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[Instructor] Hello and
welcome to the lecture

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on the first P of our marketing mix,

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stands for product, so
this is about product

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and more broadly, service to development,

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how do you create and offer a
product that will create value

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for customers and help
you fulfill the mission

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of the business or the organization?

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Here's an overview of what we're gonna do,

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we're gonna talk about innovation,

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we're gonna talk about traits
for success for a product,

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we're gonna talk about the MVP model

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that does not stand for
most valuable player,

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but minimum viable product,

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we're gonna talk about
the product life cycle

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and a model of adoption
and diffusion of innovation

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and of new products.

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So new products can be
delivered in a few ways.,

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you can add new functionality
to an old product

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or a new product to an old line

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and one of the things I
want you to think about

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is innovation.

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And one way of thinking
about innovation is

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how disruptive to consumption
patterns is the product.

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So I have here photos of a
rotary phone, a stereo system,

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a multi-component stereo
system like I used to have

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back in the day and a desktop computer,

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and thinking about how in many ways,

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and probably in order from top to bottom

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these items in the photos
are rather obsolete now,

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you really don't see them a lot,

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especially except as some
sort of retro statement,

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you really don't see a
lot of rotary phones,

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and in many ways they've been
replaced by these three things

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that you see in the bullet points here;

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cell phones have largely
replaced rotary phones,

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iPods or actually cell
phones have replaced this

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and headphones or earbuds have largely

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replaced multi-component stereos

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and laptops have largely
replaced desktops.

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So you can think about
the innovation has been

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how disruptive has it been,
has it made products obsolete?

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And has it really changed
how people consume things,

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where they buy things.

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So one thing I was thinking about is

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how few people have landlines now,

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they're becoming more and more rare,

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I would say most folks who
have a landline, for example,

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my 80 something parents have a landline,

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most young folks I know don't,

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few folks have a multi
component stereo now,

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I mean, most folks stream it online,

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you really don't buy music
on a piece of plastic

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as often anymore, so these items
have been really disruptive

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to the products that they have replaced.

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You can think of this as
three types of innovation,

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there's sort of a continuum
rather than distinct categories

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but at the one end you can
think of it as continuous

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where there's only a minor modification,

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so taking an existing product
and offering it a new flavor,

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new color, new package,
new size, et cetera.

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In the the middle is what we think

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of as dynamically continuous
which is there's a big change,

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but it doesn't disrupt, so a hybrid car

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is pretty different from a regular car,

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a CD is a different
product than a vinyl album

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but it's still a piece of plastic,

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a hybrid car it's still a car,

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a cordless phone is still
connected to a landline,

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but then you can think about discontinuous

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which really is a fundamental change.

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So PCs, personal computers
have certainly changed

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our lives in countless ways;

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streaming movies on the
internet, social media,

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there really wasn't anything before that,

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MP3 files have meant that
we share and listen to music

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electronically rather than
buying a piece of plastic

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cell phones mean that
you don't have to be home

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that you can talk to people as
well as all the other things

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that phones do, text and
taking pictures and videos

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and all kinds of things like that.

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Here are a number of links to websites

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which talk about how to innovate,
the nature of innovation,

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how to do it, what to look
for, why it's an advantage,

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lots of questions like this,

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so please have a look at these

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before our in-class discussion.

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Next, I'm going to walk you
through the characteristics

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of success, and I will go through each one

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in the next few slides.

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The first one is superior advantage

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that customers must perceive
that your product or service

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is better, there must
be something about you

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that will make them change,
that will make them try it,

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that will make them keep buying it.

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And think back to our
customer value equation

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that in some way you must be
offering perceived benefits,

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there's something of
value, something better,

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and or at a lower cost, so might
be the actual monetary cost

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they pay as well as time, convenience,

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but you really have to offer something

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that is superior compared
to what they're buying now.

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Next, it should be compatible,

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so it should align well
both with your business

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and with the community.

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So you can think about that your products

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should align with your values

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as well as it should be a good fit

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for the people you're trying
to sell to in their attitudes,

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their norms or behaviors.

