Product Management: What It Is and How It’s Done
Every company that was ever created started with a product. That product is the idea upon which all the mechanisms of the business work towards. The product is the currency that businesses depend on to profit. This makes the production line the rate limiting step in the business process. In other words, a company can only make so much profit if it has limited products. Merely having a product in large quantities, however, doesn’t guarantee profits. A great deal of planning and strategy goes into the production process. Extensive back and forth communication between different departments of a business is done before producing a final product. This guarantees a product that fulfills the needs of the customers and in turn maximizes profits. Product management is thus vital to every business and directly affects how well it performs.
What Is Product Management?
Product management deals with everything related to the product from start to finish. A great deal of effort and resources go into the production process. Some of the responsibilities that fall upon the product manager include planning, forecasting, production, and marketing. Product management overlooks the production process throughout the product life cycle.
Product planning is identifying what the market needs from the product and fulfilling those needs in a cost effective manner. The planning process requires a great deal of market research. Basically, every department in a company collaborates with production, including research and development, and marketing. Planning is an ongoing process that doesn’t stop due to the fact that the market is constantly changing. Noticed how Coca-Cola products and packaging changed through the years?
Planning starts from the introduction of a product idea and follows through using different strategies like product life extension plans and, if it comes to it, product withdrawal plans. Product management is basically responsible for planning the life cycle of all products within a company.
A good company is one that is always on top of changes in customer preferences. This involves a great deal of prediction. Product forecasting isn’t about sheer experience and luck, it’s a very delicate science with lots of data gathering and number crunching. Forecasting is an important aspect of product management during many stages of the product life cycle. Before introducing a product to the market for example, you must predict the public reaction to your product. This is done by market research and extensive competition data gathering.
There are several models for product forecasting. These models are equations, with many variables, used at different times of the life cycle to predict product performance. The Bass model for example, is used when a new product is being introduced to the market. It uses past data from similar products to estimate success. Similarly, the Fourt-Woodlock model is used to forecast sales.
Production is the process of gathering resources, both tangible and intangible, to create a final output. This final product and how well it performs is the standard that all company efforts are judged upon. Product management is the glue that fixes all these resources in place, thus ensuring a product that’s up to standards.
Product management is responsible for choosing which raw material to buy, and which method of assembly to use. This means direct involvement with the production line process. Production is the combined effort of all the departments in the company. Imagine you work in marketing: your job requires you to see what works with the consumers then report to research and development. R&D then gives new production parameters and how-to to production. This whole process is overseen by product management to ensure cost effectiveness and maximum profitability.
A great deal of product management efforts is done hand in hand with the marketing department. Communication is important to make sure that all customer needs and expectations are met. A good ad campaign needs to be in sync with the product functionality, because marketing has to be realistic as well as appealing.
Product managers need to have the necessary background on marketing channels as well as some skills needed for marketing. Research must be done to ensure which marketing technique suits it best. Product management here calculates the risks and benefits of a marketing campaign, and sometimes ask the marketing department for brand refurbishment. Is digital marketing suitable for this product? Can a guerrilla marketing campaign boost sales? All these questions are constantly in the mind of a product manager.
Who Is a Product Manager?
A product manager is responsible for communicating between high ranking executives all the way to production line and distribution. The product manager has various responsibilities including: Evaluating the production process, Identifying product potential, Market research, Planning, and determining market demographics. Aside from product management skills, a manager needs to be equipped with other skills according to his role in the company. The exact role of a product manager varies from one company to another, but the outline is the mostly the same. In early stages of a company a product manager role can go as far as covering the marketing manager job. The golden rule is that the bigger the company, the less responsibility falls on one person.
Product Management in the Service Industry
Businesses in the service industry have product service managers, with more or less the same job description. Services also have a life cycle that needs to be as smooth and efficient as possible. The role of a service product manager starts with planning the proper approach to introduce a service to a market. There is a different protocol for introducing services to a market with existing competitors, than for opening up a new market. The earlier requires a strategy called market penetration, which involves setting lower prices and offering promotions. Service managers are also in charge of determining whether their service can benefit from business to business (B2B) marketing. Service based industries are almost always associated with online marketing, thus a service manager needs to know how to set online marketing strategies.
Importance of Product Management
Product managers have always carried great power within a company structure. They act as supervisors over the whole of the production operations, whether it’s the tangible resource management like raw material or equipment, or overseeing the theoretical part which includes planning, data collection, crunching numbers and market research. Not all companies prefer to let all the responsibility be in the hands of one person or even one team. What happens when the product manager retires or moves to another company? Hence why most companies turn towards compartmentalisation as much as their resources and personnel can allow. The day to day operations of every department are supervised internally in larger companies, but despite this a product manager that collects all data and sees the bigger picture is vital to the production process.