Why does a business need product management?
The purpose of this article is to give a business an understanding of what areas of responsibility fall into the role of a product manager, how it intersects between a standard business approach and whether a business needs a product management approach, and at the same time a dedicated organizational function.
What is a product
Business success is often interpreted by the basic economic rule of supply and demand. This requires conducting market research, assessing the behavior of the target consumer in order to identify potential needs. And already for this need to form an offer as a service or product.
Let’s understand what a product is and whether a service can be a product.
A product is understood as any offer to meet a specific need or solve a problem of a client (consumer). Simply put, a product can be physical (like a phone) or digital (like an app on a phone). Any product has packaging and distribution, regardless of whether it is physical or digital.
On the other hand, a service is an action or task performed by one party for another. Simple examples of services are consulting, transportation, banking, handyman at home.
However, in today’s world, the line between product and service is beginning to blur. The point is that a service or set of services can be packaged into a product. A few examples to get the idea across:
Streaming service that offers a catalog of content and is a product platform, but offers a subscription listening/viewing service
A banking application is a purely digital product that provides banking services.
Any product has packaging and distribution, regardless of whether it is physical or digital, or whether it is a service.
Why the product needs to be managed
If the product is not managed, it can quickly cease to be relevant or begin to develop in the wrong direction, there will be friction between business functions. This carries high risks for the company and may negatively affect the final profit or even put the business at risk of closing.
Product management emerged as an organizational function in its own right in the 1930s at Procter & Gamble. One of the company’s marketers, Neil McElroy, suggested that the analysis of sales effectiveness should include, in addition to evaluating marketing tools, the study of feedback from dealers and customers. This approach to doing business proved to be very profitable. In the following decades, product management has gone a long way in developing and confirming the value of the approach, even changing the processes in companies.
Today, the application of product management principles has become part of the business process of successful companies.
A few main areas where product management is present:
Strategy and planning. Effective management of products or services ensures alignment with the overall strategic goals and objectives of the company. It helps define the vision, target market, and value proposition by guiding and positioning the offering in the marketplace.
Market and trend research, including identifying customer needs to form a development strategy. Such research includes competitive analysis to tailor strategy as well as position value propositions as superior to alternatives in the market.
Development and improvement of the product or service itself from concept to launch. Proper prioritization of product iterations is a critical management component. The value of a product is built up through continuous improvement.
Market entry strategy it is not only marketing and attracting traffic and estimating the cost of attraction, but also how the product is perceived by the target audience from the moment they first met.
Determining Product Pricingwhich includes the cost of its creation and maintenance of the offer, as well as the cost of attraction, which ultimately creates demand if it is possible to convey value to the target audience.
Ensuring sales and internal involvement in the product among dependent departments of the company includes the creation of a common environment with all the necessary materials about the product, including the possibility of internal administration of the product.
Any company that provides a product or service to the market has elements of product management.
But not all companies have a dedicated organizational function of product management. This is due to the fact that the function is blurred among several separate directions, while the company’s management consolidates information, makes a decision and takes steps for the next action.
The effectiveness of this approach depends on the type and size of the business, as well as on the involvement and depth of management involvement. As the company develops, to maintain efficiency and speed of development, the delegation and consolidation of product directions become inevitable. There is a need for a product management function.
What does a product manager do
Due to the fact that the responsibility of the product manager is the continuous collection of requirements and prioritization, analysis, implementation control, cross-functional coordination, very often this role is confused with the role of a business analyst and project manager. While business intelligence and project management are supportive functions, but not excluding combinations in one role, depending on the size or other characteristics of the organization.
For the sake of simplicity, the full structure of the product management function is not covered in this context, but the differences are:
business analyst focuses on business needs and processes, business data analysis for decision making;
the project manager focuses on planning and executing projects on time, managing risk, quality and project cost;
The product manager focuses on the product development strategy, identifying the target audience and implementing the product based on their needs, and is responsible for the measured value of the product as part of the company’s strategy.
