No one ever said it was easy, but suddenly the product manager’s job has become a lot harder and vastly more important.
Maintaining a winning product portfolio means knowing what products to support through development; how to position existing products in the market; what the right moves are to counter the competition; and when to kill a product and reallocate resources to a new one.
All these decisions come down to one thing—knowledge. The more product managers know about what customers truly need, the better their decisions will be. And for today’s product manager the need for better market intelligence is crucial.
A Higher Bar
Globalization of markets, opportunities, and competition has radically increased the complexity of portfolio management. Because of these changes, today’s product manager needs to know and understand the market at a level that hasn’t been necessary in the past.
Consider some of the challenges:
While the job has become more complex, it has also become more interesting. Product managers always have had to stay ahead of the curve by anticipating and responding to threats before they happen. But now that the curve extends all the way around the world, it affords an opportunity for product managers to be more strategic.
Within the context of a global portfolio, strong constraints need to be overcome. Resources need to be allocated across products and regions, which brings a new importance to spending efficiency. In addition, no organization has the R&D resources to develop a product for every niche—so while it may be desirable to develop a tailor-made product, it is usually impossible.
One thing to watch out for is the tendency to play it safe. Market uncertainty can push product managers into being reactive—defending rather than attacking. Instead, product managers would do well to be more discerning, in order to make the most of what is possible. That means letting restraints inspire rather than inhibit, and making insightful and selective decisions about:
Optimal Decision Making
This decision making approach is called strategic market insight. At the core are five questions:
Taken as a whole, the answers to these questions provide a foundation for decision making at all levels of the organization, from local to global.
For the product manager, it means that the organization develops a clear strategic direction that guides decisions, helping him or her fill holes in the global product portfolio precisely where they are most critical.
How It Works
A strategic marketing approach requires reevaluating not just research and gathered market intelligence, but also the methods used to gather it.
While useful, standard market research techniques are incapable of developing the required depth of understanding for strategic marketing. They can predict what is happening in the market, but they leave questions about the underlying dynamics. Alternative techniques exist that:
Used appropriately, these techniques help create the informational basis for real strategic marketing.
Segmentation and Positioning
Once a product manager has the answers to the critical questions, it’s time to put the knowledge to use. This begins with segmenting the market—not on the basis of geography, but on the basis of categories that reflect a specific set of needs. Segmenting by needs also brings to light critical gaps in your knowledge. If you don’t know how many people are likely to respond to a given campaign (i.e. are in a given segment), or what the most important needs are within a segment, it becomes obvious very quickly.
Once you understand the needs landscape, you have a powerful tool to improve the positioning of your product. It is possible then to grab a virtually unassailable position within critical segments by:
To see how knowledge of the needs landscape works, let’s consider how it would affect a product in a market where the cost of healthcare is paramount and generics are a major threat.
Assuming the branded drug works better than the generic—that’s important, but not enough for today’s market—a case needs to be made that the improvement is great enough to justify higher payment. And the key to building that case is differentiating between the drugs’ effects, and understanding how they fit into the values of purchase influencers.
For example, if the payer is the government, differences that improve worker productivity may be the focus. A private payer, on the other hand, may be interested in brand value itself and the impact of providing branded drugs. And a patient-as-payer may care most about the drugs’ side effects profiles.
Maximizing the Brand Value
Every product is, to some extent, a brand in itself, yet branding exists at multiple levels. It is hierarchical. The corporate logo may carry some connotations, but sub-brands specific to therapeutic areas or disease states do too.
Too often, however, the product-level brand is treated as independent of the higher-level brands. Brand identity becomes fragmented, with no consistent value proposition across products. When that happens, little can be done to efficiently position, market, and sell related products.
Here, too, strategic market insights offer a solution. Once segments are identified based on needs, it becomes possible to rationally create consistent brand strategy that stretches across borders and responds to local needs. Core brand messages with broad appeal can be selected, appropriate sub-brands can be defined, and the required product characteristics that are the foundation of these messages can be supported by targeted R&D and L&A efforts.
Strategic marketing insights allow the organization to take a portfolio approach to selling, marketing, and coordination across products and sub-brands. The knowledge that a particular segment has certain key needs creates a platform on which product managers can work together to demonstrate their ability to meet those needs.
Getting There From Here
It seems obvious that product managers and the organizations they work for would benefit from a strategic marketing focus based on a deep understanding of their markets. But if your current market research apparatus can’t take you there, how do you persuade the organization to take action?
Here’s how to pitch it:
Lay out what’s needed—more relevant market intelligence that addresses the five fundamental questions, an approach to market segmentation based on needs, and a clear branding strategy consistent with that segmentation
Create an understanding—take the time to explain why current market intelligence is not sufficient
Build commitment—Keep the momentum moving forward among people up the chain.
For the product manager, it’s important to mentally connect the effort of moving the organization to the outcomes it will create: the improved ability to efficiently position, market, and sell product, and the increased revenue and profitability that will follow.
If you keep those outcomes in mind, change will become a priority and a relevant point of discussion whenever the discussion turns to positioning, marketing, and sales.
A strategic marketing approach is desirable regardless of the complexity of the marketplace, but in today’s world it is absolutely critical. Those who fail to adopt it will find themselves outmaneuvered and outflanked.
Mark T. Morgan is senior business analyst, and Rita E. Numerof is president at Numerof & Associates, Inc (NAI). You can reach them at (314) 997-1587 or [email protected]