PM: Key for successful business

There will always be need for some selling. But the aim of marketing is to make selling superfluous. Marketing has to know and understand the customer so well that the product or service fits him and sells itself -- Peter Drucker

Irrespective of the numerous attempts being made by marketers to reach this destination, with various approaches, tools, techniques, R & D efforts, technologies, terminologies and designations, it still appears virtual.

During last 20 years or so, enterprises are concentrating on increasing efficiency, reducing costs and trying to make available their products at lowest possible cost. This resulted in automating various functions of the enterprise, including manufacturing and information handling. IT played a major role here by continuously providing solutions like Accounts, Payroll & HR, Inventory Management, Production, Marketing & Sales etc., then integrating them thru ERP and finally helping build & analyze databases in respect of Customers (CRM) and Suppliers (SCM).

It seems that during the journey so far, somewhere, somehow, we may have underestimated or sidetracked the basic objective of business, i.e. to fulfill the customer needs or to provide the customer what is needed and when. With increasing globalization, emerging competition and wider geographical spread of businesses, the reality is slowly sinking in that in order to be the market leader, both the Strategic & Tactical Product Planning should definitely be customer centric.

Product planning decisions largely determine the success or failure of new products. To achieve revenue targets, clear product strategy and direction need to be set and at the tactical level, product managers must understand the market needs and select the optimal set of features to meet those needs. At the same time, product complexity has to be controlled in order to achieve acceptable development schedules and create a product that can be supported after the sale. This inherent trade-off forces constant analysis, forecasting, and prioritization. The better a company manages this process, the more likely it will achieve and maintain market leadership. It is now understood that only those companies will succeed who can consistently bring the right products at the right time for the right customers.

This is creating tremendous pressure on the companies to perform dynamically in the market and to continue to garner greater efficiencies and effectiveness in how new products are developed and taken to market. This is being shown to us by increasing investments by all manufacturing companies during last two years in 'Product Lifecycle Management (PLM)' solutions. According to research majors AMR and Gartner, PLM is the fastest growing software segment with a 5 year CAGR @ 13 percent. However, PLM would just take care of some of the tactical points of product development and there remains a void for carrying out the strategic planning effectively. Then there would be a need to consolidate and manage all these functions with a clear focus and optimization.

Be market driven

With the everchanging market scenario, the need is to be market driven rather than company driven. That is, you have to be driven by the needs of market rather than the capabilities of your company. A market-driven company defines itself by the customers it wishes to serve rather than the capabilities it wishes to sell. Companies that are not market driven believe the role of marketing is to create the need for our products. But mature companies realize that the aim of marketing is to make selling superfluous.

As happens in any manufacturing organization, be it consumer goods or technology, introduction of a new product goes thru a typical cycle and unless checked in time it becomes a vicious cycle, which may look like this ::

Technology à Revenue à Branding à Selling à Cost-containment à back to Technology again.

The development process starts from technology and travels thru various focal stages with turning back to it again for upgradation or replacement of the base technology underneath the product. The Customer, however, is conspicuous by absence.

Here engineers or developers know technology, marketing/communications knows how to communicate, sales people know about the deals they're working on, everybody is busy trying to devise ways to talk TO the market or customer. But, who is listening to the market? And who can give details about market or customer problems?

Old Spices in a New Heady Mix:

Product Management is the fast emerging discipline, which is getting all the diverse functions related to marketing & selling together with a renewed and emphasized customer orientation. It can be in the market, observe customer problems that the company can solve and then tell the development cell about the problem. It will start the cycle from the market or customer and will end it with the customer by providing him complete support for utilizing their product to solve his problem. It will also provide the needed technical support at every stage.

Product Management (PM) can bring back the lost focus by including Customer into the equation. PM is about what the product should be and is an occupational domain, which holds two professional disciplines, Product Planning and Product Marketing. The product's functionality is created for the user via product planning efforts and product value is presented to the buyer via product marketing activities. In both, the customer rules !! And as customer IS the market, you automatically get in sync with the market demands.

As PM is made up of two distinct functions, the constituents there off can also be listed out to understand it better. These two functions are required to collaborate with each other on every step to provide seamless inputs to each other.

Product Planning may have following broad functions :

•  Market Research, Market Requirements, Product Definition & Design
•  Product Life Cycle (PLC) & Evangelizing the Product with internal customers
•  Product Portfolio Management
•  Product Differentiation

Product Marketing has the following :

•  Product Positioning & Outbound Messaging
•  Product Promotion with external customers
•  New Product Introduction to Market
•  Product Lifecycle Management (PLM)

The above list develops a feeling that while all the time we have been working with these functions then what is new ?

