Product Management - Basics of Basics
- 1. Author - Ravi Lakkundi
- 2. What is this presentation all about? • An insight about product management for aspiring or budding product managers • Focusing of practical approaches to product management (Mainly Strategic) • Learning by Example Continue if you are NEW to Product Management ….
- 3. Product Management • Product management is an organizational lifecycle function within a company dealing with the planning, forecasting, or marketing of a product or products at all stages of the product lifecycle (wikipedia) • Comprising of Product Development and Product Marketing
- 4. One who manages the Product is a Product manager !! ;)
- 5. Product Manager - Definition • Product Manager is CEO of a Product ABCAB Analysis – Market Analysis Business – Business Commitment (Money-Money-Money) Customer – Customer/Consumer Context Adapt – Adaptation to Change in Business and Market feedback Business – Generate New Business and sustain • By Definition – Product Manager keeps scouting for new business for an organization, Selects a particular interest area which can reap financial/other benefits for an organization and develops that offering/product for the organization and further manages that offering throughout its lifecycle
- 6. Product Manager Strategic/UpStream Product Manager Tactical/DownStream Product Manager Product marketing and Lifecycle Management Concept Create Commercialize Product Positioning Routes to Market Marketing Plan Launch Plan Collaterals and Sales Pre-sales Promotion Channel and Sales Training Evangelism CRM
- 7. New Product Development/Introduction Philosophy • • • • • • • • • • It all starts with one Compelling Concept Evaluate the concept, requirements and feasibility Can the idea make enough business? $’s Check the ROI if engineered Gather engineers and start engineering Check at every stage of engineering if the product being engineered/designed meets the objective Modify and Adapt to changes during course of design/engineering Check the final Engineered product and compare with objectives – Again Satisfied …? Yes … Enter into Mass production Launch the product and see it make money ……
- 8. Best Approach to learning Lets take a hypothetical company • Company Name – ACowStick Pvt Ltd • ACowStick Portfolio – Multimedia Speaker Manufacturers • ACowStick Market Share – Growing Linear • ACowStick Mind Share - Significant
- 9. Story Buildup … • ACowStick visioning to become a leader in consumer electronics industry intends to strengthen its product portfolio of Multimedia/Desktop Speakers • ACowStick has a great set of engineers and its products are valued for their engineering, Design and are sold world wide • ACowStick is eyeing the emerging Markets for expanding business and needs to make products which fit the demographic more accurately
- 10. Product Manager – Mr. DB ….. • ACowStick has Mr. DB as their star Product Manager • Mr. DB sets out for scouting the market to find out opportunities where he can grow the company business and expand the product portfolio Ideas for new product development can emerge from any place – Either by Market research, Competitor info etc
- 11. DB Idea !!! • Mr. DB aligning to the ACowStick core business looks at Market Trends in Multimedia Speakers • He realizes that the Tablet business in general is growing and soon realizes that there is a potential on making some new products • DB sets puts his gray matter to work and starts thinking aloud
- 12. The Tablet Trend – DB View • DB hires a Market research firm and focuses his search on global Tablet sales and asks the firm to get him – Market Size, Market Growth, Market potential for Tablets alone • The Market research firm gives DB some graphs on trends, sales, units etc etc
- 13. DB looks at the iPad and Other tablet Sales Results from the research -Tablet growth World wide is significant - Most popular price point is $150 to $250 tablets, Android tablets - In India alone Tablets priced less than 12000 Rupees (~$200 USD) are sold 1 million units annually (highest in the world !!) - 80% of tablets sold in India are 7 inch (priced at ~12000 INR) Making a valid business case / Market Trends
- 14. • Looking at the data DB establishes the fact that Tablets are here to stay and majority of them come in only 2 standard size 7 inch and 10 inch • 7 inch is most popular • He ponders that if Tablets are more popular then so should be accessories market Ex: Headphones, Portable speakers etc • People using Tablets will use Accessories with it for entertainment SAMPLE DATA – May be irrelevant Making a valid business case / Market Trends
