Product Management

by
Arun Kumar Dutta
B. Tech (Hons.) IIT Varanasi
PGDBM - XLRI Jamshedpur

Prof Arun Dutta served top private sector firms for 30 Yrs in leadership positions in Tata
Motors, Tata-Hitachi Construction Machinery Co., and M&M in functions including
Marketing, Production, Auditing, Risk Management, Ethics and Governance.
Topic 1 : Introduction : Overview of Product Management
After discussion of the topic, you should be able to :

1) Understand the principle of product management

2) Outline the role of product management
3) Discuss the role of product management to different kind of
org structure.
4) Highlight the skills needed to manage different products.
Topic 1 : Introduction : Overview of Product Management

• Introduction
• A product manager's potential interaction
• Product Vs General Marketing Management
• Marketing Organization
• Critical skills in Product Management
• Challenges affecting Product Management
Post –it- notes 3M…. initially idea was from Art Fry had a tough time persuading worth investing

James Dyson dissatisfied with the performance of Vacuum Cleaners set out to create a better one.
After 5 years and about 5000 prototypes, he created the Dual Cyclone bagless Vacuum Cleaner. He did not
get any investor or VC partner to make the New product as he was an Industrial Designer. He could not
possibly knew about Manufacturing or Marketing

In 1985, on the verge of bankruptcy, Dyson found an interested Japanese investor and

By 1993 set up Dyson Appliances in the UK (home country)

He has since sold $2 worth of Vacuum Cleaners worldwide

Confused….by the Uncertainty of New Product Development (NPD)

The activity is also known by the name PRODUCT INNOVATION MANAGEMENT Or PRODUCT PLANNING Or
R&D Or MARKETING
WHY IS THIS AN IMPORTANT FIELD OF STUDY? ?
It is Big business – Lakhs of new products are marketed every year.

Equal number of people make their living producing and marketing new products.
Competitors do the most damage when there is little Differentiation that price-cutting takes
your Margin away or they have a desirable new item that you do not have. Profits fall when
we can not get good margin over costs and sales fall when customers no longer prefer our
products.

A successful new product does more good for an organization than anything
else that can happen (OYO rooms)
WHY IS THIS AN IMPORTANT FIELD OF STUDY? ?
New product process is exceedingly difficult and fraught with high failure rates.
1. Opportunity identification and selection
2. Concept generation
3. Concept / project evaluation
4. Prototyping, developing, testing, validation
5. Manufacturing and production ramp-up
6. Launch
Firms get a high percentage of their sales and profits from new products
A large scale study showed the following:
 On average 33% of sales come from products introduced in past 3 years
 Top performing firms did even better gaining 49% from new products
 Among successful new products studied, half achieved at least 33% ROI, 50% had
payback period of < 24 months and at least 35% Market share
 Opportunity Identification and Selection

Inputs from ongoing Special Opportunity Inputs from ongoing

marketing planning audits corporate planning

Sort suggestions for Product Innovation Activity

Exploit underutilized Exploit new resources Respond to external Respond to internal

resources mandate – mandate –
Discoveries, Quality studies, Owners, top mgmt
Technical, functional, acquisitions, customer needs, plans, unit mgmt
product, market diversified markets competitive threat, plans, Gaps
regulation

Pull of Validated New Products Opportunities

Give each Opportunity a PIC (existing or new)
 SOME HOT NEW PRODUCTS
Kawasaki Z1000 Sports motorbike with minimal plastic body showing off
inner workings
3M super sticky Post-its Having industrial grade adhesive and are designed not to
fall off vertical surfaces
Apple’s iTunes Music Easy to use and powerful. It offers millions of songs that
stores can be downloaded, saved burned on a CD or played on an
Apple iPod.
Toyota Prius Hybrid car about the size of Camry. 55 miles to a gallon.
Futuristic styling and options, Wireless technology for
mobile, smart entry system
Canon EOS digital Rebel SLR camera using standard Canon SLR lens, Point & shoot,
Easy to use, Digital
Paytm payments
Today, you know Bubble Wrap as the protective packing material that’s also
fun to pop. But that wasn’t its original purpose.

Inventors came up with the concept for

Bubble Wrap when trying to develop a
new type of textured wallpaper. They
essentially sealed two shower curtains
together.

But once the wallpaper idea didn’t work

out, one of the inventors had a
brainstorm during a flight that the
material could be used to protect
products during shipping and transport.
Nike: It’s All About Attitude
• Nike doesn’t sell shoes. It sells attitude. Nike creates community around
these stories and around its continuing theme of promoting attitude.
Want proof? Head on over to the company’s LiveStrong YouTube Channel
 and you’ll see how Nike showcases stories of people struck down by
cancer. And how it builds a community of support for those who are
struggling with the disease.

