Introduction

The role may consist of product development and product marketing, which
are different (yet complementary) efforts, with the objective of maximizing
sales revenues, market share, and profit margins. The product management
is an active part of the initiation of a new product concept through to the
readiness and commercial launch and sales of new products. Product
management drives the business case and justification to start new product
development and has an active role throughout the steps and or stages to
develop, test and launch a new product. Product management is also involved
in product change and life cycle decisions and planning. Product elimination
can begin with the identification of candidates for a change in life cycle (in
some cases due to a new product launch and therefore replacement; a lack of
sales of a product and therefore a phase out plan; or an obsolescence in
technology and therefore an immediate removal from sale). This process then
proceeds with a cross functional plan to remove the product from active sale.
The obsolescence plan will include a comprehensive view of the impact on
the organization (inventory associated with the product, assets and
manufacturing / assembly resources associated with the producing the
products, active commercial agreements, service and support requirements,
and marketing assets and areas to update and update.

Introduction to Product Management

Learning Outcomes

At the end of the topic, you should be able to:

Discuss and explain how Product Management evolved;
Explain what a Product Manager has to do;
Understand the linkages of Product Management with other functions in the
organization.

1. Product Management

Product Management is a function within a company that deals with the

planning or marketing or forecasting of a product or products through at all
stages of the product life cycle.

Product management and product marketing are different yet complementary

efforts with the objective of maximizing sales revenues, market share, and
profit margins. Product Management has several roles which cover many
activities from identification to development, to launch and even support
during its life cycle. The issues handled by the product management team
vary from being strategic and/or tactical in nature depending on the type of
organization and where in the organizations hierarchy the function lies.
Product management can be a separate function or a part of marketing or
engineering functions.
Since better and new products are a key differentiator in the market and are
what drives company‘s profits Product Managements main focus is on new
product development. However since they are the ones who know most of the
product and the basis of its origin the Product management is responsible for
the growth and development of the product in the market and sometimes they
may even be responsible for the bottom line generated by the product.

2. Historical Background

Business executives throughout industry spend more and more time trying to
answer one basic question: ―How can I assure continued profitable growth of
my business?

The answer to this question is quite simple: ―By providing the optimum
solution to the market needs.

Market needs are classified as Goods or Services. All these have a tangible
value and can be commercially produced and marketed profitably. For our
purpose, we shall classify both – goods and services – as products. Hence, if
we were to answer the above question again, it could be: ―By providing a
continual flow of new products to satisfy market needs or desires.

The question then arises: ―Now where will these products come from?

In the early 1900s, new products were created by gifted inventors who worked
with crude equipment and facilities but were creative geniuses with
determination and vision to follow their discoveries in spite of tremendous
difficulties. Men like Edison, Watt, and Marconi created products like the
electric bulb, steam engine and the telegraph. All their products came from
years of hard work and hit and trial experiments. Once these basic inventions
were developed, new products evolved. For example, after the steam engine,
motorized transportation in the form of cars became a reality, and steam
boats replaced horses and sailboats.

By the end of World War I, new technologies had become so complex and the
speed at which new developments were made became so rapid, that the
individual inventor became less and less relevant. Instead, companies started
Organized development of products. World War II gave a further impetus
to the development and refinement of products. However, most of these were
based on Research and Development (R&D) in a given manufacturing
company and were not driven by customer needs. The R&D product planning
programs were expensive and slow, and they often were unproductive.

Managements then concluded that a new approach was needed to make

product development more productive. They realized that to be successful
they needed to identify products that could satisfy the customer’s needs and
desires, and which could, at the same time, match the company's
manufacturing capabilities keeping in mind the constantly changing market
conditions.
Thus, it was no longer a case of merely reacting to market conditions. A
company needed to stay ahead by creating new markets while continuing to
dominate existing ones. Hence, what was needed was a formal approach to
Product Planning and Management.

The formal process of Product Planning & Its Management is led by a Product
Manager whose primary role is to serve as the ―Voice of the Customer. He is
responsible for the ―4P’s” of Product Management:

– Price
– Place
– Product
– Promotion

Note: This includes indirect management and cooperation with other

members of various groups.

In this book we will go through the various aspects of Product Management as

is now undertaken in this complex business environment. The book has been
structured in five broad areas. The first being the introduction to the basic
subject itself where we will not only have a look at the historical background
and how product management has come out from being a product of
‗creative geniuses to a well structured process with a reasonably well defined
interface within the organization. In the chapter 2 and 3 the whole process
involved in managing product development and how once we have decided
what product to make the organization needs to function in order to bring our
the product to the market in the shortest and most efficient manner. It also
discusses how the product launch can be staggered to provide a strategic
advantage to the Marketer.

Once we are through the basics we go to the next section consisting of units
4, 5, 6 which will discuss in greater detail how we must organize ourselves to
develop new products and go through the process of generating new ideas
and evaluating which of them is economically viable before actually taking up
the developmental effort of time and money.

