Principles of Marketing. Unit 1 Setting the Stage. Chapter 1 Marketing and Customer Value. 1.4 Evolution of the Marketing Concept

 

Figure 1.9 Evolution of Marketing (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

The Evolution of Marketing

So now you’ve gotten the bird’s-eye view of marketing as a practice, and you now know what marketing is. However, let’s take a trip back through time to look at the evolution of marketing practices and how many of today’s marketing strategies came to be. As you can see from Figure 1.9, and to use an old TV commercial tagline, you’ve come a long way, baby!

The Production Concept

In order to understand the production concept, it’s important first to understand the history of technology and mass production. Spurred on by the use of steam power, the Industrial Revolution began in the United States by the middle of the 19th century. Although much of the population was still employed in agriculture, the expansion of commerce and industry drew millions of factory workers into cities and towns. Suddenly, an abundance of manufactured goods was available to households at a rate never experienced before.

The production concept assumed that consumers were mostly interested in product availability and price, not necessarily product features. As a result, companies concentrated on high production, low costs, and mass distribution. In other words, to use the oft-used line from the movie Field of Dreams, “If you build it, they will come.” People were so hungry for mass-produced goods that companies didn’t have to do a lot of sales or marketing. The production concept is thought to have lasted from just after the Civil War (1861–1865) until the 1920s.35 For example, inventor Samuel Colt’s company began mass -producing revolvers in 1835. The Waltham Watch Company (founded in 1850 in Waltham, MA) was the first to use division of labor to mass produce watches and clocks.

The Product Concept

From the 1920s until the 1950s, the product concept dominated. With product availability a thing of the past, consumers began to favor products that offered quality, performance, and/or innovative features. As a result, companies concentrated on making superior products and improving them over time. One of the problems with this type of thinking is that marketers may fall in love with a product (known as “marketing myopia”) and may not realize what the market truly wants or needs. Consider the manner in which railroad marketers overlooked the growing competition from airlines, buses, and automobiles. In his book Marketing Myopia, author Theodore Levitt writes, “The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business.”36

LINK TO LEARNING

The Reckoning

When American cars developed a reputation for not being reliable or dependable, this opened an opportunity for Toyota and other Japanese exporters in the late 1960s and 1970s. Learn more about this issue from David Halberstam’s 1986 book The Reckoning. Read the New York Times 1986 review of this book.

The Sales Concept

By the 1950s, mass production had become the norm rather than the exception. Competition had increased over the years, and there was little unfulfilled demand in the marketplace. Marketing evolved from simply producing products that customers wanted to trying to persuade customers to buy through advertising and personal selling. The basic premise of the sales concept was that consumers and businesses need to be “coaxed” into buying, and the aim of companies was to sell what they made rather than make what consumers wanted.

The Marketing Concept

The marketing concept was built on the premise that an organization will achieve its goals when it satisfies the needs and wants of the consumer. As a result, firms began to focus on customer needs before developing products, rather than developing products and then trying to “sell” them to consumers. The marketing concept was also the start of relationship marketing— fostering long-term relationships with customers in order to ensure repeat sales and achieve stable relationships and reduced costs.

The Societal Marketing Concept

In a nutshell, the societal marketing concept is simple. Companies make good marketing decisions by considering not only consumers’ wants and needs but additionally the balance between those wants and needs and the company’s capabilities and society’s long-term interests. The concept emphasizes the social responsibilities that companies bear. This means meeting consumers’ and businesses’ current needs while simultaneously being aware of the environmental impact of marketing decisions on future generations’ ability to meet their needs.37

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

1.

The product concept focuses on ________.

1. the quality of the product a company intends to sell
2. the operations of manufacturing the product a company intends to sell
3. the selling strategies a company will use to sell the product
4. the needs of the customer

2.

Which of the marketing eras or concepts is most closely related to sustainability and environmental consciousness?

1. Production concept
2. Marketing concept
3. Societal marketing concept
4. Sales concept

3.

During which marketing era concept would companies not only produce products but also try to persuade customers through advertising and personal selling to purchase those products?

1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept

4.

Which of the following accurately represents the evolution of marketing?

1. Production, product, sales, marketing, societal
2. Product, sales, production, marketing, societal
3. Marketing, production, sales, societal, product
4. Societal, production, sales, marketing, product

5.

During the societal marketing concept, ________.

1. customers’ wants and needs were first identified as essential
2. trustfulness, honesty, and transparency became most important
3. promotional efforts to move inventory were essential
4. the customer was the focus

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The Five Most Common Mistakes in Product Development and How to Prevent Them

 

By JANA PAULECH

New products fail all the time. On average, about 40% of the products launched by organisations fail to meet their intended objectives.

Some quotes put this higher – even up to 95% – but 40% is what empirical evidence indicates (see Castellion & Markham 2013). Even if this is an underestimate, that makes product failure an even bigger issue for organisations.