• So far, the LiveStrong Community has racked up more than 2 million views
on YouTube, more than 1.5 million likes on Facebook, and more than
250,000 followers. And through the community, Nike demonstrates how a
good story goes social and how social media can be used to generate
support and even raise funds for those who are suffering.
Nike: It’s All About Attitude
• Nike doesn’t sell shoes. It sells attitude. And it’s another example of a brand
with a story-telling approach to marketing. Nike creates community around
these stories and around its continuing theme of promoting attitude. Want
proof? Head on over to the company’s LiveStrong YouTube Channel and you’ll
see how Nike showcases stories of people struck down by cancer. And how it
builds a community of support for those who are struggling with the disease.

• So far, the LiveStrong Community has racked up more than 2 million views on
YouTube, more than 1.5 million likes on Facebook, and more than 250,000
followers. And through the community, Nike demonstrates how a good story
goes social and how social media can be used to generate support and even
raise funds for those who are suffering.
THE PRODUCT MANAGEMENT ARENA

 Product planning: Making sure that the right product is offered

 Product marketing: Enabling the product to reach its potential

 Product strategy: The guide for product value delivery over the life
cycle

 Creating insights: Understanding legacy, ecosystems/markets and

driving forces

High performing Product Management enables companies to sell what is

developed and develop what we can sell.
THE PRODUCT MANAGEMENT ARENA
Without Product strategy we cannot do the job of product management. The Product
strategy shall be used in product planning but also in product marketing.

In order to create a successful strategy, it is essential to have what we call Insights.

Obviously we want to know what will happen to supporting technology, customer
segments, and new disruptive innovations preparing ground for new solutions. We
want to have good grip on market trends – how will our target market evolve over the
coming period?

Product Management needs to look into the future and act on it. Insights is also about
our own capabilities and strategies. What is (really) the intention from corporate
management? Is it realistic that our R&D department can produce cutting edge
designs? Do we have the right skill set in our sales force to sell not only products but
complete solutions including an extensive service offering
In a growing number of companies, corporate management expects product managers to
empower sales and marketing to reach the business goals for each product. The increased
focus of sales empowerment increases the role of Product Management. Staffing the role will
also require additional skills.

Key interfaces for a product manager are: corporate management, development, operations
and sales & marketing.

Sales & Marketing The Product Brief is your consolidated product presentation to marketing.
Defining the key unique selling point (USPs) and the value you deliver with your product. Who
are the target Personas? What are the target applications? What is your resonating focus? In
return from sales you would expect a lot of market and customer insights
Real customers in the market

Sales departments always filter a lot of useful information. They cannot share all their
insights with you. Sales has a different objective compared with Product Management.
Sales will and shall always be focusing in getting the next customer on board. Product
management must act to create a sustainable business over time. Product management
can never rely on having sales as a proxy for market information. There is no substitute
from seeing actual existing (or potential new) customers. In fact – product managers are
highly appreciated by customers.

They see product managers as reliable and trustworthy and not as a salesperson. This
gives product mangers a unique opportunity to collect true insights from direct
customer contacts.
According to founder Randy Hetrick, all SEALs
actually learn how to sew so they can repair
their own equipment if needed. So when he
was out on a deployment, Hetrick used those
sewing skills to create a product that would
allow him to stay fit when he didn’t have
access to a gym full of equipment.
He made the first prototype with an old jiu-
jitsu belt and some surplus parachute
Workout_trx-bands.webp
webbing. From there, he discovered the
versatility of the product and refined the
actual process and materials a bit.
Triumph Over Conformity: Apple Declares War on IBM
• Apple is a legendary marketer, and the company exhibited a genius for storytelling
early on. Thirty years ago, in 1984, Apple launched an iconic – almost cinematic –
Super Bowl ad that blew customers and industry watchers away. Using fascination
and mystique, the ad literally launched Apple into the big leagues.
• At the time IBM was the dominant player in the computer world. Apple, by
comparison, was a small player – little more than a startup.
• The company did this with a dark, science-fiction style ad directed by now
legendary filmmaker Ridley Scott.  It was an artistic allegory that didn’t even show
a glimpse of the company’s latest product, the Macintosh. Instead, 
the ad merely said:

• “On January 24, Apple Computer will introduce Macintosh. And you’ll see why
1984 won’t be like ‘1984’ ”
 PRODUCT DEVELOPMENT PROCESS

CONCEPT GENERATION : understanding customer needs is the

first activity. Market research is another way to understand
customer needs. Focus group, qualitative interviews also provide
valuable inputs. Understand existing offerings and how the gaps
could be eliminated offers valuable inputs. FEASIBILITY is not
Strictly evaluated at this stage.

DESIGN : During design stage, detailed specifications are first

drawn about the product. The product goes through several
iterations before the design is approved.generally, the design,
finance, production planning, marketing and purchasing depts are
involved in decision making.
 PRODUCT DEVELOPMENT PROCESS
DEVELOPMENT/ PROTOTYPE TESTING : IT refers to the physical
development of the product. Usually a prototype is built for
extensive testing and fine tuning the design specifications.

