Chapter 1: PRODUCT MANAGEMENT — their discoveries in spite of tremendous
INTRODUCTION
Introduction to Product Management Unit
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
lifecycle.
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 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.
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
difficulties. Once these basic inventions were
developed, new products evolved.
By the end of World War, 1 new
technology 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
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:
 It identifies a market problem/ customer
needs. The 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.
 It quantifies the opportunity. 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 breakeven
period and then convert it into a profit
making proposition.
 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.
 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.
 It communicates to Advertising/
Promotion team. The Project
Management team shares its vision with
the publicity / sales promotion team
giving them the positioning of the
product.
 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.
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:
 Realize your product is not the center of
your customer’s worlds
 Save some features for later
 Product management is more than
prioritizing product features
 Differentiate your product and avoid
being a “me too”
 Reinforce your product-related
communication
 Do not think that a single product will
solve all problems for customers
 Define the problem before solving it
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.