Product management can be divided into several core elements.
How to create a Product Management Strategy
- Step1 Product Attributes
The first step is to identify the physical and emotional attributes of each product of the portfolio. The physical attributes of a product include both the product packaging and the product features. The packaging must:
– Satisfy the brand identity
– Provide descriptive and persuasive information
– Transport the product safely
– Allow home storage
– Help the consumer to use the product
Among the physical attributes, the branded product must diversify itself from a standard generic product by offering augmented features; that is features that go beyond the minimum product’s capability. A branded product will offer core elements, augmented features and potential benefits.
In addition, a brand will present a product as having emotional attributes through a value proposition whose role is to bridge the physical attribute of the product with the emotional needs of a customer.
A well-established brand will have an easier task in bridging that gap, as a brand with a positive reputation would be:
– Credible – Positive feedback from customers
– Memorable & Pleasant – When dealing with the company
– Transferable & Adaptable – When switching from competitors
– Protectable from legal claims – Legally binding
- Step2 Market Analysis
The second step in product management is to look at the market to understand the market conditions, how difficult it would be to get market share and deliver a long-term profit to the company.
In addition, how the company’s product will be perceived depends on the market stage: introductory, growth, maturity or decline. Then, a company must establish if the product and its proposition will find a place among all the competitors. For instance:
– Are there main players that hold the majority of the market?
– Is the market saturated?
– Are there new-unexplored niches?
– Does the product need to be re-developed?
– Does the product need to be diversified?
A product strategy goal is to guarantee a balanced product mix to obtain profitability by maintaining a competitive position.
Now, look at the product portfolio and divide each product into 4 categories – Rising Stars, Cash Cows, Dogs, Question Marks – based on past performances and the market conditions. Rising stars will need the biggest investment. But they could offer a diversification edge to beat competitors. Cash cows need no investment and are great at providing a sufficient income flux for brands to experiment into new markets or develop new products.
Dogs and Question marks are low performing. Products in these 2 categories need to be assessed: are they low performing because not enough investment has been put into these internal conditions)? Or because the market conditions have changed external conditions)?
- Step3 Brand Analysis
A brand analysis identifies those differentiating elements to separate the brand from its competitors. In addition to a brand’s mission and vision, those differentiating elements include Heritage & Tradition, Innovation & Assets, People & Company Vibe.
- Step4 Managing the product portfolio
Market analysis, product categorization, and brand identity will structure the product portfolio. The goal is to have a manageable portfolio that doesn’t drain resources. Having too many products might have serious consequences:
– Harder to define customer segments & positioning
– Higher product cannibalization risks
– Higher operational and marketing cost
To launch a successful marketing and product strategy, brands should launch fewer products and instead shepherd fewer, stronger ones in a more synchronized way.
A well-designed product management strategy should include restructuring, acquisition, divestiture, or launch of new brands or products. However, all would start from a well-identified consumer need. Especially, to identify the consumer need and how they want it. This can be a new way to look at a product – and find out it can serve a new market segment.
- Step5 Customer Touchpoints
A well-designed product management strategy takes the consumer journey into consideration. The first step in the customer journey is the customer perspective. The customer has specific expectations regarding the type of interactions -human or otherwise – at each touchpoint. The second step is the enterprise perspective and the identification of the software or department the customer will interact with at each stage. But what the mix of a successful customer touchpoint architecture looks like?
– A value promise that stands out from the marketplace
– The value proposition is built in every aspect of the business
Does the enterprise bring itself to the customer, or must the customer bring himself/herself/itself to the enterprise? – Anirudh Dhebar
A customer expects an enterprise to make them feel in control while supporting them along the entire journey. The enterprise is also able to adapt itself to accommodate changing needs.
Great enterprise architecture is consistency with the value promise, makes the customer journey easy and inviting. Each department offers an excellent experience from first-touch to purchase. The value offered to customers is compelling and different from the competition.
- Step6 Create a Motivational Need
A tension that generates a disequilibrium results into a need. This creates anticipation into an action whose goal is to satisfy such need. To create marketing tension into a customer’s mind, a business must address one (or more) of these needs: affectional, ego-bolstering, ego-protecting.
How does a customer make a choice when exposed to different brands? First the brand perception, including packaging and design. Then, the ability of the brand to generate need-arousal. Finally, reinforcement by delivering an experience and a product that satisfies the initial need-arousal state. This will generate a habit that will bring the consumer to select a brand at the expenses of its competitors.
- Step7 Pricing
There are different methods to set up pricing. Cost-based, competition-based, customer-based pricing. The ideal price would cover the manufacturing and marketing cost (mark-up) while keeping into consideration the competition and the customer’s willingness to pay.
If a company can be perceived as having a higher value than its competitors, the business can charge a higher amount. A new player needs to design a market penetration pricing – a price that will lure customers away from the competition. A lower price might induce a larger segment of the market to switch to the new player. A larger volume would lower costs and therefore increase the profit (even at a lower retail price). This method is also applied by established companies that seek a larger market share and it’s referred to as market-share pricing.
However, while the cost-based price is easy to calculate, and the competition-based price can get companies to grow their market, the best approach would be to identify how much a customer is willing to pay. Consumers might consider paying a higher price if they perceive they get a better quality, more prestige, a better deal.
While drafting a price, a company might consider the brand image, the number of projected sales, customer attraction, sales volume.
Not only does your pricing model keep you in business, but it also signals your branding and positioning.
- Step8 Value-based proposition
A value proposition presented to the right segment allows the price to be higher. The value proposition must be clear to the customers. If customers are going for the premium offer, there must be enough perceived value to justify the extra cost – and consider the cost fair. Also, consider what the next best alternative is offering and if the applied tactics will be good enough to create that sense of need in the customer.