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Information as a product: not , not services

Jon Freiden Associate Professor of , College of , Florida University, Tallahassee, USA Ronald Goldsmith Professor of Marketing, College of Business, Florida State University, Tallahassee, USA Scott Takacs Assisant Professor, Department of Business, Georgetown College, Georgetown, Kentucky, USA Charles Hofacker Professor of Marketing, College of Business, Florida State University, Tallahassee, USA

Recent decades have wit- and again without any degradation in the nessed an explosion in the The information age original data, i.e., information has the quantity of information being As the world’s enters the Informa- capacity to be digitised. Information, as produced, which in turn has tion Age, all types of digital data become conceptualised here, does not include live created vast opportunities for more important to many aspects of business, performances that require an audience to be information-based to say nothing of daily life (Drucker, 1994; present because these are, strictly speaking, . The time has Naisbitt, 1982). Moreover, the selling, trans- services (Lovelock, 1991). In essence, we are come for information to be porting, and manipulating of information defining information both as the treated as a unique product have become a huge business. It is estimated communication of knowledge and as a signal alongside . that there are more than 36,000 information or transmitted data (The American Heritage But is information an intangi- product suppliers in the USA (Meyer and Dictionary, 1985). Furthermore, ble good or an imperishable Zack, 1996). One information supplier, information may be capable of being service? In this paper we Find/SVP, sells hundreds of marketing exchanged as in other marketing discuss the unique properties research and reports, many of which transactions (Rowley, 1995). of information as a product cost $2,000. In 1997 the A.C. Nielsen In common with most new product fields and propose that information Company generated over $1.358 billion in (Foxall, 1984), the initial thrust in the be distinguished conceptually revenue information industries has been creating new and thus marketed differently (http://www.nielsen.com/home, 30 July 1997). forms of information and the to from both goods and services. Tapscott (1996, p. 9) estimates that the compile and disseminate them. Consequently, We offer recommendations interactive multimedia industry will gener- either a “production concept” or “selling for marketing practice that ate one trillion dollars or 10 per cent of the concept” approach has dominated this apply uniquely to information. gross domestic product of America in just a business. Our argument is that it is now time Finally, implications for mar- few years. Within the industry, almost all to focus more specifically on the marketing of keting theory, marketing current business efforts and research, how- information and let the “marketing concept” research, and directions for ever, are focused on the production and sale of guide the development of information future research into the information products (Meyer and Zack, 1996). products. A orientation will be as marketing of information are This paper provides justification for the need essential to the success of information presented. to develop information marketing as a distinct companies in the future as it is now for any field of study and practice alongside other type of goods or services-based traditional goods marketing and the newer company (Deighton et al., 1996; Webster, 1994). field of . We suggest that The focus of our paper is the marketing of marketers should focus attention on information, where information is the creating theories and strategies that are primary component of a “product” to be uniquely suited to the marketing of purchased and used by either organisational or consumers. This paper A version of this paper was information. presented by Professor Certainly, the term “information” has discusses the of information and pre- Goldsmith to the Marketing many meanings depending on the context in sents a review of the literature relevant to its Faculty at Kent State which it is used. While a later section dis- marketing. Next, we discuss a new paradigm University, 25 April 1997. cusses the concept of information in more that distinguishes goods, services, and detail, we begin by thinking of information information. Our orientation to the concept simply as words, numbers, pictures, software, of information is summarised well by Rowley sounds, or video. The content of information (1995), who states that information is “neither a good nor a service, but has some character- Marketing Intelligence & may be factual, as suggested by Campbell’s Planning definition: “news, intelligence, facts and istics of both as well as unique 16/3 [1998] 210–220 ideas that are acquired and passed on as characteristics of its own”. This leads to © MCB University Press knowledge” (Campbell, 1982, p.15). All of these recommendations concerning marketing [ISSN 0263-4503] may be “captured” in time and related again practice. Finally, implications for marketing [ 210 ] Jon Freiden, theory, marketing research, and directions service, as is a visit to the doctor, where the Ronald Goldsmith, for future research into information market- product is dominated by the professional Scott Takacs and ing are presented. service, but it may be accompanied by Charles Hofacker tangible medical devices or drugs (goods) and Information as a product: not goods, not services booklets or advice (information) on health Three types of products: goods, maintenance. Finally, a Type III product is an Marketing Intelligence & Planning services, and information information product; an encyclopedia on CD- 16/3 [1998] 210–220 ROM is virtually all information, but it also As the marketing concept has long argued, a has a small goods component (the CD, its product is a bundle of benefits that a firm case, the jewel box), and a small service offers to consumers to meet their needs and component (the online help and upgrades). wants (Webster, 1994). Expanding on this While this article focuses mainly on the “product/service bundle,” we propose that a marketing of Type III products, the product consists of relative proportions of implications are clear: marketers of all types three primary elements: goods, services, and of products should keep in mind that their information. Figure 1 shows this new market offering may contain some concept of a product embedded in the proportion of each of these three elements augmented product concept introduced and that , consumer by Levitt (1983) and discussed by Webster , and new product development can (1994). be guided by enhancing each part of the Most products can be conceptualised as a product. mixture of these three elements. An example of a product that is comprised of approximately equal proportions of all three Information is unique elements would be personal computers: the total product consists of the hardware First, it is important to establish a conceptual (goods), the service guarantee and user sup- definition for information and identify its port services (services), and information on properties. Information is unique because it its use contained in the manuals and disks has a mathematical form, regardless of (information). From this orientation (see whether the medium carrying the informa- Figure 2) we can refer to a Type I product as tion is a book, movie, audio tape, or computer one that is dominated by the goods compo- screen. In modern terms, information has the nent. oranges sold during the capacity to be digitised without any loss of holidays, while dominated by the goods com- content (Gates, 1995). It may be provided in ponent, may have smaller sectors devoted to printed or electronic form and it can be sold services (e.g., returns for imperfections) and to external markets or it can be used inter- information (e.g., a booklet describing unique nally by the originator (Meyer and Zack, uses). A Type II product is predominantly a 1996). Information may be uniformly consumed by more than one person, at various Figure 1 locations, at any time. Information is A new concept of a product: tangible goods, services, and information delivered in an impersonal manner, or it has the capacity to be so delivered. Thus, information is the same for all consumers who can use it any way they wish. The challenge for managers of Type III products (such as the author of a thrilling novel or the creator of a software ) is to develop the information (often having high fixed cost and long development time) after which Tangible Services the product may be sold over and over with Goods Core Product negligible variable cost. There is no theoretical limit to the level of supply by a single producer (e.g., there are over 100 Information million copies of Windows 3.1 used through- Expected Product out the world, all virtually identical (Schlender, 1995)). Furthermore, consuming information Augmented Product does not use it up or change it (the feature of permanence), although it can become out of date (the feature of obsolescence). Infor- mation should not be confused with its [ 211 ] Jon Freiden, Figure 2 Ronald Goldsmith, Three types of products Scott Takacs and Charles Hofacker Information Service Information as a product: not goods, not services Marketing Intelligence & Information Planning 16/3 [1998] 210–220

TYPE II TYPE I

Tangible

2. Services 1. Tangible Goods Haircut Tyres Service Tangible Account Car Battery Repair Service Oranges

TYPE III

3. Information Instructional Manual News Service On-line Directory

