Product management is challenging, complex, and often misunderstood. Across the high-tech Product Manager's Toolkit. Front Matter. Pages PDF. The Product Manager's Toolkit Gabriel SteinhardtThe Product Manager's Toolkit PDF "caite.info The Product Manager's Toolkit. Methodologies, Processes and Tasks in High- Tech Product Management. Bearbeitet von. Gabriel Steinhardt. 1st Edition.
|Language:||English, Spanish, Dutch|
|ePub File Size:||29.82 MB|
|PDF File Size:||20.17 MB|
|Distribution:||Free* [*Regsitration Required]|
It provides a real- istic overview of the many roles product managers play and it exam- ines, in an organized fashion, a variety of management tools which. Gabriel Steinhardt. The Product Manager's. Toolkit. Methodologies, Processes and Tasks in. High-Tech Product Management. The first € price and the £ and $ price are net prices, subject to local VAT. Prices indicated with * include VAT for books; the €(D) includes 7% for. Germany, the.
Product sales pass through different and distinct stages. Market requirements describe what the user needs to do, while product requirements detail the functionality that the product provides, and enables the user to do what is needed. For example, the directive: The key to making this happen is the notion that product planners are problem-tellers and market experts, while engineers are problem-solvers and technology experts. The remaining stages, seven through nine, form the product development process, are owned by the lead developer and are executed by the product development team. It is all a matter of timing since asking customers what they want during the sales process is not considered actually listening to the market.
Each team member takes a leadership role during the product delivery process, and contributes where and when needed to deliverables owned by other team members. The product delivery process, often called a product program and managed by a program manager, is an umbrella term that contains many corporate sub-processes, among them three key sub-processes which are the product planning process, the product definition process and the product development process.
At an abstract level, Table 3. The entire product delivery process is comprised of stages one through nine. Stages one and two constitute the product planning process, which is owned by the product planner.
Stages three through six constitute the product definition process, 3. Uncover unsatisfied market needs Product planner 2.
Define market requirements 3. Identify product concept Product architect 4. Define product requirements 5. Design product Lead developer 6. Define product specification 7. Implement the design Product developer 8. Test the product 9. Manufacture the product 27 Sub-process Product planning process Stages Product definition process Stages Product development process Stages which is owned by the product architect.
The remaining stages, seven through nine, form the product development process, are owned by the lead developer and are executed by the product development team. The first six steps of the product delivery process, being the product planning and the product definition processes, are the main focus of this chapter and critical to the success of the eventual product development effort.
Instead, their primary focus is on executing autonomous product definition. The product delivery process inspires constant feedback and interface between the product management department and the engineering department, and effectively coordinates market analysis and technical design efforts that eventually allow for building a successful product.
Regarding organizational placement, the product planner position belongs in the product management department, while the product architect and lead developer usually reside within the engineering department.
However, with the right individuals and corporate mindset, it is also possible to have the product architect position placed in the product management department. Through the actions and deliverables of the product definition team, and via execution of the product definition process, market requirements are translated into product requirements, which themselves are translated into engineering design requirements and specifications, to be used by the product developers.
It is imperative that roles and responsibilities of the product definition team members are profoundly clear and known to everyone in the company, and are consistently communicated and interpreted in the same manner by anyone that is involved in the product delivery process.
This is a critical factor for the successful execution of the product planning and product definition processes. The disconnect with market needs is further amplified as companies often frame their market worldview and define products in terms of what the company has to offer rather than what the customer actually wants.
Countering this phenomenon should be and is the realization that product planners outline what customers want, and that the engineers respond with what they can build and how long it will take to bring the product to market. There are many possible partitions and terminologies surrounding the product planning and product definition processes. Indeed, the details of the product delivery process vary from company to company, but the fundamentals are the same and revolve around clear market and product requirements, and a well-understood methodology.
The way to produce successful market-driven products is by properly structuring a product definition team and governing its actions with well-defined product planning and product definition processes, within the context of a product delivery process. The key to making this happen is the notion that product planners are problem-tellers and market experts, while engineers are problem-solvers and technology experts.
It embodies a market-driven approach that involves spending time with current and future customers to determine past, present and future market problems that customers need to solve in order to meet their business goals and objectives. The VOC process is based on in-depth interviews that lead interviewees through a series of situations in which they have experienced, and perhaps found, solutions to the market problem being investigated.
