introduction product management
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INTRODUCTION TOPRODUCT MANAGEMENT
Learning Objectives
After reading this chapter, you should be able to:
1. Define and examine the nature of product management.
2. Describe the roles and responsibilities of product manager.
3. Explain the differences between product manager and other managers and its
importance on marketing organization.
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1.1 INTRODUCTION
This chapter focuses on the job of a product manager whose primaryresponsibility is a product or closely related product line.
Accordingly, the product management can be defined as the management of aspecific product or service to increase its profits contribution from current and
potential market. According to Windley (2002), product management as a
discipline is about whatthe product should be.
The responsibilities of a product manager including the following :
a) The product manager is responsible for the planning activities related to theproduct or product line. The job involves analyzing the market, including
customers, competitors and external environment and turning this information
into marketing objectives and strategies for the product.
b) The product manager must get the organization to support the marketingprograms recommended in the plan. This involves coordinating with other
areas of the firm, such as research and development for product line extension,
manufacturing, marketing research and finance.
c) Defining and planning product lines and product enhancements.
d) Managing product contracts and sales.
e) Setting strategic direction based on customer needs and business goals.
f) Interpreting strategic goals into operational tasks.
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g) Making proposals to senior management regarding implications of proposedplan.
h) Serving as a representative to internal and external clients. Taking the lead inestablishing tactical plans and objectives.
i) Developing and implementing administrative and operational matters ensuringachievement of objectives.
j) Evaluating risks and trade-offs.k) Proposing contingency plans :
Analyzing business processes and creating applications to improve or support
those processes.
l) Branding.
m)Working with graphic designers to create look and feel.
n) Defining navigational flow and user experience.
o) Defining feature sets and scooping releases.
However, product manager is not a developer, a software manager, a projectmanager, and a marketer. Product manager are accountable to executive
management for overall product direction, key decisions, product budget,
ensuring final product meets specifications, evangelizing product to internal and
external stakeholders.
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In addition, product managers are in charge of a single product or closely relatedproduct line, they are not concerned on a day to day basis about the health of the
general business area in which they operative. Much of proceeding description of
the products managers job and the types of organization structures that affect the
role of products managers was general. Even within the specific organization
type, the product managers job varies among industries and among products. The
only trait appearing in the sample of products managers was that there is no single
background that products sheets, even within this industry, company exhibited
high degrees of variability on their product managers education and
backgrounds. Companies have used a variety an organizational team for this
marketing function. Most of changes in the environment noted earlier have led to
important shift in resource allocation. Under the traditional approach that is, when
manufacturers had information about which product were selling and which were
not the sales focused and gaining distributor, getting retailers to promote their
brand, pushing the product managers for trade oriented promotions to increase
short-term volume.
1.2 DIFFERENCES BETWEEN PRODUCT MANAGER AND GENERAL
MARKETING MANAGER
The focus of a product manager is different from a general marketing perspective.The mindset of a product manager must be changed or adapted to the following scope
of responsibilities, nature of decision making and time horizon:
PRODUCT
MANAGEMENT
GENERAL MARKETING
MANAGEMENT
Scope of responsibility Narrow: Single Product
or Product Line
Broad: Portfolio of product
Nature of decision making Mainly tactical Mainly strategic
Time horizon Short-run
(annual/shorter)
Long-run
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1.3 MARKETING ORGANIZATION
There are 3 organizational structures for marketing that has been identified:
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1.4 CRITICAL SKILLS IN PRODUCT MANAGEMENT
In todays marketplace, in order to be successful as a product manager, candidatemust develop and demonstrate various skills. Skills below are being valued during
employment recruitments.
a) Teamwork - The ability to work in and lead teams of individuals from all partof an organization. The product manager must gather information from a
variety of departments. The role requires managers to coordinate, organize
and facilitate workers from many groups both inside and outside of the
organization.
b) Communication Skills- Product Manager is communicating the successesand challenges of the product or brand to upper management and the company
as a whole. Product managers may be called upon to communicate the
benefits of their product to the outside world in the form of advertising or
promotional materials. These tasks require the manager to be an excellent
communicator.
c) Analytical Ability - The product managers job requires a great deal ofquantitative analysis, interpretation and general number crunching,
particularly in companies that position marketing as a source of strategic
information. In addition the manager is involved in pricing and developing the
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right marketing-mix and budget. Therefore the product managers are
involved in brainstorming meetings to discuss new product.