The next section with units 7, 8, 9, and 10 will help you understand how from
the concept we actually undertake the development of the product, and
pretest or test market the product before we actually launch it in the market.
Once we find that eh product meets our marketing objectives the steps we
need to follow to launch the product.

Now that we have launched our products we need to understand how to

manage these products that are in the markets. The units 11, 12, 13 and 14
will give you an insight into where new products should be added, when
should you support them in their life cycle and when should you decide to
withdraw the product. In this section we will also understand how to balance
the product portfolio and the factors affecting the pricing decisions.
We know that in addition to the product it is equally important to package and
brand the product in a manner that it fits in the product positioning that has
been decided by the product management team. So the Units 15, 16, 17 and
18 will take you through the processes followed to arrive at branding,
positioning and packaging decisions.

3. Product Management and its Interface with Other

Organizational Functions

Though all the ―P‘s are interlinked and affect each other, it is the Product
that has the most profound effect on all the other functions. Hence the
study of the product management process is an extremely important process.
It is this function that has a large impact on the bottom line of the organization
and also whether the company is able to stay ahead of competition giving the
company a strategic advantage to leverage.

Product Management interfaces with other functions in the following manner:

3.1. It identifies a market problem/ customer needs

This means that the Product Management team uses methods and
techniques that help it to identify the problems that the customer would like to
have a solution for. Once they identify this, they create a product that will
resolve the problem or satisfy that particular customer need.

3.2. It quantifies the opportunity

Any new product development that will resolve a customer problem will need
a company‘s resources in terms of time, people and money. The company‘s
decision to invest in these costs will depend on the business opportunity
that could be created by this product. The Return on Investment (ROI) must
be large enough for them to make sufficient profits in order to recover the
initial investment costs within the break even period and then convert it into a
profit making proposition.

3.3. It communicates the market opportunity to the top Management. Since

only the top management can commit resources for new product
development, the product management team must provide them with the
business rationale for following the opportunity and give them a
business plan to convince them to commit resources for research and
development.

3.4. It communicates with the Product Development team

Once the top management has given their approval for development, the
product development team must be explained what the market requirements
of the finished product are so that they are clear about what they need to
develop. Let us take an example: In the initial stages of the development of
mobile phones, the customer had to hold the phone to his ear to listen to the
other person. Phone companies understood the market need of their
customers not wanting to hold the phone to their ears. They communicated
the product development team that they need a product that does not force
the customer to hold the phone to his ear. The product development team
developed an earphone that was linked to the phone through a thin wire
plugged to the phone.

While this was better than the earlier system where the customer had to hold
the phone to his ear, the Product Management team wanted a further
improvement since the wires always interfered while handling the mobile
phone, and in any case, the customer had to continue to hold the phone in his
hand. The product development team then came out with a cordless earpiece
that solved this problem.

3.5. It communicates to Advertising/ Promotion team

Each product is positioned for a specific category of customers. The Project

Management team shares its vision with the publicity / sales promotion
team giving them the positioning of the product. E.g.: A Maruti 800 is
positioned for a middle class customer while a Honda Accord is positioned for
the high income customer. They type of advertising communication for each
type of customer is different and hence the Product Management team must
explain the positioning to the Advertising team so that the right communication
can be generated.

3.6. It empowers the sales team

The sales team also needs to understand the product so that they can
effectively sell the product to the customer. That is again the responsibility of
the Project Management team – to define the sales process and identify the
necessary sales tools to sell to the customer. A Maruti 800 customer will
focus mostly on price and may not be so feature conscious while the
Honda Accord customer will focus more on features, styling, and comfort.
Hence the selling tools for both the products will be different.

4. What a good Product Management must do

A good Product Management Team or a good Product Manager must work in

order to keep his company ahead of competition and help provide a
competitive edge to the company. Some of the characteristics that
differentiate a good product management from a bad one are:

a. Realize your product is not the centre of your customer’s

worlds

A good product manager must realize that his product is most probably one of
many products which a customer uses every day. A product manager is likely
to think about his product all day, every day. It is very unlikely that the
customer think about or uses this product nearly that much; to them, it is more
likely just one of the many products in the market. Thus decisions about
product design and features must keep this in mind. If we are over absorbed
about our product and think the customer will understand everything or will
find everything we develop useful, we may create problems for ourselves.