“Now, hold on a minute,” you might say. “Isn’t product failure just the inevitable cost of product innovation?”

To that, I unequivocally say NO!

Developing and launching a product only to have it fail is the complete antithesis of the ‘Fail Fast’ innovation motto. You have just invested thousands of work hours and millions of dollars in developing and launching this product. In no way, shape or form is that fast.

On the other hand, a high volume of failing ideas (i.e., ideas killed before they are developed or launched) should instead be thought of as the signpost of strong product innovation. Conversely, however, we are not failing enough ideas.

Even if we took the oft-quoted “95% of products fail” (most commonly attributed to Clayton Christensen) to mean “95% of ideas fail”, then that means we’re still taking far too many ideas through to production and launch.

Estimates indicate it takes about 3000 raw ideas to make one commercially successful product (Stevens & Burley, 1997), and in some industries much more. In reality, most companies are reviewing and failing ideas several orders of magnitude less than this.

We are not failing enough ideas, and we are launching too many failing products.

Something is occurring in the broad spectrum of product development between thought and launch, leading us to keep making the same mistakes.

Below is an attempt to categorise the five most common mistakes seen in product failures with the benefit of hindsight (and maybe a sprinkling of common sense).

#1 - A Lack Of Customer Benefit

A product or product improvement needs to provide genuine benefits to a customer. These benefits will come from solving a deep problem a customer has.

Product Management 101 is ‘problem before solution’, but it still appears the message is not getting through, as too many products and product improvements are launched without a real benefit to customers.

Think of the last time someone said “we’ll put AI/ML into this”. A secondary concern is whether these benefits are enough to justify the cost. But no amount of cost-cutting or even a freemium model will solve the failure point of delivering no benefits to customers.

Juicero is a widely mocked example of a product that provides no benefit. A Wi-Fi-enabled juice dispenser that presses juice from single-serve packets is an example of a technology solution searching for a problem.

In 2017, when a Bloomberg article showed the packets could be more effectively squeezed by hand rather than with the $400 machine, this was the last blow in a 4-year journey that saw investors lose over $200 million to this failure point.

#2 - Inadequate Customer Research

A product or product improvement needs to fulfil an unmet need for a sufficiently large group of people who are willing to pay for it.

If PM 101 is ‘problem before solution’, then PM 102 must be ‘who will pay and why?’
This lesson is still frequently forgotten, as evidenced by the most common answer to the question “Who is your product for?” still inevitably being “Everyone”.

General purpose products rarely succeed, and product managers need to do the research upfront to identify whom they are solving a problem for, whether are there enough customers who want this solved, and if they will pay to have it solved.

A recent survey estimates that less than half of product development ideas are validated with customers at all, which still doesn’t guarantee that the right questions are being asked to identify a suitable target market or willingness to pay.

Segway is a well-known example of a general purpose product that no one actually needed. Most people’s transportation needs were already sufficiently solved by the current methods of transport – foot, bicycle, motorcycle, car, etc. – yet Segway touted it would solve all individual transportation needs.

In other words, this is a target market equalling ‘everyone who moves’. In reality, its use was relegated to low-volume, niche transportation cases in urban settings like police, postal services and tourists.

#3 - No Clear Differentiation In Market

A product needs to be sufficiently different enough in a buyer’s mind to sway them to purchase.

In a world where your product is never the only solution to a problem, you are asking a customer to choose you over another solution that may provide similar benefits.

It may be that even if your product has no direct competitors, the competitor is customers ‘doing things the way they have always done things’, which offers much less activation energy to change than ‘doing things with your product’.

One final consideration is how your product will differentiate within your own product portfolio.

Coca-Cola C2 was a costly lesson in product differentiation within a portfolio. It was marketed as having the same Coke taste but with only 50% of the calories, and was targeted at a young male demographic concerned by calories but not interested in the perceived femininity of Diet Coke.

As it turned out, the benefit of fewer calories wasn’t distinctive enough from the current Coke offerings to sway behaviour. Low sales – primarily the result of the cannibalisation of Coke & Diet Coke sales – led to the discontinuation of the product in less than 12 months.

A year later, the more differentiated “zero calories, full flavour” product, Coke Zero, was launched successfully, making C2 a short but costly lesson in product differentiation.

#4 - Poor Design & Execution

A product or product improvement needs to be ready to meet customer demand & expectations at launch.

Untested or faulty products diminish the product’s reputation over the long term, and it may never recover. Worse yet, faults may do long-term damage to the organisational brand if it goes against a customer perception of brand quality, safety or security.

Unlike previous failure points, a successful launch can precede a product failure if a product fails to scale to demand. Performance issues or delivery delays can harm a product’s commercial success even if the original product is not faulty.

