The first of the four Ps is product. A product is really anything that fulfills a customer need or want. We usually think of a product as a tangible good. However, it could also be a service or even an idea. As we discussed earlier in most categories, there are multiple firms competing for the same customers. So in order to be successful, a product must have a distinctive selling proposition. In marketing, we typically refer to this as a product's positioning. This positioning can be either functional, based on actual product differences or symbolic, based on how a product is perceived. For example, Coke, Classic Coke fulfills our need for thirst as well as our desire for belonging and is positioned as being an original and iconic cola. For example, we all know that Coke is it. The product portion of the marketing mix has a number of key concepts, including product quality, managing a firm's product line, and product service support. In this module, we'll focus on two fundamental concepts, product development and brand management. Innovation is viewed as a critical element in the success of most products. Firms that are more innovative typically enjoy greater market success. Good examples of this are firms such as Apple, Google, and Netflix, which create new products and new business models. Marketers typically refer to these types of firms as engaging in a radical innovation, which disrupts traditional practices. Since these types of radical innovations are quite rare, most firms engage in what is known as incremental innovation, which focuses more on improving existing products rather than creating entirely new ones. For example, throughout its history, Coke has been very successful in introducing a number of extensions to its cola line by launching products such as Diet Coke, or Coke Light in some places, Coke Zero, There we go and, Cherry Coke. This type of line extension strategy can be quite successful by helping our firm target different offerings to different segments. For example, Diet Coke is targeted towards women while Coke Zero is targeted towards men. To develop these new products, most firms employ a cross-functional team comprised of managers from across different parts of this business, including marketing, sales, operations, and R&D. These team members typically follow a carefully scripted product development process such as the stage-gate method in which development of a product systematically moves from conceptualization to launch through various stages. At each stage, data is collected, progress is monitored, and approval from higher authority is sought. This process is usually quite secretive in nature and those outside the firm usually have very little involvement. For example, during the stage-gate process, customer insights are solicited at only two points, the beginning and the end. Moreover, because this process is meant to be confidential in nature, only a small amount of customers are asked to provide input. Although these types of development processes are well-established and carefully managed, most new products still fail. A brand is a name, symbol, or design that differentiates a firm's product from its competitors. This differentiation can represent both tangible differences such as better taste or intangible differences such as the way a product may make you feel. For example, the Coke brand is differentiated not only by its name but also by the font it uses, the design of the bottle, and the color red. Strong brands help consumers decide what to buy and provides them not only with greater confidence, but also a sense of identity. Brands are also beneficial to firms. Strong brands usually charge higher prices, enjoy greater loyalty, and experience higher profitability. This results in what marketers call brand equity, which the value of a brand over a generic product in the same category. Brand equity is a substantial intangible asset for many firms. For example, Coke's brand equity is estimated to be worth over $90 billion. This represents over 40% Of Coke's total market value. Given this high value placed on brand equity, most firms placed considerable emphasis on building strong brands by carefully choosing brand elements such as a brand name or color, building strong associations through advertising campaigns, and protecting their brands through trademarks. Now, usually these functions are closely managed by a brand management team whose main job is to manage the health of the brand. Both product development and branding decisions are typically made by a firm's brand managers with a little input from customers or other external entities. For example, in the typical new product development process, customer input is typically solicited at only the concept testing stage or the test market stage. Even then, typically only a small number of customers are asked to provide input. This firm-centered approach is beginning to break down due to the rise of digital tools. For example, the Chicago-based T-shirt manufacturer Threadless has no design staff. All of its T-shirts are designed and selected by its customers using a web-based platform which designs are submitted, viewed, and voted upon. Thus in this new digital marketing environment, we are moving from firm-created products and brands to co-created products and brands. In this module, we'll discuss how this co-creation process is changing how firms create products and manage brands. I think you will find this discussion to be eye-opening and then may likely challenge the way you think about this aspect of the marketing mix.