For example: We can add features that we consider useful but if the
customer does not use them then it is of no use putting the feature no matter
how useful we think it is. If we use very specific terminology (which sometimes
gets developed internally in the organization during the development phase of
the product or may be a technical term not generally used) which is not easily
recognized by anyone new to the product. Then this may not be understood
by the customer. If we get too involved with our product we may miss
identifying how it can be used with other products thus missing potential
business opportunities. Hence a wise product manager will generally:

Use existing standards whenever they are relevant and applicable. If we have
a standard QWERTY key board for computers and we change this for some
other purpose then it may become difficult for customers to use this. Realize
that products work with other products which the organization produces as
well as products and systems created by others — including your competitors.

b. Save some features for later. It‘s important to include enough features
when a product is first released, and delaying the release of some features
helps because: Customers have difficulty in grasping too many features at
once. Also extra features may distract the customer towards the less
important features and make him miss the truly differentiating features. If
features are added with passage of time then product life can be extended by
giving the customer an improved version of the product. Many times these
can be given as priced value additions. Giving some features later may also
provide the opportunity to upgrade or modify existing features that may be
needed by the current market customer expectations. It is not possible for the
product manager to know and plan for all features needed by the market and
hence this enables him to keep his product abreast with the market and
deliver a better bottom line.

c.Product management is more than prioritizing product features.

Product managers needs to have a much broader view and needs to see and
understand everything from the basic customer needs to the business model
to the product road map to the go-to-market strategy. Unfortunately, many
product managers take the easy feature-focused development mode. As a
result they do not see their function in a holistic manner.

d. Differentiate to avoid being a ―me too!!

A good product manager must try to differentiate his product and avoid being
a ―me too.‖ Getting into the market speedily is definitely important; however
it is always better to come into the market later with a better product than
slightly faster with something that does not stand out. Being first is good but it
is no guarantee of success. Amazon.com was not the first online bookseller;
Google was not the first search engine; the iPod was not the first portable
MP3 player; the list can go on and on.

In “Product Leadership: Creating and Launching Superior New Products ,

Robert Cooper” offers some amazing statistics on ―truly superior,
differentiated products: One of the top success factors we uncovered is
delivering a differentiated product with unique customer benefits and
superior value for the user. … Our New Prod projects studies show that
such superior products have five times the success rate, over four times
the market share, and four times the profitability as products lacking this
ingredient. “Truly Superior, Differentiated Products” had an average 98%
success rate and 53.5% market share, while “Me-Too” Products averaged an
18.4% success rate and 11.6% market share. Though the desire for quick
revenue and immediate return within organizations is often strong, though
there is good cause for launching the “right” product. In the end, the extra
effort put into figuring out how to differentiate a product will be well worth the
effort.

e. Reinforce your product-related communication

Product managers have to ensure that any communication they send out
must be clear and consistent. They need to do this in order to avoid
confusion over action proposed or being taken. The product manager has to
ensure that any communication he sends out must be understood and taken
note of by all concerned with the product – be it sales, or distributors or even
the internal departments like engineering, R&D, marketing etc. So that all of
them are on the same page. We all know that communication is one of the
most difficult things to do and many times people do not get the
communication in one go. Thus the product manager must follow up and
make sure that the communicated information has been received and
understood by the recipient.

f. Do not think that a single product will solve all problems for
Customers.

We may like to make a single product that will solve all customer problems
since this way our development costs would be minimum and profits would be
maximum. However, trying to make it everything for everyone usually results
in a product that does nothing for no one. In order to make a product do
everything for everyone we would need to add a lot of features to it making it
extremely complicated for most. And it makes it difficult or the marketer to sell
the differentiating factor to the customer. We can see that today we are
seeing more and more products that are focused on a specific benefit – eg
anti dandruff shampoos (Head and Shoulders, Clinic All clear), powders for
heat problems (Navratan), soaps with cream (Dove), Fairness cream for Men,
etc. This is not to say that an all-in-one strategy is always bad. Product
managers can still choose to follow an all-in-one strategy; they just must be
aware of the impact it may have on the perceptions of customers. Even then,
an all-in-one product should be that way because it provides value and solves
specific problems for the customer, not just all-in-one for the sake of being all-
in-one.

g. Define the problem before solving it

Product managers and many others unfortunately assume the problem is

clear and jump straight away to solving it. However, improperly-defined
problems lead to improper solutions. Albert Einstein is supposed to have said
that, given one hour to save the world, he would spend 55 minutes defining
the problem and 5 minutes finding the solution. This quote does illustrate an
important point: before jumping right into solving a problem, we should step
back and invest and effort to improve our understanding of it. The first and
foremost thing to be done before solving the problem is to define it correctly.
This definition should neither be too narrow or too broad. A narrow definition
will limit the scope of the solution and similarly a very broad definition will give
us solutions that may not be relevant to the problem.

Going too far in either extreme may be unproductive and inefficient in many
situations.

Product managers must not be in a hurry to write down features without

clearly defining the problem. Re looking at problems can always provide a
fresh perspective and give interesting solutions. Many times the product
manager should take the help of research to clarify and define issues. The
time spent in defining problems in the early stages always helps save time
spent later in resolving issues.

5. Summary

Historically product development was dependent on work undertaken by

inventors and geniuses. Later with the advent of competition it became more
organized. Products were developed in research laboratories of large
companies. However these were products that could be developed rather
than what was needed by the customer. As competition increased further
companies were forced to understand what were the customer needs and
develop products that were needed by him. This led to the creation of the
Product development function. The product development function is an
important function that needs to interface with all functions of an organization.