Windows Vista is a well-known punchline for how not to design and develop a software product. A host of compatibility and performance problems lead to a revolt in even their most loyal customer base.

This discontent even allowed their competitor, Apple, to monopolise – making the situation appear even worse with their advertising campaign featuring “I’m a Mac… and I’m a PC”.

While some issues with Vista were able to be solved, the Vista product never recovered its reputation and arguably cost Microsoft some of its reputation too.

#5 - Ineffective Product Marketing

A product or product improvement needs to create positive sentiment & awareness in the customer’s mind at launch.

There are about 30,000 products launched every year, so getting mindshare at the critical time of launch is imperative. The most common issue here is a lacklustre launch due to a lack of forward planning and support.

A poorly planned launch is unlikely to make the news (in fact, that is the point), but worse yet is product marketing launches that make the news for all the wrong reasons.

Launching products at the wrong time or with the wrong message may cause reputational damage. The saying “no publicity is bad publicity” doesn’t hold if significant customer loyalty, positive sentiment or goodwill is lost.

Airbnb’s campaign for ‘floating world’ stays launched amid Hurricane Harvey, which flooded large swathes of the USA. This is a great example of poor timing.

Sony launched the PSP white console with a print advertisement featuring an angry-looking woman dressed in all white grabbing the face of a terrified black woman alongside the words “White is coming” – never a good message.

How To Avoid Making These Mistakes

So, now that you’re aware of the five most common mistakes made in product development, how do you avoid making these mistakes?

It all comes down to having a process that focuses on addressing these failure points before they can derail your product development.

Most Lethal Failure Points Occur In Product Discovery

It is important to note that of the five failure points above, some are inherently more lethal to the future of a product than others. If you have a product that solves a deep problem for a defined target market and delivers true benefits, it may be able to outlast some hiccups with execution or product marketing to grow over time.

This assumes that those issues don’t fundamentally debase the customer perception of the product or organisation’s brand.

However, the converse is not true.

No amount of flawless technical execution or product marketing will save a product that solves no problems, provides no benefits, and has no customers.

This means the most critical thing that can be done to avoid these product failure points is to cover the ‘product thinking’ basics every time:

• Who is the product for?
• What problem does it solve for them?
• What benefit does it provide to them?
• What benefit does it provide to us (e.g., will they pay)?

Validating these basics with real customers rather than assuming that you know what the customers want avoids stacking the case with false data. Finding and talking to customers will help validate if you have the right target market and if the problem is one they want to be solved and would pay for.

Your Product Process Should Focus On Checking
 For Failure Points

If most product failures could be avoided by sticking to the product thinking basics, then why do we still launch so many failing products and fail too few ideas?

The most likely culprit is the lack of a repeatable and structured product process that emphasises the basics of product thinking and embeds checks for product failure points along the way.

A successful product management process should:
1. Test for each of the product failure points during the process.
2. Provide structured decision points when an idea can be culled or continued.
3. Provide a common language for stakeholders to understand how decisions are made.

Dividing your product management process into phases or stages can help to identify failure points and provide a common language for where an idea is in the process.

Ensuring the most lethal failure points are tested early also helps assess more ideas and reduces any sunk cost or anchoring bias.

Take the Brainmates product management process for example, which occurs over three phases:

Innovate Phase

A structured process for innovation & discovery that focuses on testing many ideas fast. This phase is key to avoiding the most lethal failure points. Structuring product thinking – for who, what problem, what benefits and positioning – into this phase and testing with customer research will help to remove bad ideas early. The majority of ideas should be removed in this phase. Remember, for every successful product, there are about 2999 failed ideas. We need to fail more ideas earlier in our product management process.

Design Phase

A phase focused on deep ‘as is’ current state customer understanding. The aim is to identify real problems for real people, and guardrails to guide solution design and development. Guardrails should be focused on the customer and market needs required to solve the problem, rather than what can be delivered by a specific date. Prioritisation of these guardrails can reduce scope creep in the final phase.

Implement Phase

A phase to focus on preparing for product launch and testing solution readiness against the design phase guardrails. A common understanding of customer and market guardrails across the solutions team means solutions are tested throughout development and avoid poor customer outcomes on release. Product managers spend the majority of their time in this phase preparing for a successful launch in collaboration with their marketing colleagues.

Fail More Ideas To Launch Fewer Failing Products

In summary, failure will happen – but failing where others have failed before doesn’t have to!

Having a process that focuses on avoiding the most common failure points is the best way to avoid making the same mistakes and minimise the cost of failure to your organisation.

Weed out the most lethal failure points early with a process focused on the basic elements of product thinking – who is our customer, what problem are we solving and for what benefit (for us & them). Most ideas will fail the test, which is to be expected with strong product innovation.

The final failure points can then be avoided with strong customer and market-centric guardrails for solution design and development and increased focus across product and marketing on preparing early for launch, because you can never be too prepared.

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