[Instructor] Hello and welcome to the lecture
on the first P of our marketing mix,
stands for product, so this is about product
and more broadly, service to development,
how do you create and offer a product that will create value
for customers and help you fulfill the mission
of the business or the organization?
Here's an overview of what we're gonna do,
we're gonna talk about innovation,
we're gonna talk about traits for success for a product,
we're gonna talk about the MVP model
that does not stand for most valuable player,
but minimum viable product,
we're gonna talk about the product life cycle
and a model of adoption and diffusion of innovation
and of new products.
So new products can be delivered in a few ways.,
you can add new functionality to an old product
or a new product to an old line
and one of the things I want you to think about
is innovation.
And one way of thinking about innovation is
how disruptive to consumption patterns is the product.
So I have here photos of a rotary phone, a stereo system,
a multi-component stereo system like I used to have
back in the day and a desktop computer,
and thinking about how in many ways,
and probably in order from top to bottom
these items in the photos are rather obsolete now,
you really don't see them a lot,
especially except as some sort of retro statement,
you really don't see a lot of rotary phones,
and in many ways they've been replaced by these three things
that you see in the bullet points here;
cell phones have largely replaced rotary phones,
iPods or actually cell phones have replaced this
and headphones or earbuds have largely
replaced multi-component stereos
and laptops have largely replaced desktops.
So you can think about the innovation has been
how disruptive has it been, has it made products obsolete?
And has it really changed how people consume things,
where they buy things.
So one thing I was thinking about is
how few people have landlines now,
they're becoming more and more rare,
I would say most folks who have a landline, for example,
my 80 something parents have a landline,
most young folks I know don't,
few folks have a multi component stereo now,
I mean, most folks stream it online,
you really don't buy music on a piece of plastic
as often anymore, so these items have been really disruptive
to the products that they have replaced.
You can think of this as three types of innovation,
there's sort of a continuum rather than distinct categories
but at the one end you can think of it as continuous
where there's only a minor modification,
so taking an existing product and offering it a new flavor,
new color, new package, new size, et cetera.
In the the middle is what we think
of as dynamically continuous which is there's a big change,
but it doesn't disrupt, so a hybrid car
is pretty different from a regular car,
a CD is a different product than a vinyl album
but it's still a piece of plastic,
a hybrid car it's still a car,
a cordless phone is still connected to a landline,
but then you can think about discontinuous
which really is a fundamental change.
So PCs, personal computers have certainly changed
our lives in countless ways;
streaming movies on the internet, social media,
there really wasn't anything before that,
MP3 files have meant that we share and listen to music
electronically rather than buying a piece of plastic
cell phones mean that you don't have to be home
that you can talk to people as well as all the other things
that phones do, text and taking pictures and videos
and all kinds of things like that.
Here are a number of links to websites
which talk about how to innovate, the nature of innovation,
how to do it, what to look for, why it's an advantage,
lots of questions like this,
so please have a look at these
before our in-class discussion.
Next, I'm going to walk you through the characteristics
of success, and I will go through each one
in the next few slides.
The first one is superior advantage
that customers must perceive that your product or service
is better, there must be something about you
that will make them change, that will make them try it,
that will make them keep buying it.
And think back to our customer value equation
that in some way you must be offering perceived benefits,
there's something of value, something better,
and or at a lower cost, so might be the actual monetary cost
they pay as well as time, convenience,
but you really have to offer something
that is superior compared to what they're buying now.
Next, it should be compatible,
so it should align well both with your business
and with the community.
So you can think about that your products
should align with your values
as well as it should be a good fit
for the people you're trying to sell to in their attitudes,
their norms or behaviors.
So a lot of what you say in your mission statement
might help inform whether this product is compatible,
so on the strength and weakness side
of the SWOT analysis as well as the community,
so the opportunity and threat side, is it a good fit?
Does it put you into that top right quadrant
of the SWOT analysis of strengths greater than weaknesses
and opportunities greater than threats?
Next is simplicity, it should be fairly straightforward
how to use it, that it should be something
that people can pick up and use,
the instructions should be pretty simple
and straightforward having only basic skills
that the more that people can easily use it and consume it,
the greater the chance of success
and the more sort of hurdles that exist
toward the using it makes it less likely to be successful.
Next is observability
and this goes back to the superior advantage,
that where the innovation is, why it's better,
why it's different, why it's improved,
should be really obvious, it should be either observable
or very easily communicated.
Next is trialability,
so you don't want something that's a huge risk
that you can do things like free samples
an introductory price, a smaller trial package size,
but he more that the consumer can kind of take your product
for a test drive, figuratively speaking,
can try it out, try a sample, a small size,
the more that you make it easy for them
to try it at a low, you know, low cost to them,
not a lot of effort, not a lot of money
to try it for the first time
but the more likely it will be successful.
And last is low perceived risk,
so here you want to decrease the risk,
so in things like warranties and guarantees,
that's ways that if they don't like it, they can return it,
so thinking back, it's sort of related to trialability
but in this case it's what kind of assurance,
especially if they do make
a fairly large upfront investment,
what can you do to assure them that if they don't like it,
that if it all goes wrong, they can re return it?
Or, you know, offering some sort of warranty or guarantee
that they can get their money back if things go wrong.