mode or the medium through which it is traditional economic distinction between delivered. Mode here refers to whether durable and nondurable goods, Copeland’s information exists symbolically as words, (1924) breakdown of goods into convenience, numbers, pictures, or sounds. Medium shopping, and specialty goods is well known refers to the physical means by which it is to marketers. However, the distinction delivered to users, via print, broadcast, between different product types (i.e., goods digital, or visual media. Type III products and services) is a more recent concept. An may exist in several modes and be delivered analogy for the case for considering the by several media. For example, popular marketing of information as different from books are sometimes sold as hardbacks, marketing other types of products can be paperbacks, audiotapes, and even CD- found in the services marketing literature, ROMs. which emphasises the distinction between goods and services. The earliest literature about services Traditional product classification marketing concentrates on how to market specific services (Hobart, 1947). Articles actively discussing the distinction between The idea that different types of products marketing services separately from physical should be marketed differently is one of the goods did not appear until the early 1960s. oldest ideas in marketing. In addition to the Regan (1963, p. 57) wrote that services [ 212 ] Jon Freiden, represent “either intangibles yielding satis- Table I Ronald Goldsmith, factions directly (), tangibles yield- A comparison of goods, services, and Scott Takacs and ing satisfactions directly (transportation, information Charles Hofacker housing), or intangibles yielding satisfac- Information as a product: not Product goods, not services tions jointly when purchased either with or other services (credit, deliv- characteristics Goods Services Information Marketing Intelligence & Planning ery)”. Regan (1963, p. 62) also noted that “the Heterogeneity Low High Very Low 16/3 [1998] 210–220 application of to the delivery of Perishability Low High Very Low services may do for services what technology Inseparability Low High Low did for mass production”. He argued (p. 61) Tangibility High Low Very Low that the life-cycle of services has new services Ownership High Low Both as “offered to and sought by higher socioeco- Reproducibility Low Low Very high nomic levels” and mentions that “social pres- sure and legal means are then invoked to help realise this service for a wider market”. heterogeneity, because the individual differ- In another early classification of services, ences in humans providing the service make Judd (1964, p. 59) classified services into three consistent service delivery more difficult categories on the basis of whether they (Zeithaml et al., 1985). For example, the final represented: product you receive in a new haircut or a 1 rented goods services; soothing massage may differ considerably 2 owned goods services; or from service provider to service provider 3 non-goods services. and, on occasion, even within the same ser- Judd (1964, p. 59) pointed out that this vice provider. classification scheme does not define the Type III products, in contrast, are identical essential characteristics of a service, but “it to each other and to the original; the product is possible to be quite definite about what is exactly the same, demonstrating perfect services are not”. Rathmell (1966) described a homogeneity. Information may even be “in continuum between goods and services, with the economic sense, a pure in that no product being either a pure good or a pure its cost, once the process/ is in place, service. We have extend this idea (as shown in is completely unaffected by the number of Figure 1 and discussed earlier) by proposing people who have access to it, with the that products consist of tangible elements, quantity of information unchanged or often services, and information. expanded with use” (Hawes, 1987, p. 84). This feature enables managers to emphasise “a standardised, quality-controlled product,” for The new paradigm consumers (Hawes, 1987, p. 87). Information is thus similar to goods, but information is even Zeithaml et al. (1985) have developed a more extreme in uniformity since goods can popular framework showing how goods have small quality variations visible only marketing differs from services marketing. through sampling and inspection procedures. They identify four characteristics that separate services from goods: Perishability 1 heterogeneity; Perishability describes how long a product 2 perishability; can be stored or inventoried. Goods are some- 3 inseparability of production and what difficult to classify since the ability to ; and inventory them varies widely. Some goods 4 intangibility. will last a lifetime or longer (high-quality In this section, we review these four concepts tools, aluminum baseball bats, etc.), while to show that information is different from other goods have a very short shelf life both goods and services. Then we expand this (bread). In terms of principles, paradigm (see Table I) by adding two durable industrial goods considered as assets additional characteristics, ownership and can be depreciated or amortised over an iden- reproducibility (Palmer and Cole, 1995), tified period. Services are quite different in which justify further the need to treat infor- that they have value only when they are mation as a distinct product category. produced and consumed. If the service is not consumed (i.e., the service provider is idle), Heterogeneity of the offering the service has no