Executing the VOC process are members of the product definition team which is comprised of individuals with different roles and responsibilities. Product definition team members, primarily the product planner and product architect, respectively contribute to this process which should ultimately yield a product that meets customer needs and expectations.
The MRD is a written representation of the overall functionality that users seek in order to address a particular market problem. Therefore, the MRD represents or describes the user view of a solution to the market problem.
As such, the MRD becomes a living document that reflects market change via the revised functionality the solution must hold. The MRD only describes desired functionality. It does not describe the specific features and attributes that the solution should have to solve a particular market problem. The MRD is intended for all those in the company or outside of it, who contribute to the product delivery program, including executive management, usability specialists, product marketers, documentation writers, engineers, and testers.
The MRD captures the essential information that is required as input to devise a functional solution to a specific market problem. In general, the goal when writing an MRD is to present as much information as clearly and concisely as possible within a consistently organized format so that engineers can first determine if a product concept can be developed, and then describe a suggested solution product and its features.
A market requirement is an aggregate unit of information which represents with sufficient detail the functionality sought by users to address a specific facet of a particular market problem. This is the full and comprehensive definition of a market 4. Unlike product requirements, market requirements are lasting and do not expire when technology or the solution evolve.
The sum of all market requirements collected describes the total functionality needed to address the whole market problem. By understanding the overall functionally that is described by the sum of market requirements, it is possible to construe the scope of the market problem. Essentially, the market problem is described by the sum of market requirements, and the market problem scope is described by the overall functionality that is in the market requirements.
Market requirements are built using four components: The essential component of a market requirement, that must be present in any market requirement, is the directive. Constraints, rationales and sources are considered vital components, and their presence is strongly desired in any market requirement.
The four market requirement components are defined as follows: Ideally, all rationales should be accompanied by the source from which they came, thus providing credence to the assertion made by the rationale. Rationale and source sets can be attributed to either directives or constraints, since directives and constraints can both be viewed as claims.
Therefore, the market requirement would optimally have rationale and source combinations assigned to the directive and to each constraint. The relationship between the components is one-to-many throughout the internal structure, when viewed top-down. The directive can have several rationales supporting it; the directive can have many constraints assigned to it; a rationale Fig. Defined in this manner, the directive is a compulsory essential component, while the others are considered discretionary vital components in support of the directive, as well as each other.
It is a statement which is phrased as an instruction that guides and directs the functionality being sought by the user. The directive explains what is to be accomplished.
It will also determine the quality and form of the proposed solution. Market requirements detail functionality — essentially the solution a user seeks to a defined market problem.
At the basic level, all market requirement directives relate to the user, and are consistently phrased in the same manner. For example: The special conventions used in the directive statement are: All desirable market requirement directives i. Should medium — desirable feature.
Should low — include only if resources permit. The directive is the most important component of the market requirement. Directives themselves have their own foundation elements and structure. All directive elements must exist within each directive so that the directive itself is valid. Directive elements are: Ultimately, the structure of a useful market requirement allows it to be easily modified and understood by non-technical and technical persons who will be acting on it in the future.
This is important because there will be times when the people who originally wrote the market requirement are not available to continue work on the MRD.
Such a scenario makes a strong case for why market requirements need to stand on their own and be self-sufficient for future use. Incidentally, people often view the market requirement directive as being synonymous with the entire market requirement unit of information.
This happens because the directive is the most dominant component of a market requirement, but clearly the two are not the same. Such expressions and wordings will lead to very different personal interpretations of the directive. Accordingly, the proposed solution and its scope will vary considerably. This inevitably will lead to a disconnect between the desired functionality the market requirement attempted to convey, and the actual functionality that will be proposed.
For example, the directive: Constraints are limitations imposed on the solution, and are another component of the market requirement. In the following example, the directive previously used in the example is revised and interjected with constraints: However, the directive remains flawed in several respects.
From the outset, the directive did not detail the terrain where the flashlight was dropped, which could be snow, mud, sand, water, grass, concrete, etc. Rectifying ambiguity is accomplished by quantifying the directive, as in: It is immediately apparent that the directive must be qualified using constraints, and that the constraints must be quantified.