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So a lot of what you say
in your mission statement

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might help inform whether
this product is compatible,

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so on the strength and weakness side

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of the SWOT analysis as
well as the community,

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so the opportunity and threat
side, is it a good fit?

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Does it put you into
that top right quadrant

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of the SWOT analysis of
strengths greater than weaknesses

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and opportunities greater than threats?

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Next is simplicity, it should
be fairly straightforward

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how to use it, that it should be something

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that people can pick up and use,

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the instructions should be pretty simple

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and straightforward
having only basic skills

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that the more that people can
easily use it and consume it,

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the greater the chance of success

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and the more sort of hurdles that exist

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toward the using it makes it
less likely to be successful.

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Next is observability

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and this goes back to
the superior advantage,

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that where the innovation
is, why it's better,

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why it's different, why it's improved,

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should be really obvious, it
should be either observable

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or very easily communicated.

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Next is trialability,

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so you don't want something
that's a huge risk

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that you can do things like free samples

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an introductory price, a
smaller trial package size,

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but he more that the consumer
can kind of take your product

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for a test drive, figuratively speaking,

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can try it out, try a
sample, a small size,

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the more that you make it easy for them

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to try it at a low, you
know, low cost to them,

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not a lot of effort, not a lot of money

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to try it for the first time

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but the more likely it will be successful.

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And last is low perceived risk,

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so here you want to decrease the risk,

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so in things like
warranties and guarantees,

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that's ways that if they don't
like it, they can return it,

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so thinking back, it's sort
of related to trialability

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but in this case it's
what kind of assurance,

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especially if they do make

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a fairly large upfront investment,

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what can you do to assure them
that if they don't like it,

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that if it all goes wrong,
they can re return it?

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Or, you know, offering some
sort of warranty or guarantee

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that they can get their money
back if things go wrong.

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Next, I'd like to talk to you about MVP

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which stands for a minimum viable product.

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So it is the version of a new product

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that will allow you to do two things;

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learn and measure what works,
learn about your product,

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get feedback from your customers

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with the least amount of time and money

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and effort put forth.

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Here are two links to websites
that tell you more about MVP.

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So as is suggested here, MVP
should be an iterative cycle,

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so you try something out,
you offer it, you measure it,

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you see how it does, you learn from that

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and then you rebuild, you re-innovate,

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you put your learnings

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into account and re-offer and
a round and round that you go.

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So an example of this might be

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if you have a food business,

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let's say that you want to make Thai food

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or something like that.

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So rather than invest in a huge, you know,

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paying rent and buying an oven
and a stove top and a hood,

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you might want at first to
just try to cater an event

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maybe with some friends,
make a few dishes,

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see how they like it, then measure,

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what did you like?

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How spicy was it?

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Was it good?

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What was your favorite?

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Would you buy this?

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And then take that
feedback and then maybe,

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well, once you've sort of perfected that

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move to a food truck.

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So here you are mobile,
you have less overhead,

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continue to learn what did you like?

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What did you not like, et cetera

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and then finally, once
you feel like you really

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have a viable product that
you can scale up with,

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then rent restaurant space.

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So again, these are other words,

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so a minimum viable product
is the smallest thing

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that you can deliver
that will create value

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and it also gets some of the bonus back.

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So you not only get
information back hopefully,

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you're getting a little
bit of money back too

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and it's basically the idea
of start small, start lean,

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and then build from
there as you learn more.

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So MVP maximizes revenue at
least for that small item

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as well as really maximizing information

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while minimizing cost, effort, and time

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and it should also very
much minimize your risk.

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The next topic I would like to
cover is the diffusion model.

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So this is the idea, this was
developed by Everett Rogers

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in the early 1960s and he
noticed that there was a pattern

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of how farmers adopt new technologies.

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And here in this graph,
you can think about time

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being on the X axis and
Y being when folks adopt

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how many people are adopting
or sort of who adopts when.