value. For example, unsold Type I products often manifest high seats on an airplane have no value once the homogeneity because of mass production and plane leaves the departure gate. standardisation. Conversely, Type II products Type III products differ from both goods are portrayed as having considerable and services in that information is not [ 213 ] Jon Freiden, perishable; in fact, information is essentially is largely intangible, but may have a few Ronald Goldsmith, permanent. Information itself does not tangible aspects (Levitt, 1983). Scott Takacs and deteriorate over time, although the medium Information differs from goods because it Charles Hofacker in which it is stored may decay, as when a exhibits an absence of tangibility. It is Information as a product: not goods, not services book yellows and falls apart or an early symbolic in nature; the most tangible element celluloid film decays. In fact, it is not even of an information product is the medium Marketing Intelligence & Planning used up during consumption, but remains to through which it is conveyed. Data, for 16/3 [1998] 210–220 be used again and again. This is not to say example, may reside in numbers or letters that information always retains its original that have some recognised meaning. Location value, as some types of information, such as is not an important property of information. news, have an element of timeliness or Information may be on your computer screen immediacy. Although its value may change or in cyberspace being delivered. Thus over time (with newer information generally information is even more intangible than a being more valuable than older information) service, which most likely has some tangible the information itself remains the same. In aspects. Information is then clearly not just a summary, with respect to perishability, good or a service, but is a unique type of information has little in common with product that is not only produced differently services and is more like goods. than most types of goods (Meyer and Zack, 1996), but should also be marketed differently Inseparability from both goods and services. The concept of inseparability refers to the physical and institutional distance between Ownership the originator of the product and the final Ownership in the sense of taking title to a consumer. In the case of Type I products, the product is a central feature of consuming producer may be quite distant from the final goods, but one cannot take title to a service, consumer. The product may move through a only own the right to have a service act channel of involving a series of performed in the future (Palmer and Cole, middlemen and it may physically move from 1995). Technically speaking, information can a factory, to a , to a store, and be owned; e.g., this article is copyrighted. In finally to a household. Type II products, by reality, however, ownership rights may be contrast, are highly inseparable because the difficult to exercise as witnessed by the producer and the consumer in concert complexity of covering copyright and to create, deliver, and consume the service. . Information’s good-like This is especially true of services that are qualities facilitate ownership, but its performed directly on the person (e.g., hair- intangible features hinder exclusive cut, massage, dental care, etc.), as opposed to possession and control. Besides the services that are performed on objects (e.g., intangibility of information, its repro- car, outboard motor, etc.) (Lovelock, 1991). ducibility limits ownership, making it differ- Unlike services, information is like a good ent from Type I products, which can be owned because it is produced, stored, transported, but not copied. and can exist without being consumed. Type III products may involve an “ordinary” Reproducibility channel of distribution, such as a store or Most of the time a consumer cannot repro- mail order, or it may be distributed in a duce or copy a tangible good; and counterfeit unique manner, as in the case of dedicated products are illegal. Many services (other phone lines and appropriate hardware (e.g., than “do it yourself”) also cannot be copied to access information via the Internet). by the consumer (Palmer and Cole, 1995). Nevertheless, information still needs to be Information, however, may be easily copied distributed. Information is capable of being for or by other consumers using modern consumed at a distance from its production technologies that yield low variable costs site, and thus is clearly not a service, again (information can even be transformed from emphasizing the separation between infor- mode to mode and medium to medium), so mation producers and consumers. that information must be carefully guarded to maintain exclusive possession. On the other Tangibility hand, this feature means that information is Tangibility refers to the product’s physical not used up in the act of its consumption, but properties and the extent to which it can be it can be used repeatedly and shared. Finally, seen, felt, heard, smelled, etc. Goods are information can be preserved more easily tangible and