Directives will present different implications and different optimal solutions when they are differently qualified and quantified. This means that market requirement constraints must be as scalable and measurable as possible, because what is not measured cannot be controlled.
The objective in writing high-quality market requirements that are properly constrained is to provide anyone reading the directive, particularly the product architect, with enough information to propose a way to accurately and efficiently provide the needed functionality. There is a balance however, as too many details and constraints will impede creativity and innovation. Additionally, when dealing with complex products with long development cycles, it helps to document the reasons why certain functionality was requested.
When adequately captured, the reasons can be used during reevaluation and for marketing purposes. The rationale represents the logic and justification of a directive or constraint, while the source provides the rationale with credibility based on data or respected opinions.
Constraints are meant to intentionally limit the options open to the architects of the solution. Because of their impact, each constraint should be accompanied by a rationale and a source.
The sources may come from a variety of origins: Readers need to know the reason for which a particular directive or constraint was introduced, and rationales are the given explanation. Rationales provide the justification and backup for a directive or constraint, allowing readers to gain a better insight as to the merit of that component. Sources are very important and they allow any rationale or constraint to be validated by documentation, surveys, statistics, or views of market analysts.
Sources complement the rationales, and prove that the rationales are not mere opinions of the writers, but actual justifications supported by facts.
The rationales and sources provide more helpful information to those faced with writing the PRD — the next important document in the product development cycle. In general, it is optimal when rationales and their related sources are assigned to all directives and constraints within all market requirements.
Story mode is helpful when dealing with simple products without too many constraints, or when the developers prefer the narrative, flowing form of knowledge transfer. An example of story mode representation would be: With data mode, a less verbose directive is presented and supplemented with data in the form of bullet points which hold the other market requirement components.
Data mode is helpful when the product is complex, subjected to many constraints, and is of a deep technical nature. The data mode approach is more suited for high-tech products, while the story mode is favored by those who deal with consumer goods. An example of data mode representation would be: Snow 36 4 Crafting Market Requirements An example of a more complete market requirement with samples of constraints, rationales and sources might be using fictitious data and sources: Snow 4.
Larry L. Wear, Ph. Each directive addresses a facet of the market problem. The directive format is: Sources are a list of references and information origins that validate the market requirement Constraints A list of all possible constraints; the limitations imposed on the solution relevant to this particular market requirement.
Each constraint should be supported by its own rational and source l Rationales A list of all possible rationales; the reasons that support the introduction of this constraint o Sources Each rationale must be supported by a source. Sources are a list of references and information origins that validate the market requirement Persona Names of all personas applicable to this market requirement Use Case A use case statement or use case identifiers applicable to this market requirement.
Once a market requirement or set of market requirements have passed the wholeness test, they are then ready to be placed into the MRD. After one is developed and finalized, it will get used by someone else in the product process. As a result, the MRD has to be a standalone document that can be used successfully by the next person in the development process to develop the right product for the intended customer.
When the product planner completes and finalizes the MRD, it is passed on to the product architect who is responsible for creating the PRD. Typically the MRD is stored as a textual document and the most common way of doing so is with MS-Office tools, as many product managers are familiar with Microsoft Word or Excel. While word processors are good at producing textual documents, they have deficiencies that significantly decrease their ability to provide a suitable platform for creating market requirements.
Word processors and spreadsheets are not good at querying information, sorting and baselining data, maintaining relationships between statements, and linking information internally and across documents. They are however inexpensive and easy to learn and use. There are other more effective and efficient methods and means for building market requirements and an MRD. An example of an alternate method is using a database to store and create all market requirements.
For some products, a market requirements database can be more useful than a document for accessing and utilizing the various directive components, arguments, operators, metrics, and supporting material. The database method utilizes a computerized database and application software that aid in the generation of market requirements and an MRD.
Implementing market requirements in an electronic medium can facilitate the crafting of market requirements such that they are particularly useful further down the product delivery process. Every market requirement can be presented to the reader via a table of data; essentially a database record with data fields. In addition, the volume of market requirements can be organized in database form and formatted in structural representations that can be managed relatively easily using a computer.