- 15. The Accessories Market • Finding out the accessories used with 7/10 inch tablet is a little tricky, customers may or may not buy a bundled accessory • There are many accessories to categorize Headphones/Portable Speakers/Docking Speakers etc • Post researching the market again DB finds out that 30% of Tablet buyers buy a portable speaker/Headphone/Some kind of entertainment device with the tablet Making a valid business case / Market Trends
- 16. The Accessories Market - Continued • DB figures out the accessory portable speaker market worldwide is around 20 billion !! • Tablet covers accessory itself is around 2 Billion !! • DB figures out a big potential for a “Killer Tablet accessory” and he knows that ACowStick is a very popular and is a desirable Brand • Now what he needs is either a highly acceptable product “A Me too product” or a “disruptive technology product (New Me)” and take some risk with market acceptability Making a valid business case / Market Trends
- 17. New Product Introduction • DB chooses to design something new for tablets, a completely new product yet acceptable • DB knows that a Product Manager is also called the First Customer, he does an independent unbiased evaluation of “Me too” Vs “New Me” and takes input from his team • Since customers look for innovative, good value for money products the team unanimously decides on “New Me” approach
- 18. Target Make Something New – Out of the Box Accessory – A Speaker for Tablets Product to have Customer Context Product to be structurally correct and be usable Customers want good product .. good sounding … new and fresh &^&^%$#*&^%$% #^%&^%*((*^*&^
- 19. Conceptualize ……. • He decides to make a speaker for tablets that is unique • It is a part of the tablet cover or can act as a tablet cover • Can flap open or close when required • And not to forget sounds awesome !!
- 20. The First Look …. A Tablet Cover with foldable Speaker Attached to it !! • DB slowly builds up the idea • He contemplates – This is more usable than a portable speaker • A speaker system is difficult for customers to carry • Any thing that is not a part of the system becomes an accessory • This particular idea is something different – An accessory in principle but practically not an accessory !!
- 21. Conceptualize … Nurturing the IDEA .. • DB knows its too early to talk to design team but knows that he needs some sort of visual before taking his next step • DB influences his designer Mr. Stu and makes sure he gets the idea. Post analyzing the idea Mr. Stu comes up with a rough rendering of the product concept • DB does not spend much time in designing since he does not still know what his stakeholders have to say about the idea in general
- 22. Rendering …. Draft When Open When Close
- 23. Tablet with Cover (Speaker flaps open)
- 24. The Product Line …. is happy with the rendering and now needs to quickly make a good product line and name a product to present to his stakeholders .. • He names his concept as “FunTabStick” and develops a product line and how product will work •
- 25. working … • The user will use the FunTabStick and slide in the Tablet (FunTabstick actually is a cover with speakers) • The user will flip open the FunTabStick speaker on sides and they will be connected by innovative mechanism • Once the user slides in the tablet the tablet will automatically pair (Through NFC etc) with the FunTabStick cover and the speakers will start playing the media audio (Bluetooth) • Needless to say FunTabStick is a Powered cover with LiIon Batteries (Smartly packed with Speakers)
- 26. Product Line buildup … • DB now thinks on a product line he can build from his idea conceived • He also thinks of an initial price point the product can be offered (Market research shows that 40% customers are willing to pay 20% of the tablet cost for a product like FunTabStick)
- 27. FunTabStick - 7 FunTabStick - 10 iFunTabStick Mini iFunTabStick Tablet Size 7 inch Standard 10 inch - Standard iPad Mini iPad - Standard NFC enabled BT √ √ √ √ Speaker Output 2W 2W 2W 2W Battery Life 8 Hours 8 Hours 8 Hours 8 Hours Speaker Configuration 4.2 4.2 4.2 4.2 Price (One WorldOne Price) $39 $49 $44 $54
- 28. This will help to concretely justify the Target Retail Price , features and benefits over competition