have physical attributes, than tangible goods because copies can be although they may also have some service made to replace an original if it is stolen or attributes; while the performance of a service destroyed. [ 214 ] Jon Freiden, In conclusion, Type III products should not becoming more involved in the self-customi- Ronald Goldsmith, be treated simply as special cases of Type I or sation of these Type III products. The new Scott Takacs and Type II products. Information constitutes a push technologies evolving on the Internet Charles Hofacker unique product, separate from goods and ask consumers to describe which types of Information as a product: not goods, not services services. Consequently, information as a prod- information they want transmitted to their uct requires distinctive marketing strategies. computers for viewing at their convenience. Marketing Intelligence & Planning The Internet also provides individualised 16/3 [1998] 210–220 stock portfolios, customised weather news, Information marketing and other types of individualised information management and strategy for users, often called “intelligent agents”. We can conclude that the most appropriate As discussed, information has unique strategy for market segmentation for Type III properties that do not conform well to the products is micro-segmentation, where each traditional goods versus services consumer is treated as a unique individual. distinctions. In this section we describe the marketing strategy implications of informa- Product considerations tion’s unique properties. The ways by which Producers of goods and services are generally information differs from goods and services concerned with the quality of their product may be important to managers charged with and this should be no less true for the produc- marketing Type III products and to acade- ers of information. Consumers tend to judge mics challenged to further investigate them. the perceived quality of many tangibles by We first discuss information market using the dimensions of performance, segmentation and then the for product features, conformance with specifica- information. tions, reliability, durability, serviceability, Information market segmentation and fit and finish (Garvin, 1984). Likewise, consumers tend to evaluate the quality of The strategy and practice of market services on the dimensions of reliability, segmentation have always focused on divid- empathy, responsiveness, assurance, and ing large heterogeneous markets into smaller tangibility (Parasuraman et al., 1985). more homogeneous segments to improve Information quality should focus on satisfaction and market efficiency customer needs and wants, as the marketing and effectiveness. The years have witnessed concept prescribes (Webster, 1994). We the evolution of market segments from rather suggest information marketers be guided in crude divisions based on simple demograph- their pursuit of quality information products ics and product usage to more sophisticated by four other dimensions represented by the schemes using consumer lifestyles, values, acronym FACT: attitudes, and perceptions. The use of data- 1 Form; base marketing has pushed the precision of 2 Accuracy; market analysis much further, grouping con- 3 Completeness; and sumers by zip codes or other geodemographic 4 Timeliness. characteristics (Berry, 1994; Francese and Piirto, 1990; Thomas and Kirchner, 1991). Form refers to the mode and medium through marketing also opens the possibility which the information is made available. for treating each consumer as an individual Users have preferred modes (print, target (McDougall, 1995; Peppers and Rogers, electronic) in which they wish to use infor- 1993). Recommendations regarding market mation and preferred media (books, floppy segmentation and targeting consumers are disks, microfiche, CD-ROM, online) through converging on a new paradigm. The emphasis which they wish information to be delivered. on relationship marketing (Fierman, 1994; Marketers should ensure that they make Peppers and Rogers, 1993; Vavra, 1992), information available to users in the form building long-term relationships between that users prefer. This may entail providing firms and , almost demands a one- the same information in a variety of forms for to-one market segmentation programme for different market segments. For example, an information marketers. online information service is of little use to This emphasis on personalisation applies to potential customers who lack access to the both business-to-business and to household Internet. A CD-ROM is useless to computer consumer marketing strategies. Both types of owners who lack the appropriate disk drive to buyers are increasingly coming to demand read it. Thus, marketers of information will personalised information products. This is likely produce their products in multiple especially appropriate because Type III prod- formats to adapt to the technological and ucts are often delivered interactively to con- experiential characteristics of their sumers. Moreover, consumers of all types are customers. The notion of form