A database is also helpful when there is a new product launch and decisions need to be made with regard to first release functionality. Customer critical items that are universally acceptable form the bulk of the initial release. However, requirements that did not make the first release, but are relevant to the product roadmap, can be considered for the next development cycle. Once complete, the MRD is used to create the PRD which will contain the descriptions of all of the functionality that will go into a product.
The PRD represents or describes the product view of a solution to the market problem. The matter of traceability — the linkage between market requirements and product requirements — is of great importance to product planners so they can verify the product is not lacking needed functionality, or conversely, has superfluous features 4.
Databases are a clear choice to monitor traceability between market requirements and product requirements. There are several software applications on the market that were built for managing requirements of all kinds market, product, technical. These applications are very much the same in principal — essentially database systems with configurable or fixed data entry screens and query mechanisms. However, these applications are designed to handle data, not enforce processes, and thus, to a large extent, the majority of them do not guide the product planner through a built-in methodology.
With so many potential interpretations to the nature of a market requirement, the definitions and components presented in this chapter help demystify the inherent ambiguity in the industry surrounding what a market requirement is and its purpose.
Each market requirement must be tested and verified against consistent guidelines so that it is valid for use in the product definition process. Software applications that use databases as an alternative to textual documents improve the management of the entire product delivery process, and ensure the much needed traceability between market requirements and product requirements.
Writing quality market requirements demands a very special skill set of product planners. While familiarity with markets is crucial, the key to developing quality market requirements is often determined by understanding the mechanics and methodologies for creating them. The aim is that by understanding the concepts introduced in this chapter, the product planner will have a framework for producing complete, clear and concise market requirements.
These will serve as the key to reducing risk of product failure and increasing the chance for product success in the marketplace. The goal of marketing is to build and maintain a preference for a company and its products within the target markets.
Volumes have been written about the marketing domain and what it entails, but little has been noted about how it is ordered and organized. This model maps the marketing activities within the marketing domain, presents the division and location of departments identified with the marketing domain in the corporate organizational hierarchy, and describes the types of strategies and plans related to the marketing domain.
This chapter provides insight into the concept, structure and elements of the marketing domain from the Blackblot perspective. Business domains include business related functions such as business management, operations, engineering, manufacturing, product management, and marketing. Business domains themselves are vast, layered, and made of different elements.
All the business domain elements are based on a common collection of knowledge areas and processes. The layers of a business domain are organized and sequenced in the following hierarchical manner: Most companies implement the elements in the business domain by using a conjoint approach. Without attesting to its merit, a characterization of this very commonplace implementation is as follows: Within a particular domain, the majority or virtually all disciplines are constantly being executed. Within each discipline, several methods are used concurrently with one particular method being the dominant one.
Within each method, several modes are used alternately. Within each mode, a multitude of techniques are used concurrently or alternately. By using the business domain concept it is possible to explain the internal structure and relationships of the marketing domain. Marketing is focused on the task of conveying pertinent company and product related information to specific customers, and there are a multitude of decisions Loyalty programs, community relations, alliances, symbols, ideas… Product Branding Market research, value and positioning messages, messaging plan… Value Emphasis Competitor analysis, product comparison… Feature Emphasis Press Releases, Events, Lobbying… Public Relations Presentations, sales tools, stationary, colors, logos, packaging… Graphic Arts Business Domain Elements Discipline — Knowledge area or activity that is governed by processes.
Method — Plan or course of action. Mode — Particular form or way of achieving goals. Technique — Procedure used to accomplish a specific activity or task. Knowledge databases, briefing sessions, demos, visits… Analyst Relations Copyrighting, budgeting, creative, Internet, print, radio, TV… Advertising Marketing Communications Loyalty programs, community relations, alliances, symbols, ideas… Corporate Branding Corporate Marketing Skimming, penetration, diversification, discrimination… Price Emphasis Fig.
Once the decisions are made, there are numerous ways tactics and processes that could be employed in support of the selected strategies. The goal of any business is to build mutually profitable and sustainable relationships with its customers. While all business domains are responsible for accomplishing this goal, the marketing domain bears a significant share of the responsibility. Within the larger scope of its definition, marketing is performed through the actions of three coordinated disciplines named: Table 5.