- 29. Fund Raising and Approvals …. • Once DB is confident on his idea and the feasibility of the product. He presents his work in a concise Product Concept Document and presents to a approval committee in ACowStick The Executive committee decides (Based on their experience and analyzing the defense put forth by DB) that the concept has some potential and approves for further Requirements and feasibility check DB is asked to share a detailed ROI (return on Investment) in comfortable 3 weeks time …
- 30. Return On Investment • With a few more rendering of all the FunTabStick version DB now works with a procurement team and finds a supplier based out of China who can help him build such a product • DB is smart and has already spoken to an taken in confidence his local engineering team that the product is feasible in design and sound quality
- 31. The Suppliers - ODM • DB gets the quote from 3 trusted suppliers FunTabStick7 FunTabStick10 iFunTabStick Mini iFunTabStick Supplier 1 $20 $26 $23 $35 Supplier 2 $18 $24 $22 $37 Supplier 3 $22 $27 $23.7 $35 DB knows that he needs to challenge his teams to achieve the lowest target manufacturing costs, but he knows he will have to work with a Program Manager who will ensure that cost at every stage is carefully controlled
- 32. Target FOB • Having a quick look at the supplier quote and by talking to his best engineers he sets a target FOB cost and is ready to share the details with Global teams for a ROI check FunTabStick7 Target FOB FunTabStick10 iFunTabStick Mini iFunTabStick $ 21.4 $25.7 $23 $36 FOB – In Short Supplier will provide the packaged goods at the nearest port of export/warehouse
- 33. Return On Investment • DB now discusses his new concept product with global teams (Sales and Marketing) and gets their consent • He shares them his concept document and product line buildup and later ….. • He then tries to sell his idea to his first customers (Global Sales and Marketing Team) • He request global team that if such a product is ever developed what would be projected volumes annually … For ROI DB has to work with finance management team of ACowStick
- 34. The Reaction ….. • Global teams react to DB’s proposal with annual forecast volumes and their preferred price – Some of them feel that the price is too high for such product and some feel its low !!! and some feel the product wont sell in their market
- 35. The forecasts ….. Stick7 12 month forecasts (Unit volumes) Stick10 12 month forecasts (Unit volumes) iStick Mini 12 month forecasts (Unit volumes) iStick Std 12 month forecasts (Unit volumes) Comments India 20000 6000 12000 15000 China 15000 25000 10000 25000 Americas 50000 60000 30000 30000 Brazil 2000 2000 2000 2000 Cost too high Russia 5000 5000 5000 5000 Concept not acceptable Europe 40000 50000 40000 60000 Total 132000 148000 99000 137000
- 36. ROI Calculation Model 12 month Forecast (units) Retail Price ($) Revenue FunTabStick - 7 132000 39 5148000 FunTabStick - 10 148000 49 7252000 iFunTabStick Mini 99000 44 4356000 iFunTabStick 137000 54 7398000 Total 516000 46.5 (avg) $ 24,154,000
- 37. Channel Routes – How to make your product reach customer – best, smart, cost effective way Distributor Dealer Customer Route 1: ACowStick -> Distributor -> Dealer -> Customer Route 2: ACowStick -> Dealer -> Customer Route 3: ACowStick -> Customer There exists many such routes This is just one possibility
- 38. ROI Calculation – Example (India & US) • Price for FunTabStick – 7: $39 • Assuming a 2 level channel (worldwide) for go-to-market – Distributor – Dealer/Retailer • Lets take two example countries – USA – India
- 39. Reading the slide ROI FunTabStick 7 INDIA 12 month forecasts 20000 USA RUSSIA CHINA 50000 5000 15000 EUROPE BRAZIL 40000 2000 FOB Landed Cost Distributor Price MSRP/MRP in USD Revenue Margin Margin $ $21.4 $27.9 $29.3 $39 $585,366 5% $29,268 $21.4 $24.0 $28.7 $39 $1,433,500 19% $272,365 $21.4 $21.4 $21.4 $21.4 FILL DATA HERE Total: $ 6,013,610 Average: 12% Financial Summary for FunTabStick7 Target Retail price $39 Target Unit Sales 12 months 132000 Target Revenue $ 12 months $6,013,610 Target Margin $ $721,633 Target Margin 12% Target Project Cost $100,000 • Similarly the financial returns are calculated for all the SKU’s (All FunTab’s) $12,000 $50,000 $350,000 $8,000 Total: $721,633
- 40. The Day of Approvals … • DB presents to an Executive panel the following – – – – – – – Product Concept Features and Benefit Competitive landscape (This is a “New Me”) ACowStick Advantage Volume Forecasts and Financial Summary Initial Design Timeline and the result ………
- 41. Ready to be engineered ….. Good to Go ….