PRODUCTION : This refers to transfer of know-how to production

personnel and establishing the system of volume production.

Product development funnel represents the PD process with Gates

and Timelines. Most of the development does not happen inhouse.

Concurrent engineering technique cuts the development time

drastically.
Project Predictability
Planning activities related to management of products or product lines

The role of product management spans many activities from strategic to

tactical— some very technical, others less so.

The strategic role of product management is to be messenger of the

market, delivering information to the departments that need market facts
to make decisions.

This is why it is not surprising that 8% of product managers report directly

to the CEO, acting as his or her representative at the product level
Obtaining organizational support for marketing plan:

• Product Management communicates the market opportunity to the

executive team with business rationale for pursuing the opportunity
including financial forecasts and risk assessment.
• Product Management communicates the problem to development team
in the form of market requirements.
• Product Management communicates to Marketing Communications
using positioning documents, one for each type of buyer.
• Product Management empowers the sales effort by defining a sales
process, supported by the requisite sales tools so the customer can
choose the right products and options.
 A PRODUCT MANAGER’S POTENTIAL
INTERACTION

Advertising
Advertising
Agency Media
Manufacturing Agency
Promotion
Promotion
& distribution services
services

R&D Packaging

Product
Manage
Legal
r Purchasing

Fiscal Publicity

Market
Sales
Sales
Research
Research
 PRODUCT Vs. GENERAL MARKETING MANAGEMENT

Product Management General Marketing

Management

Scope of Responsibility Narrow: Single product Broad: Portfolio of

or product line products

Nature of Decision Mainly tactical Mainly strategic

Making

Time Horizon Short-run (often annual Long run

or shorter)
Organizational Structures
PM’s Job depends on how the organization is structured

We will explore 3 Organizational structures:

1. Product-Focused Organizations
2. Market-Focused Organizations
3. Functionally Focused
MARKETING ORGANIZATION: PRODUCT- FOCUSED
ORGANIZATIONS
Head of
company/division

Corporate
Manufacturing Marketing Finance
communications

Marketing Product
Support
research management

Manager of Manager of Manager of

product A product B product C
Product-Focused Organization
Advantages
Disadvantages

• Inability
Locus oftoresponsibility is questions
ask fundamental clear (directly accountable for brand)
(too close)

•• PM may become
Invaluable somewhat
training removed from
& experience the action in the field
for PM

• Short-term focused
Product-Focused Structure

• Product Manager Acts as a “mini-CEO”

• Takes responsibility for overall health of a brand

• Well Defined Hierarchy exists (ie Group product Manager, Brand manager,
Assistant Brand Manager)
Market-Focused Organization
• Defines authority by Market segment

• Segments can be industry, channel, regions of the country or customer

size

• Useful when there are significant differences in buyer behaviour among

the market segments
Market-Focused Organizations
Advantages
Disadvantages

•• Strong
Does notCustomer Focus full responsibility for products services (more
give managers
coordination)
• Easier to get Product Managers to ‘pull together’
• Lose ‘mini-CEO training’
• Better knowledge of company’s line of products
Functionally-Focused Organizations
• Align themselves by functions (ie Advertising, Sales, merchandising)

• No Single person is responsible for the day-to-day health of a brand

• CEO & Vice Presidents (VP’s) make marketing strategy decisions

• Strategies are implemented through discussion & coordination among

functional groups
Functionally-Focused Organizations
• Disadvantages
Advantages

• Limited responsibility for specific products

• Administratively simple
• Conflicts b/w strategies can only be resolved through discussion – time consuming
• Functional training is strong
• Narrow scope of managers – limits development
• CEO & VP’s make important strategy decisions
Product Management: Critical Skills
• Negotiation : Managing the terms with functional partners whom they
don't have direct control on as they play important role to reach send goal.
• Teamwork : since product manager has to synthesize information from
many departments he has to coordinate, organize and facilitate many
groups inside and outside.
• Communication Skills : A product manager is called upon to communicate
the success and the challenges of the product to Management. Also to the
world out through advertising and promotional material.

• Analytical skills : Product manager has to crunch numbers for competitors

for sales targets, pricing analysis etc.
Challenges facing the Product Management :
1. Derailment in to solution : sometimes the product managers are too
busy to look an analyse the market and they loose on opportunities that
happens because they have too much of them to handle.

2. Defining market requirements: absence of reliable source to define

market, which puts them in “feature overload mode” than need mode.

3. Product management for global products : less barrier for globalization

4. Low CEO mind space for product management:

Variance across industry/ company size
1) In high tech companies, new product development is the substantial role
sometimes it becomes grey between marketing and new products team.
2) In smaller companies, its more hands on responsibility, pricing and strategy
is taken by higher authorities.
3) The high tech products and internet savvy customers, the job pace is more
4) Traditional FMCG companies have the luxury of standardized research due
to mature industry
5) Performance evaluation at FMCG help them to do profit loss calculation
while high tech companies rely on successfully completing new product
projects.