Structured representation and mapping of the marketing activities within the marketing domain marketing activities is everything that is being done in the marketing domain. Structured representation of the division and location of marketing related departments in the corporate organizational hierarchy. Description of the types of strategies and plans in the marketing domain.
Provide a structured approach to mapping the elements of the marketing domain. Aid in building efficient corporate departments and structures that perform marketing activities. Feature Feature Competitor analysis, product emphasis comparison comparison. Price Cost-plus, Skimming, penetration, emphasis going-rate diversification, discrimination. Product Uniqueness, Loyalty programs, community branding labeling relations, alliances, symbols, ideas. Corporate marketing Corporate branding Analyst relations Marketing communications Advertising Personification Engagements, resources Loyalty programs, community relations, alliances, symbols, ideas.
Knowledge databases, briefing sessions, demos, visits. Entertainment, Copyrighting, budgeting, creative, information Internet, print, radio, TV.
Graphic arts Signals, imagery, Presentations, sales tools, stationary, perception colors, logos, packaging. Public Relationship, Press Releases, events, lobbying. See Fig. There are three principal methods to achieving this goal. Each of these principal methods concentrates on one of the various aspects of the product: In the price emphasis method, the goal of product marketing is reached by emphasizing and communicating to the market the price of the product as a marketing signal.
In the value emphasis method, the goal of product marketing is reached by emphasizing and communicating to the market the value the product holds relative to the customer and comparatively to the value offered by other competing products.
The goal of the value emphasis method is to create superior perceived value and prove superior actual value. The price emphasis and feature emphasis methods price competition and comparative marketing are considered significantly easier to implement than the value emphasis method value marketing.
This is because the price emphasis and feature emphasis methods convey simple quantitative concepts that are easy to understand and require minimal interpretation by the customers. Conversely, the value emphasis method relays abstract and qualitative concepts which project conjecture and argumentation, and thus are more challenging to grasp.
Another method in the product marketing discipline is product branding. Product branding is executed concurrently with one or more of the principal methods in product marketing. The process of product branding and the derived brand is often the result of a deliberate and conscious effort by the company, but can also be an unintentional 5.
Product branding is therefore not considered a principal method on its own since the formation of a brand can be the outcome of applying any of the three principal methods in product marketing. Corporate branding aims to create a favorable image and a positive identity relative to the company, with customers existing and potential in the target market.
The goal of corporate branding is to leverage corporate brand equity in support of product brand equity. Financial analysts are individuals often employed by investment banks, who provide private and institutional investors with valuable perspectives on the market in support of investment decisions.
Industry analysts are individuals often employed by research firms, who present companies with knowledge and perspectives on a select industry in support of business decision making. Analyst relations attempts to indirectly influence customers via the analysts. The goal of analyst relations is to sway analysts so they in turn positively affect potential investors and customers with their recommendations.
Marketing communications manages and employs different media vehicles in order to communicate information about the company and its products to the target audience. The marketing communications discipline objectives are supported by three principal methods: Because of the different interpretations and views of the marketing domain and of the marketing disciplines, there is neither a consistent place nor uniform allocation of the relevant corporate departments in the organizational corporate structure.
The corporate departments which represent the three marketing disciplines are occasionally aggregated to one corporate division called Marketing, sometimes grouped along with disciplines from other domains, and sometimes scattered among different corporate divisions.
As with the representation of the marketing domain, the model uses a layered manner of description and a graphic and tabular presentation. Some disciplines from other business domains are occasionally grouped with the marketing disciplines and placed within the Marketing corporate division.
Commonly interjected in to the Marketing corporate division are the sales and business development disciplines which actually belong to the operations domain. Both the sales and business development disciplines are actually part of the supportive operations business domain and therefore do not belong in the marketing domain. Every strategy has two goals: Inside the marketing domain there are two key decisions making areas that form the two marketing related strategies: The market strategy is determined by roles in both the product marketing and product planning departments with contributions from other corporate departments, notably the executive management department.
The general idea is to combine mix the variables to generate an optimal, positive, and desired response in the target market. Diverse and numerous combinations of marketing methods, modes, and techniques can be selected and applied to create a marketing mix. The marketing strategy is mostly determined by roles who focus on the promotion element of the marketing mix in the marketing communications department with contributions from other corporate departments, notably the product marketing department.
