I would like to take another view of Transreality products. We tend to think of products as physical. It is not just the existence of physical and virtual products that defines Transreality. Webkinz (http://www.webkinz.com/index.html.) has shown that products can transcend both. Webkinz allows children to play online with virtual representations of their real life toys. The purchase of a real life Webkinz toy can lead to awareness of the virtual toy. Or the virtual toy can lead to awareness of the real world toy. What links the real and virtual are the services provided that enhance the value and enjoyment of the real/virtual toy.
Most products have services related to them. It may be as simple as the label on a can showing a picture of what is inside. Or service may be an important part of a product. How valuable is a cell phone without a service provider. Most business that sells a product has to offer a number of services to the customer to stay in business. A customer has to be aware of a products existence before they can make any purchasing decisions about it. We tend not to think of advertising as a service, but what is the Yellow Pages. It is nothing more than a collection of advertising arranged in a way that provides value. The same can be said for a method of payment. Unless a business wants to go broke there must be a method of payment. However, the multiple options that exist today provide value to the customer. Accepting a credit card so a customer can buy now and pay later adds value to the customer. Otherwise the credit card industry would never have existed as it does today. Since services can be offered through many different channels, services themselves can be thought of as Transreal. The same question about a product can be answered for one person by a FAQ on a web page, or by a customer service representative on the phone. Both means offer value to the customer; the method of delivering said value is just different.
So, back to the physical product. People tend to think of Transreality products as virtual world products existing as digital images that later are made into real world products. This is a very limited view. The first really Transreality products can be traced back to the days of the mail order catalog. The “Wish Book” was a service provide to the customer. It contained representations of physical items that one could order and have delivered through the mail. Many times the “Wish Book” contained items that the customer had never seen before or new versions of items they were familiar with. The combined services of the catalog and ability to order through the mail allowed people to purchase items on faith. By this I mean that they were buying items based on nothing more than a picture and a simple description of the item. Unless they knew someone who had purchased the product or had seen one in real life, the picture and description had to supply enough trust in the product for the customer to make the purchase. This trust factor exists today. Amazon in many ways has become the “Wish Book” of today. Their system of reviews and product information allow customers to have faith in the products that they purchase through Amazon. In fact some studies have proven that customers are willing to pay a premium in order to purchase from vendors such as Amazon that they trust. The Transreal service that Amazon provides is an important part of the product to the customer thinking about purchasing an item that they have never seen.
When does a product exist? If you purchase a PC from Dell or a Truck from Toyota the odds are good that the product you get did not exist at the time you placed your order. The customer is trusting the manufacturer to produce what they have ordered. They are basing their expectations physical and/or virtual representations of the product they expect to receive. The manufacture is relying on a manufacturing system and supply chain to produce and deliver the product to the customer’s expectations. The only difference between today and the “Wish Book” era is that today we have customer expectations of faster delivery and business live in the world of Lean manufacturing and Supply Chain. However, the basic principals of trust and fulfilling that trust are still the same. Trust is the key to Transreality products.
This trust will also be the key to some of the negative aspects of Transreality products. The big one being the ability of digital information to be readily copied. Any product that generates a large enough consumer demand will have someone else try to also find a means to fulfill the same demand. That is what competition is all about. It is no different if a product starts out life as a collection of digital images first. With the exception of intellectual property rights such as patents and copyrights, there is nothing preventing others from fulfilling customer demand that you have created. If the product has been reduced to the stage of a commodity then price will be a major factor. If you can keep the product from becoming a commodity and build trust and loyalty you may be able to compete on brand. TY makers of those beanbag animals have a very loyal following. If you check around you will find many companies selling beanbag animals. Every time TY creates a new one that is a hit you can count on a bunch of similar beanbag animals being sold by their competitors. Fortunately for TY, their customers are willing to pay a premium for a genuine TY toy. Another good example is a small Hosta grower that I know. He does not have the money to patent his plants. When he puts one on the market he knows that the first people who will be buying it will be the large commercial growers who will be tissue culturing it to produce thousands of plants for sale. My friend markets all of his plants on the Internet. His plan to deal with competition is simple. He will be the only one with plants for the first two years. He can do this because it takes two years to go from tissue culture to marketable Hosta plant. So he produces what he thinks will sell for two years. The year before he has the first year’s worth ready for market he adds his line of new introductions for next year to his Web catalog. He works the blogs, etc. to generate demand. In this way he can capture the higher prices of limited availability before the item becomes a commodity and he has to compete on price.
Brand loyalty and time to market will be the two most important factors for true Transreality products. Logistic networks like Li Fung (http://www.lifung.com/eng/global/home.php) will play a major role in these products.
Li Fung manages the supply chain for time sensitive consumer goods. The Lean Supply Chain as well as Lean Manufacturing will be standard practices for the companies that capture the first real demand from a product that is transformed from virtual to real. It will not matter if it is a toy, jewelry, clothing, etc. Transreality will offer opportunities for short-lived trends and mass customization. The companies that can adapt to this environment will be the big winners in the future. Companies will have to look beyond just the cost of manufacturing Transreality products to the Total manufacturing and logistic costs. Time really will mean money as new products ride the path to becoming a commodity. Being the lowest cost producer may not be as important as capturing the higher profit margins at the beginning of the commoditization cycle. Cost may not help much if the customer has already identified any product but producer X as a cheap knockoff and inferior status symbol.
My spare time is up so I will end here on Transreality. Hopefully I can continue after Labor day.
Posted by alexanderkeenan 
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Posted by alexanderkeenan 
Posted by alexanderkeenan 