion be used for information goods?
important thing to recognize
1) the product you really want to sell is the middle product
2) the high-end product is there only to push people toward the compromise choice.
One important strategy is to offer premium quality technical support as the main differentiator of the "gold class."
5. customizing browser and content
Java
: could be used to customize information you collect about user behavior, allowing you to assemble a much rischer set of information
: help you in versioning information since it can be customized to display the prticular type you are selling in an optimal way
6. Bundling
: special form of versioning in which two or more distinct products are offered as a package at a single price
EX) Microsoft Office
a product bundlles together a word processor, a spreadsheet, database, presentation tool
90% of the market for office suites
Why?
1. guaranteed to work well together
2. the component parts use shared libaries - effectve
bundle attractive and profitable
price is less than the sum of the component prices
considering
determine whether you would like to offer a targeted discount on one product to customers who would purchase the other product anyway.
6.1 Dispersion in Customer Value
Bundling software applications can also allow you to significantly increase the value you extract from your customers when it reduces the dispersion in their willingness to pay
Mark
: marketing department
word processor most of the time, spreadsheet occasional need
Noah
: accounting
mostly spreadsheet, word occasional
how most revenues?
if $100 or $120
Mark, Noach both buy only one program -> revenue 220
<-> both price $100
Mark, Noah will each bu both program -> revenue $400
but
Bundles
Mark Noah would each be willing to pay $220 for the office suite -> $440
why increase?
번들에 대한 지불 의지가 구성 요소에 대한 지불 의지보다 적게 분산되기 때문입니다.
willingness to pay for the bundle < willingness to pay for the component
6.2 Other Reasons for Bundling
Option value
If the consumer does decide to use a spreadsheet in the future, she will naturally choose the one that is free in the Microsoft Office bundle
spreadsheet really isn't free
a zero incremental cost
Microsoft faced competition in the operating systems market
6.3 Information Bundles
informatino bundle 사용 많이 함 : articles, subsciription
6.4 Customized Bundles
ex1) cd - individual song 포함, -> customized
ex2) personliaed newspaper, own bundle of article
Promotional Pricing
LESSONS
1. Adjusting the characteristics of your information products to emphasize difference in what customers value
- offer different version that have differential appeal to different groups, adusting the price if necessary to sort the consumer
소비자 가치두고 있는 다른점에 집중해서 제품의 특징을 조절하는 것
2. version your product along a variety of dimension
Delay, user interface, image resolution ~~ support 10가지 예시
3. add value to on-line information to differentiate it from hard copy
hard copy와 구분하기
make it searchable and use links for cross-reference
4. design informatino product line to match
ex) if there are professional and amateur users, offer version that are designed and priced to appeal to each of these market segments
Term
mutual fund:
뮤추얼 펀드: 투자자들의 자금을 모아 투자 회사를 설립해 주식이나 채권, 파생 상품 등에 투자한 후 그 운용 수익을 투자자, 즉 주주에게 배당금의 형태로 나누어 주는 투자 신탁
nagware
내그웨어 ((사용자 등록이 완료된 때까지 계속적으로 경고하는 셰어웨어 타입의 소프트웨어))
Cannibalization
Voca
stripped-down: 쓸데없는 것을 뺀
patron: 고객
comping images: 캠핑 이미지?
low-resolution: 저해상도의
floating-point: 부동소수점의
disabled: 무능력해진
copy protection: (소프트웨어) 복사방지
surgeon: 군위관
entry-level: 초보자의
checkbook: 수표장
high-powered: 영향력이 큰
Public affairs specialist: 공보 전문가
Annoyance: 짜증, 골칫거릿
fundrasing drive: 모금 착수
Public television station: 공영 방송국
break into: (갑자기) 하기로 하다, 억지로 열다
get around: (문제를)처리하다, 해결하다 = overcome
deliver: 제공하다
pricing: 가격책정
compensate: 보상하다
lose track of: 놓치다
incur: 발생시키다
subtract: 빼다
dispersion: 분산
office suite: 사무실
twist: 변화
impose inconvenience: 불편함을 부과하다