Market strategy Decisions that define target markets, set marketing objectives, and outline how to build a corporate competitive advantage. Product strategy Decisions that build and enhance products to fit market needs, and outline how to build a product competitive advantage Product strategy belongs to the product management business domain.
The product strategy belongs to the product management business domain and is determined by roles in the product planning department. Inside the marketing domain there are two plan types: The market plan documents the market strategy, but when prepared in support of the product marketing discipline it also documents certain elements of the product strategy, which pertain to building a product competitive advantage.
Market plans are created by roles in the product marketing department relative to the product and in the corporate marketing department relative to the company. The marketing plan contains the marketing strategy and is created by roles in the marketing communications department, with contributions from the corporate marketing department, but primarily from the product marketing department.
The marketing strategy is permeated on an ongoing basis by various marketing activities, but is also expressed by very specific and focused measures taken in the market. Examples of marketing programs include events conventions or conferences , advertising campaigns, and limited-time discounting promotions. It is noted that support strategies and plans, which are more operational and tactical in nature, are derived from the market plan and the marketing plan. These include strategies and plans for advertising, analyst relations, and public relations.
Marketing plan Description of the selection and application of marketing mixes in the target market. Marketing Description of the short-term marketplace effort designed to obtain a specific program marketing goal. Many definitions abound as to what marketing is and its purpose. Some definitions are very expansive and some more focused. At the heart of these diverse definitions are different perceptions which view marketing mainly as a process, an activity, or a corporate department, or all of them combined.
Consequently, the abundance of interpretations that proliferate in the industry creates different corporate structures and role definitions to support them. Some even view the term marketing as loosely synonymous with the terms sales or advertising.
By understanding the concepts, definitions and structures introduced in this chapter, those responsible for marketing now have a complete and clear framework for executing marketing activities and assigning them to the appropriate corporate departments.
The goal of the product marketing discipline is to generate product awareness, differentiation, and demand. Three principal methods used to achieve this goal and each of them emphasizes one of the various aspects of the product: The price emphasis method is called price competition. The features emphasis method is called comparative marketing. The value emphasis method is called value marketing.
This chapter describes the underlying concepts of the value marketing method and how to perform value marketing. Some formulas are rudimentary and simple, and some are complex and may include cultural, emotional, social, mental and psychological coefficients to indicate the highly perceptive nature of value.
Customers will always prefer to base their decisions and opinions on actual value rather than perceived value, because actual value is inherently more realistic and somewhat more objective.
Actual value is always based on actual components actual benefits and actual costs[customer]. However, perceived value can either be based solely on perceived components, or on perceived and actual components. To create perceived value it is enough that one variable in the value formula is of the perceived type. Ultimately, positive value either actual or perceived derived from owning and using a product is what customers seek and will pay for.
Table 6. Costs are predominantly defined in monetary terms, but can also be expressed in non-monetary terms. Accordingly, value can be expressed either on a monetary or utility non-monetary scale, or ostensibly both.
Both transformations are based on the known utility that other alternative products can provide for that amount of money. Monetary units are considered intuitively easier to measure and justify than non-monetary units of value. Overall, value can be actual or perceived, tangible or intangible, and can be monetary, non-monetary, or a combination of both.
The resulting value is therefore subjectively and wholly expressed in utility units. The resulting value is subjectively expressed in monetary units. Many products will hold both utility and monetary value, and both these forms of value scales will influence the customer to buy and continue using the product. However, it is cognitively difficult to jointly consider these two very different scales of value.
Thus, the customer often focuses on one value scale as the key factor to consider, while the other value scale is regarded as an advantageous or positive compelling attribute. Again, value is something customers want and will pay for, no matter how it is expressed. Customers will often rely on their intuition in an attempt to understand and realize the level of value the product holds for them.
Common business oriented resultant value propositions, which are based on the benefits derived from features include: Customers try to determine the type, relevancy, and magnitude of the resultant value proposition the product holds for them, and corroborate that with available information public knowledge or own experience about the actual value proposition.
After customers ascertain the type, relevancy, and magnitude of the resultant value proposition the product holds, they need to comprehend and compare to other products the value received in relative terms, proportionate to the costs.
