A project just kicked off and management's expectation is to ensure that the deliverable of the first iteration helps the marketing team present the product prototype to potential customers. What shou

Increasing WBS details is more typical for predictive projects and focuses on exhaustive planning, which may hinder the agility needed to quickly deliver a prototype.

Splitting the backlog into phases is a general backlog management technique, but it doesn't specifically address the immediate need to identify the core features for the prototype.

While the sponsor might prioritize, it is the project manager's or product owner's role to lead the identification of the essential functionalities for a specific deliverable, often in collaboration with stakeholders, but not simply 'ask the sponsor to prioritize some functionalities'.

When the goal is to present a product prototype for marketing, the focus should be on delivering the "Minimum Viable Product" (MVP) or Minimum Business Increment (MBI) that provides just enough functionality to satisfy the immediate objective. Identifying this minimum functionality ensures the team focuses on what is most critical for the first iteration's success.