Meeting Topic: PRODUCT MANAGEMENT 101: The Business Behind The Product
Moderator Name: Brian Seagrave
Speaker Name: Greg Riggs, Director of Private Brands, Guitar Center
Meeting Location: Sportsman's Lodge, Studio City, California
How does our gear get to market and what happens once it's there? This was the focus of the October 24, 2017 AES LA section meeting, where AES-LA Board Member Greg Riggs reprised his presentation from the 141st International AES convention. Acknowledging his debt to The Product Manager's Desk Reference by Steven Haines, Greg clearly laid out the product life cycle and the product manager's responsibilities for us in an engaging evening. Greg's research partner, Scott Leslie, who, unfortunately, couldn't be present, also provided some material.
Steven Haines calls the product manager the "mini-CEO" for the product, the one person who champions it. According to Greg, the Product Manager stays with the product when it goes to market long after the development team leaves up until it discontinued and withdrawn from the market. The Product Manager instills Customer Focus ("what do people do and why?") to the Product Strategy and Product Plan.
Product Management deals with three main Product Development challenges:
1) Time to Market (planning)
2) Meeting Market Needs/Competitiveness (market research and understanding the Customer Value Equation)
3) Meeting Price/Cost Targets where the team designs for value and manufacture.
Greg explained that the "Customer Value Equation" is where one understands what truly drives purchase behavior and how the product stacks up to others in the market. Greg showed a table that lists Value Factors by weight and how several competitors compare on each point. If the product you're developing doesn't score high enough when compared to competitors, this is the time to retool or abandon before too much money is spent in development.
Greg illustrated the use of the "Productivity Pyramid," which shows that it's cheapest to make changes to a product at the concept level, where one person is responsible for coming up with several concepts and no extra money is spent. This phase is the shortest, a couple weeks. Refinement starts after that, where a small team of, perhaps, three people define the product and may take a small investment over a month. The Design level can take a year for about ten people to come up with one design and involves the most money, in the hundreds of thousands of dollars. At this level, the product can still change when new tech undermines what you put together or customer needs change, but changes at this stage are much more expensive.
The Product Lifecycle can be broken down into Major and Minor phases:
1) New Product Planning — Understanding the customer -- Why are we bringing this product to market?
2) New Product Introduction — Can engineers build it correctly?
3) Post-Launch — Responsibilities once the product is in the market.
Each phase has different management priorities and considerations. The break-even point and profit is not seen until well into Phase 3. Before that phase, a company usually has negative cash flow for the product. Once the product is available for purchase, there are four phases of profit: introduction, growth, maturity (the most revenue) and decline. If you can introduce a new feature or meet customer needs some other way before reaching the declining point, the lifecycle of the product may be extended.
According to the presentation, the scope of the Product Manager entails eleven facets, five of which Greg outlined as critical to success, as without them, the project will surely fail:
Voice of the Customer/Customer Advocate — Address the problems, challenges, needs and motivation of the customer. Understand the customer's decision-making and purchase process. Come up with different applications of the prod-uct and competitive solutions.
Inbound Marketing — This is where we LISTEN to and LEARN from the customer. We identify the opportunity and how big it is. There are two types:
Qualitative Inbound Marketing - We use the Customer Value Equation at this point. Ideally, you want to watch a customer work to identify their problems. You may want to use surveys, interviews, expert panels, etc.
Quantitative Inbound Marketing — What is the addressable market size and the potential market share of our product versus what competitors have. We need to assign a dollar value to the product life cycle and determine its priority against other products currently being managed.
Product Strategy — Our new solution must grow out of customer needs and be feasible according to our capabilities. It needs to be better than existing solutions and stronger than competing solutions.
Product Plan — Think 360 degrees! For instance, you may produce a kick drum mic stand that can also be used at a podium. The product plan is a living, master meta-document outlining the strategy and all supporting sub-plans. It includes: The team roster, product line descriptions, market segments and customer needs, the product strategy, functional support plans, market data, product performance data, operational systems support, customer-facing support, and the project plan. Greg says, "As a manager, tying things to numbers is the only way to get your point across.
Diligent Product Lifecycle Management - Typical skills of the Product Manager include: business acumen, marketing acumen, project management, customer insight, product insight, leadership and teamwork.
Outbound marketing is when we create awareness of the product using all relevant proactive and passive communication channels. Your messaging should clearly articulate that you have the best solution. You fail if you say the wrong thing or say the right thing in the wrong place. Greg says, "if inbound/outbound marketing is done right, the customer feels they got more than they paid for."
Once in the market, customer service is key. Develop policies that are as good as your product. Customer service programs are based on customer expectation, category norms and competitive strategy. Financial considerations include product design/quality versus customer support and the impact of the level of support on product forecast.
With a few small business owners in attendance, the Q&A section of the evening had some interesting discussion with many questions. We'd like to thank Greg Riggs for getting this together so quickly and everyone who attended as well!
Written By: Frank Schnyder