It is a notion that the customers use to differentiate products of seemingly similar value, although their respective absolute benefits and costs may be different. Common relative value propositions, which are based on the ratio between benefits features and costs TCO , include: More features for the same TCO.
More features for less TCO. Same features for less TCO. Less features for much less TCO. The term features is loosely interchangeable with benefits, and is used here for convenience only]. Customers try to determine whether the type of relative value proposition the product holds corresponds to their perception of quality, and corroborate the relative value proposition with the actual relative value.
However, if a company knows that its target market is comprised of customers with a definitive affinity to a particular relative value proposition, then that company can choose to offer a product with an actual value proposition that matches the particular relative value proposition being sought.
Perceived value is therefore the summation of the resultant value proposition and the relative value proposition. Accordingly, actual value is the summation of the actual resultant value and the actual relative value. These formulas can be expressed as: Superior perceived value is essentially the manifestation of the 58 6 Value-Marketing Model Table 6. From a more holistic perspective, companies go through a sequential process where they first attempt to uncover the existence of a market problem.
The companies then verify the availability of a market opportunity, continue to build a product that will solve the market problem essentially performing product planning, product definition, and product development , then create superior perceived value, and finally prove superior actual value. The latter part of the process is essentially executing value marketing activities to perform product marketing. If this process is done properly then the company would be able to realize the financial potential in the market opportunity.
Summarily, the value marketing method of product marketing tries to create superior perceived value and prove superior actual value. At this point the customer also surmises the tangible and intangible facets of the purported value, such as cost-savings tangible , morale, reputation, image or status improvement intangible.
This part of the process is completely intuitive. The next step the customer takes is to try to factually quantify and qualify the specific type of value that the product actually holds. With the 6. The customer surveys the industry for competing products, and through information gleaned from the market, possibly concludes that the product has superior perceived value.
The resulting action would be to purchase the product. The value estimation process would then restart and apply to a different product that potentially has superior perceived value. Based on all this experience with the product and other market data about the experience others had with the product, the customer can realize whether the product indeed does or does not hold superior actual value. The flowchart in Fig. In the flowchart the term ResVP means resultant value proposition, and the term RltVP means relative value proposition.
The following is a top-down explanation of the logics and process of creating superior perceived value. Provide more value than the competition. Help build a sustainable competitive advantage. While value is a relatively complex concept, competitive advantage is a rather simple idea. Relative to value marketing, the most important plan which guides the course of marketing activities to follow is the market plan.
In accordance with the goals of the contained market and product strategies, the market plan outlines marketing messages about the value and competitive advantage of the product, while simultaneously being synchronized with the corporate competitive advantage. Building a competitive advantage at either the corporate or product level is accomplished through devotion to quality.
Therefore, exceeding the hopes of the customers in deriving benefits from the product will yield a product competitive advantage, and exceeding the hopes of the customers in establishing a rewarding relationship with the vendor will yield a corporate competitive advantage. Customer expectations management is really about a promise a company makes to its customers.
A promise of quality. The promise of corporate quality, and the origin of a corporate competitive advantage, is when the company delivers a relationship more rewarding than the customers had expected to receive.
This promise is conveyed to the customers primarily via corporate marketing activities. The promise of product quality, and the origin of a corporate competitive advantage, is when the product delivers more benefits than the customers had expected to get.
This promise is conveyed to the customers primarily via product marketing activities. The embedded conclusion is that market strategy also states the reward which customers get from establishing a relationship with the company; and that the 6. Competitive advantage is based on quality, and so it can be deduced that an overall competitive advantage the market perceives will hinge upon both corporate quality and product quality. Accordingly, the overall competitive advantage formula can be represented as the summation of quality values: This state is called superior perceived value and it can be presented as an intuitive formula: This condition is attained by distilling information and data about the overall competitive advantage and product value in to messages that are communicated to the target market.
The messages attempt to influence customers to form an opinion that the product gives a net value more positive than its alternatives. Superior perceived value is thus achieved once that opinion is formed. Provide more value than the competition 2. Establishing product awareness is a by-product of issuing the positioning messages and the value messages.