d) Planning Skills - Plan could be called anything from marketing requirementsdocuments to merchandising plans. They typically contain product definitions,
features, target markets, timelines and resources needed to develop a
marketing strategy for the product or service. Product managers write
marketing plan with input from other functions such as finance, operations
and marketing communication-,, and sometimes hire outside consultants to
develop the plan.
e) Variance across Industry/Company Size - The number of difference wereobserved in the product management function across industries and different
sizes companies. These include the following:
i. In high tech companies, new product development is a Product Managersjob.
ii. The smaller the company, the morehands -on responsibilities the Productmanager has. While some product management responsibilities such as
pricing and marketing strategy are shifted to upper management.
iii. Nature of high-tech product and their internet-savvy customers, theInternet is a valuable tool for direct customer feedback than for traditional
consumer product companies is relied for the generation of new product
ideas.
iv. Traditional consumer product companies have the luxury of standardizedsecondary research due to the maturity of their industries, while market
research for high-tech companies is a looser concept, less comprehensive
and less formal.
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v. Performance evaluation at customer products companies tend toincorporate profit and loss related criteria while high-tech companies tend
to focus more on successfully completing new product projects on time
and meeting launch goals.
1.5 THE ROLE OF THE SALES FORCE
A "Sales Force" is the division of a business that is responsible for sellingproducts or services or a group of employees involved in the selling process.
The role of the sales force in a certain company is being organized according
to various structures. It is
based on the objective, focus and coordination among the various divisions inthat company.
Three kinds of sales organizational structures:
Product/product structure -organized around product lines. It sells productor products lines to all market and coexists with product-focused organization.
Product/product: easy admin., clear communication, effective control of
product expenses.
Product/market structure-it has product-oriented marketing structure, sellsproduct marketed by a division to a single market.
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Market/market structure - has market-based marketing organization andsells a complete product line to a single market. Market/market: customer
needs may be better serve by both existing and new products.
1.6 CHANGES AFFECTING PRODUCT MANAGEMENT
Product managers face many challenges in adapting to the changes in themarketing environment. Some of the key changes are as follows:
i. The Web is a new channel of distribution and a new communicationsmedium. It is part of brand building and affects the product managers job.
The plan must now have a section devoted to how the product manager
plans to integrate the Web into his or her plan.
ii. The data explosion. Almost all products sold through the retail systemare more effectively tracked by both retailer and the manufacturer through
the increased use of information technology. The use of laptop computers
and fax machines means quicker transmission of competitor information
and sales call reports from the field.
iii. Increased emphasis of brands. Sales promotion and price discounts mayincrease short-term volume but they have negative long-term effect on
how consumers see the brand. A brand once associated with quality
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becomes associated with low price and discounting. The greatest asset a
company has is its set of brand and the image and confidence customers
have in them. A key term used by product managers is brand equity, the
value of the brand name. For example Coke, IBM and Federal Express.
iv. Changes in the balance of market power. Manufacturers had better ideaof what was selling than retailers because of better data collection
methods. Today improvements in information technology and partnerships
between manufacturers and sellers in developing measurement systems
have given both parties equal access to sales and market share data, As a
result, the balance of power in distribution channels has shifted from
manufacturer to the retailer. This has created more manufacturer
awareness, even among manufacturers with
v. Powerful brand names, that retailer must be treated as key customers.However end-customer holds increasing power due to the Web. Customers
can demand what they want, when they want and the price they are willing
to pay with a few click of the mouse.
vi. Increased importance of customer retention programs. Productmanagers are paying more attention to customer service and satisfaction
programs, database marketing advertising and promotional programs
aimed at satisfying current customer or getting them to buy more of the
product. It may even make sense to have different managers in charge of
customer acquisition and customer retention.
vii. Increased global competition. Product managers have to be equipped todeal with worldwide competition by having appropriate organizational
structures and also by obtaining experience and knowledge about how a
variety of cultures conduct business.
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Discussion Questions
1) What is the role of a product manager?
2) List three organizing structures for marketing.
3) What has caused some researchers to predict widespread burnout of productmanagers?
Study Notes
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Past Year Questions
1) Product managers currently face many challenges in adapting to the changes in the
marketing environment. Discuss the key change that is taking place and their impact
on product management. Illustrate your answer with examples.
2) Product managers face many challenges in adapting to changes in the marketing
environment. Discuss five (5) key changes in the marketing environment that affect
the job of these product managers.