Next, I'd like to talk to you about MVP
which stands for a minimum viable product.
So it is the version of a new product
that will allow you to do two things;
learn and measure what works, learn about your product,
get feedback from your customers
with the least amount of time and money
and effort put forth.
Here are two links to websites that tell you more about MVP.
So as is suggested here, MVP should be an iterative cycle,
so you try something out, you offer it, you measure it,
you see how it does, you learn from that
and then you rebuild, you re-innovate,
you put your learnings
into account and re-offer and a round and round that you go.
So an example of this might be
if you have a food business,
let's say that you want to make Thai food
or something like that.
So rather than invest in a huge, you know,
paying rent and buying an oven and a stove top and a hood,
you might want at first to just try to cater an event
maybe with some friends, make a few dishes,
see how they like it, then measure,
what did you like?
How spicy was it?
Was it good?
What was your favorite?
Would you buy this?
And then take that feedback and then maybe,
well, once you've sort of perfected that
move to a food truck.
So here you are mobile, you have less overhead,
continue to learn what did you like?
What did you not like, et cetera
and then finally, once you feel like you really
have a viable product that you can scale up with,
then rent restaurant space.
So again, these are other words,
so a minimum viable product is the smallest thing
that you can deliver that will create value
and it also gets some of the bonus back.
So you not only get information back hopefully,
you're getting a little bit of money back too
and it's basically the idea of start small, start lean,
and then build from there as you learn more.
So MVP maximizes revenue at least for that small item
as well as really maximizing information
while minimizing cost, effort, and time
and it should also very much minimize your risk.
The next topic I would like to cover is the diffusion model.
So this is the idea, this was developed by Everett Rogers
in the early 1960s and he noticed that there was a pattern
of how farmers adopt new technologies.
And here in this graph, you can think about time
being on the X axis and Y being when folks adopt
how many people are adopting or sort of who adopts when.
So you can see at the very far left
that there's a few innovators who try it,
then you get a get early adopters
and then in the middle of this bell curve
are the early and late majority
and then at the end are the laggards,
those who are the very last who adopt it.
Now he developed it for adoption of new technologies
but it's also been found to be very effective
in modeling how consumers adopt and buy new products.
So in this model, the innovators are those
that really like to take risks,
they like new things, they wanna try new things,
but they will also sometimes ignore norms.
So in fashion they'll sort of be a trendsetter,
try things that really haven't been tried yet, you know,
ignore the fashion norms of the time
and do something that might be seen as, you know,
more outrageously.
The early adopters then are the ones
that once the innovators did, they see it, they say,
this seems cool and are among the next wave to do it
and they very often become the opinion leaders
and they sort of help to set the stage for further adoption,
so we talked about opinion leaders like food critics,
technology critics, bloggers, or just friends of yours
who are the first ones to try new things,
so they will often like help to promote it.
The majority then, the next to the two biggest parts
of the bell curve sort of are the ones
that only start to adopt it as it becomes more mainstream
and especially the early majority tend to be
a little bit cautious, but they can really help
to legitimize it that once it starts to be seen,
norms change, it becomes the norm,
and they helped to really help it go mainstream.
The late majority are those who tend to be skeptical,
they're on the sort of the downside of the curve,
they really wait until it becomes like truly established
like most people are doing this and in many cases,
sort of do it only as social pressure dictates.
And finally there's the laggards who are much like
the majority only even more so
they're very suspicious of new things,
they're sort of set in their ways,
in many cases, they're sort of forced to adopt.
So, I can think of a case I was a laggard with smartphones
and still had a flip phone until just, I don't know,
four years ago or so.
And basically like so many of my friends had iPhones
and they worked so much bit better could, you know,
I still had to ask for directions and like print those out,
and finally, you know, I felt like, you know,
I'm so far behind the curve I can't hold out anymore
and I got a smartphone.
And in many cases as well
these are folks from the lowest socioeconomic status,
so they can't afford maybe to have the newest things.
Finally, I wanna talk to you about the product life cycle
and this is the idea that just as humans
go through life cycles and all, you know,
biologic organisms that products do too
and they tend to follow a fairly predictable pattern,
where they're introduced, they go through some growth,
they have maturity where they're well known
and kind of mainstream, and then a decline
when they sort of go out of fashion
and are replaced by a more innovative,
a newer product that then starts at the introduction phase
and the sales start to decline.
So, I'll just let you read these, please take some time
to read these but this is how the four Ps,
they're calling it the distribution instead of place
but I'll go through each of these slides
or I'll leave them here and let you read them
and this is what you do for each of the four Ps
for each stage of the product lifecycle.
Here's the one for growth, here's the one for maturity,
feel free to pause and read these,
and finally, here's the one for decline.
So here is really where you have to re-innovate,
so you have to add new features,
you may wish to, you know, just sell it to a loyal niche
or it may be a case where you stop making it,
you liquidate inventory or find another firm
that are willing to sell it.
And here you can see that the last two graphs
sort of laid on top of each other
and it sort of talks about the product lifecycle
laid over the diffusion of innovations.
You can see that these sort of mirror each other,
the top is sort of from the supply side
and the bottom is more from the demand side.
So, this is what we did,
hopefully these all make sense.