The role of a product manager, as the name might suggest, is to manage the product end-to-end and, of course, to focus on product success within the company’s strategy.
To achieve positive product development dynamics, it is necessary to determine its strategy based on trend analysis and identify the needs of the target audience, control the prioritization of the development and (or) implementation process, and act as a link in cross-functional teams to bring the product to market.
The whole process of product management can be put into a fairly simple cycle – product development iterations:
Definition – setting a goal within the framework of product development based on the identified needs of the target audience;
Development – to achieve the goal, a component or an iterative version of the product is created together with the development team;
Launch – opening the created component and (or) functionality to the target audience. Product management in this phase takes place in conjunction with marketing, sales, product support team;
Analysis – launch does not mean successful achievement of the goal. It is necessary to analyze how well the implementation of a component or product functionality addresses the need of the audience within this iteration.
This process can actually have several levels of nesting and refers to both the development of the component/functionality, and the strategy and tactical roadmap.
In order to successfully and effectively manage the product, the scope of work of the product manager includes more voluminous blocks that are an integral part of the process:
Product strategy and vision. This is the starting point for a product manager. Product vision is a capacious target definition of why the product is needed, for whom it is and what problem it solves. Product strategy – the formation of reference points (goals), how to come from the current state to the vision of the product. As a result, a roadmap is determined in order to create or improve the product.
Market analysis. The product manager monitors market trends, competitive position and industry dynamics. Gathers information about customer behavior, preferences, and concerns to make informed product development decisions and identify market opportunities. Constantly monitors the development of the industry to ensure the competitiveness of the product. One of the goals of this area of work is to form an assessment of the potential market for the product and identify opportunities for growth.
Collection, analysis and categorization of product requirements. The product manager collects and prioritizes customer requirements by interacting with customers, conducting user research and analyzing feedback. Defines and documents product requirements, user scenarios, and use cases to guide the development process. Ensures that the product meets customer needs and delivers value. The goal is to reduce the level of uncertainty in the assumption of how the product can gain market size.
Roadmap and prioritization. Formation and maintenance of a product roadmap that describes the planned functionality, goals, releases and timelines. The roadmap should be objectively prioritized based on target customer needs, business goals, and technical feasibility. The product manager has to decide on the choice of priority and find a balance between competing priorities in order to maximize the value of the product.
Product development. Creation and implementation of product functionality based on a privatized roadmap through work with development, design, testing teams. Close collaboration is required to ensure that identified value is delivered to customers at a reasonable time and in sufficient quality. Agile techniques are actively applied to eliminate downtime in resources and reduce implementation time through small iterations. The product manager ensures effective communication and collaboration between teams in order to achieve common goals and successfully implement the product.
Managing expectations and dependencies. The product manager liaises with stakeholders, including company management, customers, sales and marketing teams. It collects feedback, manages expectations, and provides updates on product progress. Collaborates with stakeholders to ensure product goals are aligned and supported.
Development of a pricing strategy. The product manager analyzes competitive prices, examines the cost structure and determines the optimal pricing strategy. It considers market needs, price elasticity, and profit margins to set prices that maximize revenue and satisfy customers.
Product/release launch and marketing. The product manager plays a key role in launching a product. He works with the marketing and sales teams to develop go-to-market, positioning, communication and pricing strategies. Coordinates launch activities including product demos, sales support and marketing campaigns to ensure product acceptance and success.
Product Metrics and Iterations. The product manager continuously monitors the performance of the product. They collect data, analyze metrics, and solicit user feedback to gauge product success and identify areas for improvement. Makes data-driven decisions and iterates the product to improve value and meet customer needs, as well as financial and technical optimization.
In conclusion, customer focus, problem solving, and market knowledge allow the product manager (and therefore the company) to regularly bring new in-demand products or new versions of existing products to market, control product changes based on demand, or market trends. The product manager is the driver for the continuous development and growth of the product.