also may be [ 215 ] Jon Freiden, extended to describe the way information is aspect adds to the product development task Ronald Goldsmith, organised and presented as well. Marketers of information marketers by requiring that Scott Takacs and should consult end-users to determine the they continually update their product to keep Charles Hofacker most attractive ways to organise the informa- it timely. Information as a product: not goods, not services tion content of the product. For example, can An example of FACT can be found in any it be searched by name and subject and key local telephone directory, which is merely an Marketing Intelligence & Planning word if customers desire? The one-size-fits-all alphabetic listing of people, their addresses, 16/3 [1998] 210–220 product may be the furthest of all from the and their phone numbers. Should the form of demands of the information market. the phone book be a paper volume or a CD- Accuracy describes how well the informa- ROM or an addressable online computer tion represents the phenomena it purports to memory? The list of names, addresses, and describe. Part of the accuracy of information phone numbers should be accurate. The list consists of its description of the phenomena should contain all the people users would want users really want described, and not descrip- to reach, leaving out none and really not tions of other phenomena. For example, the including names of those users would not Nielsen (NTI) filled in by the want to reach. All the pieces of information wrong household members would be mislead- should be present, so that complete listings are ing. Moreover, accurate information con- available for all members of the list. Finally, forms to or represents the actual characteris- the list of names, addresses, and phone num- tics of the phenomena that it purports to bers should be as up to date as possible. describe. Information that is inaccurate is really misinformation and can be misleading considerations or harmful to information consumers. As we have described above, one of the key Marketers need to determine the level of differences between information and either accuracy desired by users and to ensure that services or goods is that information has the information they provide is as accurate as extremely low variable unit costs, depending users desire. Some unsophisticated informa- on the medium and channels of distribution. tion consumers will not be able to specify the Figure 3 presents a graphic representation of level of accuracy desired, assuming all the three products: one is a tangible good with information is “completely accurate”. This high fixed costs and decreasing variable costs has both marketing and legal ramifications. due to experience; one is an intangible ser- Some marketing effort may need to be vice with low fixed costs and high variable devoted to “educating” consumers on costs; and the third is an information product appropriate levels of accuracy, and warnings with medium fixed costs and almost zero may need to be developed to ward off legal variable costs (Ohmae, 1990). This cost effect attacks from consumers who view the simplifies the pricing decision in one sense, information product as inaccurate. since variable costs play a minimal role in Completeness refers to how much of the determining profit, but amplifies the impor- target phenomenon is described by the tance of knowing and understanding what information available. That is, is a compete consumers are willing to pay. In other words, description available, or are key parts miss- marketing managers should focus on ing? Information that is incomplete either estimating demand, since once the distribu- because it leaves out cases or elements of tion infrastructure has been created, variable cases may be completely useless to costs have little bearing on . consumers, or may have only reduced value. For example, ID Software used an existing For example, a database that reports con- Internet and game-sharing community to sumer usage of goods, but not these same distribute millions of copies of its game consumers’ usage of services, would not “Doom”. Each of these customers was likely be of much use to marketers interested provided with a toll-free number to order in selling a service to heavy users. The NTI “Doom II,” thus distributing the two-game set mortality problem would also be an example with only . The optimal price of incompleteness. for Doom II would simply be the price that Timeliness refers to how up to date or maximizes the function: revenue is the price current the information is. The phenomena times unit volume. Even more simply, the described may be changing, and thus their optimal price is the price that would achieve description needs to reflect these changes. maximum gross revenue, regardless of how Out-of-date information is obsolete and may many copies are sold. be of little or no value. It may in fact be There is a general modelling consideration misinformation and may mislead users. here applicable to decisions other than Marketers need to ensure that the timeliness pricing. It is appropriate to model the of the information they provide meets the demand for many goods and services in such requirements of their customers. This quality a way that, as price approaches zero, demand [ 216 ] Jon Freiden, Figure 3 Ronald Goldsmith, Cost functions of three product types Scott Takacs and Charles Hofacker Cost Functions Information as a product: not goods, not services Marketing Intelligence & Planning 16/3 [1998] 210–220 Cost