New is the discipline PM, which encompasses all the above functions with a single goal and tries to take it forward synergically. It is the customer-centric approach towards seeing existing things with a new outlook. PM helps us to develop low-risk, repeatable, market-driven products and services, because it is vastly easier to identify market problems and solve them with technology than it is to find buyers for our existing technology.

PM identifies a market problem, quantifies the opportunity to make sure it's big enough to generate profit and then articulates the problem to the rest of the company. The market opportunity, then, can be communicated to the management team with business rationale for pursuing the opportunity including financial forecasts and risk assessment. The problem can, then, be told to development cell in the form of market requirements. Marketing/Communications can be given positioning inputs. Sales can be helped out by defining a sales process supported by the requisite sales tools so that the customer can choose the right products and options.

Thus PM can be a guiding force in the development of technology into problem-solving products.

Challenges & Opportunities

It can well be seen that the same organizational functions are arranged in some other and more effective way to achieve the desired objective of selling market-driven products, which get sold on their own, which generate revenue with much lower selling expenses.

This unfolding scenario is quite interesting and is presenting us with new, upcoming challenges on various internal & external fronts. There are four distinct frontiers, which need to be managed successfully for optimum Product Management. These are four active areas around any new product and they form it's own distinctive product eco-system.

Business

• Assuring strategic alignment of a balanced & optimized product portfolio
•  Ensuring consistent decision-making thru proven repeatable processes
•  Achieving revenue and profitability goals thru strategic & tactical planning

Market

• Balancing customer and market needs thru constant preference analysis
•  Responding to change by forming agile & responsive product strategies
•  Setting realistic market expectations with internal & external customers

Product

• Managing product complexity considering changing technology platforms
•  Improving product quality as per market standards, not competitor's
•  Managing backward/forward compatibility & obsolescence

Organization

• Collaborating across teams & locations with real-time infrastructure
•  Allocating resources for maximum returns with proper planning
•  Interfacing with development, channel partners & customers

The pre-existing systems present in each of the above areas now need to be refocused with customer-centric approach and also by changing the process chronology. The modified working order and information flows among all these business processes indicate substantial scope for improvement and represent an opportunity to take a quantum leap in benefits accruing in terms of market capture.

The new product eco-system is customer-focused, market driven and collaborative with internal & external customers. With the availability of many software solutions in the Product Planning domain, this task has become easier.

Turning Business Development on it's Head

The ensuing scenario may turn the standard Business Development function on its head due to sheer simplicity. Strategic Product Managers can achieve the following steps with studied efforts, they can:

• Understand company's distinctive competence
•  Know what is possible with technology
•  Collect and quantify market problems
•  Know the market better than they know themselves
•  Communicate market problems to the organization
•  Get the appropriate product ready to solve the market problem, which sells
•  Identify next problem

This can be called as "Outside-In Approach" of business development where market or customer problems are converted into products and which have a much more success rate than the traditional "Inside-Out Approach", where company tries to sell the prepared product by searching for customers.

Instead of talking about our company and our products, here the product manager talks about our customers and their problems. A product manager is the voice of the customer. The product manager is also the business leader for a product, looking across all departments. This kind of scenario may happen in future and then we may not need the Sales Dept. at all. As the products are designed & produced as per customer needs, they are already booked for selling when manufactured.

But then, what about the market size?; segmentation and sales volume of each product? What about the customized content and mass content of each product? Can we go about standardizing the customized products for economies of scale? Or are we contradicting ourselves?

These are the questions sure to arise and answers to them may lead us to an optimized solution, perfectly balancing both the worlds of product-centric and customer-centric approaches.

Customer Rules!!

Following are the obvious benefits arising out of the PM and they are for all, creating a win-win situation.

• Products more tuned to market and customers needs
•  Shorter and more predictable development schedules
•  Higher development productivity and return on R&D investment
•  Better product quality, supportability, and extensibility
•  Reduced manufacturing and materials costs

Product Management, which is supposed to be a new mix of existing business processes, is sure to turn around the rule-books of marketing and due to the firm customer-centric approach, may soon be the 'must have' solution.

We only hope that, hype apart; the solution delivers and lets the 'Customer Rule' in the true sense in this age of aware consumer & buyer.

Author is DGM- IT, KENSTAR