Putting It Together: Product Marketing

In this module we've covered a wide range of topics related to the role of the product in the marketing mix. As you've seen, creating clear value for the customer, understanding the product life cycle, and creating a balanced product portfolio are all interrelated aspects of thinking about the customer and market behavior.

At the beginning of this module we discussed the success of Uber's ride-sharing product. Let's take another look at it from the viewpoint of the new-product development process.

Recall that the business model canvas is a tool companies use to lay out the business case for a new product concept. Figure 1, below, is an example of how Uber's business model canvas might have looked when the founders cooked up the idea for their ride-sharing offering. Given what we know now about the product's success, it's pretty clear that Uber hit its mark: the company identified and delivered on a value proposition with incredible product-market fit.

The Business Model Canvas. Designed for: Uber ride sharing example. Designed By: Marketing. Date: Version: . Key Partners, driver contractors in each city, driver recruiters and certifiers in each city. Key Activities, define and create simple user and driver experience, address unique legal requirements in each geography. Key Resources, one platform and app that supports all markets, global press and user word of mouth. Value Propositions, no need to find and wait for a taxi, prices below taxi fares, easy payment with phone app. Customer Relationships, rating/feedback on each ride, quick response to passenger issues. Channels, geographic penetration strategy, Internet-only ordering. Customer Segments, business travelers, bar and partygoers drinking alcohol, convenience riders. Cost structure, phone app development and enhancement; new city costs including recruiting, registration, lobbying, etc; online support and issue resolution, free rides and product discounts. Revenue streams, 20% of driver revenue, pricing multiplier during peak usage. Figure 1. Uber Business Model Canvas


The successful definition, development, and delivery of the product reduced risk in other elements of the marketing mix, though Uber's affordable and predictable pricing is an important part of the value proposition. The product has been successful and is continuing to grow in the market. Figure 2, below, shows Uber's growth compared to its competitor, Lyft.

Trend in rides given chart, showing Lyft riders and Uber riders. Both groups of riders are increasing, but Uber's rider numbers are increasing more quickly. Lyft reached 5,000 unique riders the week of May 18, 2014. That same week, Uber had around 35,000 unique riders. Caption says Uber is increasing its rides given 6 to 7 times faster than Lyft (in absolute terms, not growth rate) Figure 2. Source: FutureAdvisor


Is the product in the center of the growth stage, or is it approaching maturity? An industry analyst has charted the company's growth rate, shown in Figure 3, below, which provides some important insight into the current marketing strategy.

Trend in Growth Rate of Distinct New Customers. Two gradually curving downward lines representing Lyft's and Uber's unique riders. Caption says the monthly growth rate of new customers is similar between companies and is decreasing asymptotically towards 9% to 10%. Figure 3. Source: FutureAdvisor


We can see from the top graph that the total number of rides provided by Uber is growing. The second graph gives a view into the pace of growth, which is slowing over time. In other words, Uber's market may be reaching maturity. In terms of the adoption cycle, Uber has moved far past the innovators and early adopters and likely past most of the early majority. Now it needs to attract late majority customers and fight to hold on to its existing customers in a very competitive marketplace. As you think about Uber's product and market, will laggards ever use the service? Should the company try to influence them?

Chris Nicholson, from FutureAdvisor, explains the impact of this trend on Uber and its competitor, Lyft: "They both feel that the only way to maintain their growth rate in the U.S. is to grab each other's market share." As the market reaches maturity, competition is getting more fierce. The companies have to fight to keep their customers and try to lure customers from competitors if they want to sustain their growth.[2]

In using more of the tools and frameworks that we have discussed in this module, you are better able to understand a product's success, identify risks to its future success, and use effective marketing to influence the course of that product's success.

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