- 42. DB … FunTabStick - Product Manager FunTabStick’s Program Manager Project Manager Design Project Manager Mechanical Project Manager – Software and Electronics Project Manager Hardware Project Manager Acoustic Supplier Manager • Product Manager has no reporting/Direct people Management • But he needs to be good with people ☺ • Product Manager closely works with Program Manager, who controls the program
- 43. Engineering and Validation • The following steps are done post panel approval – Design Freeze – Choosing Supplier and fixing the cost (FOB) • Maintain less deviation with Target FOB and actual – Sample Testing (Usability, Customer context etc) – Engineering • Many times the Product Manager needs to get involved in every aspect of design and engineering
- 44. Product Manager Involvement • Many times the requirements Vs Cost do not match the FOB which suppliers quoted • Product Manager has to pitch in and sacrifice/compromise some requirement, color, material or finish • This is to maintain the cost (target FOB) on which the entire business validation is based • Engineering cycle is the most time consuming and has loads of risks
- 45. Sensitive Engineering • Many times the cost gets added up in engineering cycle (as effort spent) • Compromise occurs in engineering phase • This phase has to be tracked very closely excess, unplanned effort can increase the project cost and thus reflect on Margin $’s • Involve at every stage global teams and keep them posted on Product Development
- 46. What after you engineered? • Verify the entire product • Trigger QA teams for best quality • Ask for the final commitment on volume forecasts from Global teams • Modify financial summary (if any change has occurred in FOB, program cost, forecasts etc) • get approval from the Executive Panel for Final Authorization for PRODUCTION
- 47. Product Marketing … • Product is ready and ready to be marketed and sold • Now DB needs to pitch in as Tactical Product Manager and involve in following – – – – – – – Product Positioning Routes to Market Marketing Plan Launch Plan Collaterals and Sales tools Channel and Sale training CRM
- 48. Product Positioning Target Market and Buyers Tablet Buyers Any Competition Available None – but for portable speakers Existing product positioning None as this is New Me ACowStick position Vs Competitors ACowStick is a highly Differentiated and Desirable Brand Positioning Statement “Wrap the Tablet with Good Sound” Wrap the tablet with good sound
- 49. Routes to Market General Trade Organized Trade Apple Premium Reseller and Apple Stores Color Variations Bundling Opportunities – Exclusive color variants
- 50. Marketing and Launch Plan • Web Presence of FunTabStick – ACowStick is already a known brand the New Product details need to be put up on web • Blog about technology in FunTabStick used • Digital and PR partnering – Reviews of FunTabStick • Viral Videos – A Must – Usability, Design talks of FunTabStick • Online Advertising – Catch the right customers • Evangelism – Speaking and Briefing
- 51. Sales and Channel Training • Training is an integral part of Product management • Channel partners need to know the USP of the product, its operation and the entire philosophy • DB has to drill the passion of the product and influence the channel partners • DB has to provide (work with his marketing team) the necessary support to all channel partners Ex: Banners, posters, Flyers, Hand outs and any other sales collateral that can help FunTabSticks sell better
- 52. DB’s success • DB has successfully Conceptualized FunTabStick for ACowStick • DB successfully Created and Commercialized the product • DB also successfully marketed the product with good go to market strategy • He also ensured an efficient presales drive
- 53. Product Manager - Profile • CEO of Product – Conceptualize , Create and Commercialize – Design, Develop and Deploy • • • • • • Market Knowledge Competitor knowledge ROI Knowledge Good to have relevant knowledge of technology Presales Good Marketer ….
- 54. Looking more on basic on product management or training – Contact me ravilakkundi(at)gmail com Want to hire me .. feel free to contact http://www.linkedin.com/in/ravilakkundi