Messages are ideas to be communicated, often corroborated by facts, yet foundational knowledge is required in order to formulate messages. The foundational knowledge required for preparing value messages is more elaborate. The USP concept is therefore loosely related to the value concept. Regarding quality factors, customers often consider the following elements as a signal that depicts corporate quality: Facilitation — attention to convenience. Assistance — dedication to customer service.
Caring — dedication to customer satisfaction. Customers often consider the following elements as a signal that depicts product quality: Productivity — scope of useful features. Longevity — how long a product lasts. Reliability — how long before breakdowns. Durability — how long without degradation. Customers often consider the following elements as a signal that depicts service quality: Responsiveness — promptness in helping.
Reliability — promising and delivering. Assurance and empathy — caring attitude. Promise of Corporate Quality. Promise of Product Quality. Company Core Competency. Resultant Value Proposition.
Relative Value Proposition. Unique Selling Proposition. These corporate-related value and 64 6 Value-Marketing Model Table 6. The foundational knowledge, once established, will be used to aid creating marketing messages. These messages will be communicated to the target market via a messaging model and plan. The product positioning messages must reflect a product feature or capability and the derived benefit to the customer, relative to the market problem.
Each data point must be based on measurable, objective, factual, provable information, and each message must be supported with data points the customer can actually verify. The diagram in Fig. The product value messages must reflect a perceived monetary or material or psycho-social worth that the customers shall gain from owning and using the product.
Unlike , the. Once determined, the elements of PMTK marketing messages model form a plan that guides the marketing activities. The PMTK marketing messages plan is the last step in implementing the value marketing method. It contains all the high-level content that is necessary to perform any type of promotional activities on behalf of the product. The marketing messages plan is provided to all relevant internal departments and external partners who will operationally communicate the marketing messages to the 66 6 Value-Marketing Model Table 6.
Common schedules include: These partners specifically include: The messages will also be conceptually reflected in all possible visual and written elements of the product such as: As with any marketing method, results are not guaranteed. This is because marketing methods attempt to foretell and alter human behavior, and therefore their outcome is most challenging and least predictable. Marketing is an inexact science and since humans are considered emotional and irrational by their own fabric, the results of all marketing activities are probabilistic and unpredictable, and typically there are no definitive best practices.
Carefully formed clear and targeted marketing messages are the basis for virtually all promotions, communications, advertising, sales, and other marketing activities. The outcome will be marketplace success. Revenue allows a company to maintain viability, invest in new product development and improve its workforce; all in an effort to acquire additional market share and become a leader in its respective industry.
Cash cows are leading products that command a large market share in mature markets. The question is therefore: How can a company develop a cash cow product? By deliberately extending the length of time spent at each of the PLC stages through different tactics, companies were also able to realize much of the revenue potential a product can offer.
Product sales pass through different and distinct stages. Each stage presents a different challenge, which calls for the application of a customized marketing mix. Introduction, Growth, Maturity and Decline.
Many trial or impulse purchases will occur at this stage. At this point in time, mostly loyal consumers purchase the product.
The lingering effects of competition, unfavorable economic conditions, new fashion trends, etc. Sales Introduction Growth Fig. The main business reason for extending the PLC is to gain more sales through longer presence in the marketplace.
The main marketing reason is since not all consumers are alike; certain consumer types will adopt a product at different stages of the product life cycle. By extending each stage of the PLC there is a better chance of exposure to the relevant consumer group. Extending the PLC should not be confused with extending the life of the product, which applies to enhanced durability, reliability or technical quality.
It is hard to predict a transition from one PLC stage to another because of measurement lags and proactively react to the change with targeted action. However, through proper marketing mix design and contingency planning, it is possible to apply various product planning and product marketing strategies at the beginning of a particular stage when it arrives.
It helps students of product management, product management practitioners, product management organizations, and corporations understand the value, theory, and implementation of product management. It outlines a practical approach to clarify role definitions, identify responsibilities, define processes and deliverables, and improve the ability to communicate with stakeholders.
Gabriel Steinhardt is Blackblot's founder and CEO, and a recognized international technology product management expert, author, lecturer, and developer of practical tools and methodologies that increase product managers' productivity. A marketing and information systems MBA with over two decades of experience in product management with technology products, Gabriel has assumed diverse leadership roles with major corporations and startups in marketing, product management, and technical undertakings.