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So you can see at the very far left

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that there's a few innovators who try it,

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then you get a get early adopters

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and then in the middle of this bell curve

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are the early and late majority

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and then at the end are the laggards,

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those who are the very last who adopt it.

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Now he developed it for
adoption of new technologies

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but it's also been found
to be very effective

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in modeling how consumers
adopt and buy new products.

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So in this model, the innovators are those

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that really like to take risks,

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they like new things,
they wanna try new things,

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but they will also sometimes ignore norms.

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So in fashion they'll
sort of be a trendsetter,

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try things that really haven't
been tried yet, you know,

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ignore the fashion norms of the time

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and do something that
might be seen as, you know,

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more outrageously.

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The early adopters then are the ones

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that once the innovators
did, they see it, they say,

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this seems cool and are
among the next wave to do it

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and they very often
become the opinion leaders

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and they sort of help to set
the stage for further adoption,

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so we talked about opinion
leaders like food critics,

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technology critics, bloggers,
or just friends of yours

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who are the first ones to try new things,

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so they will often like
help to promote it.

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The majority then, the next
to the two biggest parts

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of the bell curve sort of are the ones

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that only start to adopt it
as it becomes more mainstream

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and especially the early
majority tend to be

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a little bit cautious,
but they can really help

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to legitimize it that
once it starts to be seen,

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norms change, it becomes the norm,

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and they helped to really
help it go mainstream.

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The late majority are those
who tend to be skeptical,

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they're on the sort of
the downside of the curve,

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they really wait until it
becomes like truly established

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like most people are doing
this and in many cases,

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sort of do it only as
social pressure dictates.

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And finally there's the
laggards who are much like

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the majority only even more so

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they're very suspicious of new things,

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they're sort of set in their ways,

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in many cases, they're
sort of forced to adopt.

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So, I can think of a case I
was a laggard with smartphones

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and still had a flip phone
until just, I don't know,

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four years ago or so.

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And basically like so many
of my friends had iPhones

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and they worked so much
bit better could, you know,

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I still had to ask for directions
and like print those out,

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and finally, you know,
I felt like, you know,

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I'm so far behind the curve
I can't hold out anymore

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and I got a smartphone.

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And in many cases as well

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these are folks from the
lowest socioeconomic status,

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so they can't afford maybe
to have the newest things.

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Finally, I wanna talk to you
about the product life cycle

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and this is the idea that just as humans

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go through life cycles and all, you know,

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biologic organisms that products do too

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and they tend to follow a
fairly predictable pattern,

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where they're introduced,
they go through some growth,

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they have maturity
where they're well known

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and kind of mainstream, and then a decline

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when they sort of go out of fashion

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and are replaced by a more innovative,

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a newer product that then
starts at the introduction phase

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and the sales start to decline.

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So, I'll just let you read
these, please take some time

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to read these but this is how the four Ps,

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they're calling it the
distribution instead of place

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00:21:13,380 --> 00:21:15,935
but I'll go through each of these slides

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or I'll leave them here
and let you read them

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and this is what you do
for each of the four Ps

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for each stage of the product lifecycle.

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Here's the one for growth,
here's the one for maturity,

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feel free to pause and read these,

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and finally, here's the one for decline.

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So here is really where
you have to re-innovate,

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so you have to add new features,

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you may wish to, you know,
just sell it to a loyal niche

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or it may be a case
where you stop making it,

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you liquidate inventory
or find another firm

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that are willing to sell it.

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And here you can see
that the last two graphs

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00:22:22,890 --> 00:22:25,650
sort of laid on top of each other

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00:22:25,650 --> 00:22:30,650
and it sort of talks about
the product lifecycle

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00:22:30,930 --> 00:22:35,070
laid over the diffusion of innovations.

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You can see that these
sort of mirror each other,

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00:22:38,370 --> 00:22:41,700
the top is sort of from the supply side

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00:22:41,700 --> 00:22:45,993
and the bottom is more
from the demand side.

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So, this is what we did,

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hopefully these all make sense.