Key Service Good Information

Quantity Produced

approaches infinity. This infinite demand the function shown in Figure 5, but some do property is indeed an implication of the not. For example, some information products, popular Cobb-Douglas function, which has such as software, become more valuable to been used to model market response to price the seller and buyer the more copies there are promotion (Achabal et al., 1990), couponing in buyers’ hands as the product becomes a de (Narasimha, 1984), price and facto standard (Gates, 1995). In this case a (Bass, 1969), and distribution penetration pricing strategy is called for. (Leeflang and Reuijl, 1985), and salesforce Not only have changes in telecommuni- (Hagerty et al., 1988). Since one of the features cations technology reduced variable costs, but distinguishing information from both goods the fixed or startup costs neces- and services is that it is not used up in sary to produce information have been consumption, a particular information offer- reduced. This lowering of total costs strongly ing cannot possibly result in infinite demand suggests that the of scale and scope because the market is saturated once every- at work in information markets will be radi- one has a copy. The additional derived cally transformed. Eliminating the require- from another copy of Windows 95 is zero for ment to buy presses, print or copy someone who already owns one; additional the information, and ship paper will reduce purchases come from those who are not yet entry barriers and allow many smaller firms owners. Appropriate functional forms might to enter the publishing business. While today include the modified exponential, logistic, or a mass market may be required to achieve Gompertz models (see Naert and Leeflang, profitability, the cost considerations discussed 1978). These ideas are shown graphically in above imply that productions that are finely Figure 4. tuned to a small market segment will be more While Type III products tend to be highly feasible (see Deighton et al., 1996). The seg- imperishable, often their monetary value is ment itself will not be necessarily based on not. We propose that the value of information geography but perhaps on lifestyle and inter- often exhibits a precipitous decline, as shown est. Aimed at micro-segments, these new in Figure 5. This suggests a standard pricing media may be attractive outlets to reach strategy used by booksellers and movie narrow audiences. Thus, we expect the sup- producers. Both of these industries plier side in information markets to reveal frequently exhibit skimming strategies in nonlinear, explosive growth. The most visible which initial runs are more expensive, i.e., example of this is the WWW where such hardcover editions or first-run movies. Over growth is well documented (Miller, 1996; time price is reduced until the market is Rebello, 1996). Barriers to entry are minimal, saturated. Many forms of information follow as are inventory carrying costs. Under [ 217 ] Jon Freiden, classical economic theory, this would indicate would be the most profitable (e.g., Microsoft). Ronald Goldsmith, a multitude of users. Network television provides another exam- Scott Takacs and As Type III products have high fixed costs, ple; historically, there were few providers of Charles Hofacker but low variable costs, information producers broad-based programmes, now smaller Information as a product: not goods, not services would opt for a volume strategy in order to companies targeting specific niches have maximize profits. Shareware, beta testing, proliferated. Marketing Intelligence & Planning and free product samples are examples of this 16/3 [1998] 210–220 strategy. This would suggest fewer companies Promotion considerations competing, since the high volume firms One distinguishing characteristic of Type III products is elusiveness or (Usher, 1984). To be exposed to all the information Figure 4 content in an information product is to con- Demand functions of three product types sume the product. This is the basic reason why copyright and intellectual property prob- Demand Functions lems arise so often with information prod- ucts. The goal of promotion, then, becomes one of hinting at the content, or teasing, with- Key out giving it away. The intangible aspect of Goods/Services information coupled with its low marginal Information cost makes it a likely candidate for bundling strategies. Note that software producers do not include a computer with purchase, whereas hardware producers often include software. Microsoft’s release of Windows 95 with an Internet access program bundled with the core product is also an illustration of this strategy.

