You've had the break through idea and have sorted out your business plan. If your business involves a new product or service there will probably be a section in your business plan marked “Product Development.
Visualize the fundamental product life cycle as a curve, starting from zero at initial development and rising from market introduction through growth before leveling off at maturity, then eventually reaching zero again at decline and termination. Each stage of the product life cycle interacts with and is impacted by customer wants and needs, supply chain logistics and both competitive action and price pressure.
The product life cycle model follows a course of birth, growth and maturity and death. Direct the course of your company’s products by anticipating their position on the curve by taking a comprehensive approach to marshalling internal resources from research and engineering to sales and marketing, as well as monitoring market forces such as globalization with multi-country outsourcing and Internet connectivity.
If your profits are starting to decline, maybe you should re-think your company's product life cycle model. From product design to product launch, there may be real opportunities to enhance your strategies and increase your market share.
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Product management is the management of the production and marketing of a product. A product manager will ensure that the product is brought to the market and is marketed correctly. Product management includes development, manufacturing, advertising, and anything else that happens during the life cycle of the product.
There are many benefits of product management. For example, project management ensures that a product goes from the planning stages to the customer with as little cost and as little time as possible. When a product is managed effectively, there is less room for costly error and loss. There are also pitfalls to avoid and costs that come with product management.
Positive Aspects of Product Management
The Product Management Association has grown steadily since 1999, rising from 43,000 members to over 500,000 members in 2009, according to the United States Product Management Institute. This shows that there is a rise in people entering this profession. Product managers have the important task of overseeing the life cycle of a particular function within a company, including the planning, forecasting, and marketing of projects, products, and services.
Who Benefits from Product Management
Product management benefits both businesses and customers. Its objective is to oversee any existing projects or products and to develop them continuously to provide the highest value possible for the customer. Businesses benefit because this allows them to establish themselves as a powerhouse within a particular industry, and customers benefit because managers use their input to make improvements that will benefit and satisfy them.
What Businesses Use Product Management
Any business that uses special tactics and strategies to develop and market products and services can benefit from a product management. Project managers oversee every aspect of producing and releasing a product, including determining release dates, tracking sales, promoting products and services, and evaluating the products of the competition.
Because product managers must always be present to oversee these tasks, outsourcing can be a challenge. While strategic planning duties would be difficult to outsource, marketing and promotional tasks can be completed by outside organizations.
Creating a Product Management Team
Strong product management teams are crucial, since the lead product manager cannot act alone. The manager, however, must oversee every aspect of the product's life cycle, so he or she must be heavily involved in the entire process. Product managers have a crucial role to play, since the failure or success of a project relies on them. For this reason, choosing a strong team is essential to the product’s success.
Product development helps to define the right product for customers’ needs. One pitfall occurs when a company uses marketing and sales to develop a new product. Customers seldom know exactly what they need because they have the inability to think ahead to future technology. The product manager must look at the demographics and learn to define what the customer needs. Then, he or she needs to use that information to create a new product.
Features versus Function
It is easy for product management to get absorbed in the features of a product instead of the benefits it provides. Product management should be able to describe at least one benefit of the product quickly for the item to useable and saleable. Too many features can increase the cost so much that it is too expensive to justify the benefits involved.
Confusing Yourself with Your Customer
Many companies confuse what the customer needs with what management thinks they need. A developer will know the product and how it works. The actual customer may have a hard time operating the product or find the functions to be confusing and difficult to manage. Product management should research the target market and know what the customer is capable of. Testing should be done on the prototype to ensure the product will be marketable.
Products are often developed with a long list of features that do not create enthusiasm. Too often, product management will improve a product by adding more features that have no true value. Product testing is often done without paying attention to the initial response of the product or idea. Adding features without changing product design will seldom create a usable product that creates value. In fact, this only makes the product more difficult to operate and hence more frustrating, so the user gives up and abandons the product for a competitor’s product.
Product Management Costs
Hiring a product manager can make your business run smoothly. Depending on the experience of the person you hire, the salary you pay can vary. With less than a year of experience, product managers earn anywhere from $42,000 to $74,000. This is in comparison to $70,000 to $106,000 for a manager with 20 or more years of experience. You may end up paying anywhere between $40,000 to $100,000 or more for the manager you choose.
Product managers can help you stop wasting money on legacy items. It is estimated that 80 percent of an R&D budget is spent maintaining legacy products. Product managers can help you de-invest in these products and maintain or reduce operation costs.
Although hiring a product manager does come at a cost, you can offset this cost by adding value to your product and saving money in the long run. If your project manager adds enough value to the product that it leads to an increase in sales or streamlined production that saves money, then the cost of hiring him or her pays for itself. There are also pitfalls to consider, such as adding features without adding value, adding so many features that it significantly increases the cost for the company and the consumer, and adding features that aren’t functional or practical for the average user.
Proper product management is the key to product success in the marketplace. Every product manufactured has a limited marketability, with a four-stage lifecycle covering product introduction to product decline. Product management shepherds a product through this lifecycle, attempting to position the product as long as possible at the most profitable stages of the cycle.
If you wish to employ product management, you must begin at your product's developmental stage. Using market research and customer feedback, you'll want to create a product with high demand at a profitable price. Development can long and drawn out, but the true work of product management doesn't begin until you reach the first stage of the lifecycle, market introduction.
When you introduce the product, you'll have to create the demand you've anticipated during development, then wade through early non-profitable sales cycles. With successful introduction comes the second stage, growth. During the growth stage, your primary product management work is to increase sales significantly, and begin to earn profits. Then you hit the maturity stage where your product is established and sales peak. From there, it's the decline stage where sales droop and profits fall.
While growth and maturity remain the target areas for product management, the full cycle needs your attention in order to reduce losses. For more information on product management, check the links available at Business.com.
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