Quantity Demanded Finally, the information market is likely to be highly fragmented and consist of many market niches. Targeting these segments of consumers via specialised media or direct mail may make promotion of information products easier than the mass marketing of goods and services directed to large market Price segments. Certainly, there are numerous opportunities to promote information products electronically via the World Wide Figure 5 Web. Time value of information Distribution considerations As the global economy moves towards Time Value of Information information bases, the ease with which infor- mation can be copied and distributed implies a further internationalisation of that economy. Already phone and computer - works have led to a loss of local governmental control in many cases (e.g., the use of fax machines by democracy supporters during the Tiananmen Square incident). This transnational quality of information markets, combined with reduced entry barriers, implies information markets will see heavy and increasing (Ohmae, 1990). On the one hand, technology

Value of Information Value empowers small groups to sell information in a way previously impossible. On the other hand, the competition that this will unleash implies the need for large-scale channel activity, for branding, and for promotional effort necessary to cut through the clutter. New forms of organisations within the Time may develop, whereby [ 218 ] Jon Freiden, buyers may pay for grading, sorting, and closer to relationship marketing (Vavra, 1992) Ronald Goldsmith, filtering information (Meyer and Zack, 1996). involving two-way communications. Scott Takacs and Like old-line information products such as Charles Hofacker TV Guide and Readers’ Digest, new electronic- Information as a product: not goods, not services based services act as middlemen to locate, Summary and conclusion organise, and present information to con- Marketing Intelligence & The extreme intangibility, homogeneity, and sumers. Yahoo! is an example of a company Planning non-perishability of Type III products create 16/3 [1998] 210–220 that performs these activities; other both opportunities and challenges for market- companies are arising that develop software ing. Companies that have taken advantage of products that act as information agents for information’s unique properties will likely be personal computer users. more successful (e. g. Microsoft). For both Compared to goods and services, it is easy academic and applied researchers the for information products to achieve distribu- marketing of information presents a wealth tion, especially if disseminated electronically. of unexplored topics for research. In fact, the problem of distribution ceases to The paradigm presented here suggests that be one of achieving coverage and instead marketing managers and researchers need to becomes a problem of restricting dissemina- reconceptualise what they mean by “product” tion in order to generate optimal revenue. We for consumers and not neglect the call this process antidistribution. If even only information component of their market one receiver unlawfully copies and dissemi- offerings. Moreover, Type III products satisfy nates the firm’s intellectual property (i.e., unique needs and wants not satisfied by prod- violates the copyright), it could damage the uct viewed chiefly as goods or services. We viability of the market for the property. contend that broadening the product concept Marketers need to be aware of these factors in to include information makes more explicit developing an information marketing the nature of the benefits consumers desire strategy to ensure control over distribution of from consumption. information products. should be conceptualised more broadly to Information distribution via computers account for the consumption of information depends on users having the appropriate product, and the roles of well established hardware and software to use the informa- concepts such as perceived risk, enduring tion produced in ways that are different from involvement, and opinion leadership in infor- goods and services markets. Consequently, mation markets should be explored. Some one major feature of distributing information specific questions that beg theoretical and is the need for information marketers to empirical attention are: ensure that potential users have the right 1 Do consumers use information products in equipment (peripherals, software, decoders, unique ways, including “meta- cables, etc.). This is especially true in light of information,” or information about the multidirectional flow of future informa- information? tion products. Persuading consumers to 2 Is there a limit to the value of information? adopt interactive TV, for example, depends as Information does not follow traditional much on the provision of hardware as it does economic models, other than in the sense on the other elements of the marketing mix, that it is virtually a free good. much like the spread of colour TV was 3 What type of individual is a heavy inhibited by the lack of colour programming. information consumer? Individual differ- Successful diffusion of any technological ences in information consumption should innovation depends on the market having the be explained. appropriate infrastructure. Market research itself may need to adopt new The increased intelligence at the periphery strategies and methods to develop systematic of our communications systems leads us to knowledge of information markets. The believe that all media will move over time problems of measuring the number and from unidirectional through bidirectional to characteristics of users of the Internet, for multidirectional flow. The equilibrium point example, pose a challenge to market research. for informational flow will necessarily shift Techniques, perhaps the use of simulations, towards the receiver, who can now instantly will need to be developed to learn more about and cheaply also become a sender (Hoffman how consumers interact with new informa- and Novak, 1995). The entire framework of tion media. television, print, radio, and direct mail Much has been written about the informa- advertising is currently based on a heavily tion explosion, from Moore’s to WWW asymmetric, or one-way, relationship books and consultancy industry (Hoffman between sender and receiver. This framework and Novak, 1996). However, very little until will need to give way to something that is now has been written on information on a [ 219 ] Jon Freiden, broader level. Information has its own unique Leeflang, P.S.H. and Reuijl, J.C. (1985), Ronald Goldsmith, properties, and both managers and “Advertising and industry : an empirical Scott Takacs and researchers need to take these factors into study of the West German cigarette market”, Charles Hofacker account when devising marketing plans. This Journal of Marketing, Vol. 49, Fall, pp. 92-8. Information as a product: not Levitt, T. 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