Product Management for the Entrepreneur What is it ? And what’s in it for me?

It lets you consider all the adjustable parts at once. Product management is a way of thinking about a business that is enormously powerful. It lets you consider all the adjustable parts at once. It creates focus on a clear goal. So it helps you maximize the profits of your venture. Mary Brice November 2016

The product management approach was created by a very large company—Procter & Gamble—with lots of resources to spend perfecting it. This approach was so effective at making business profitable that it was copied by other large consumer products companies, like: Johnson and Johnson Coco-Cola Then by other manufacturing companies, like: General Motors Toro And finally by companies that provide services, like: UPS Mary Brice November 2016

P&G divided its business into many tiny businesses of one product each. So Tide laundry detergent became its own business. Bounty paper towels became its own business. Crest toothpaste became its own business.

Yes. You. The entrepreneur. And who do we know who, like these tiny businesses at P&G, has just one product? Yes. You. The entrepreneur. Mary Brice November 2016

The product management approach is perfectly suited to the startup venture. You can copy the learnings of the big company, and apply them to your own venture… without having to spend the big money P&G and others invested to learn them. Mary Brice November 2016

So what did P&G discover after all that spending? Mary Brice November 2016

They are called the 4 P’s: P&G found that 4 aspects of a product work together to maximize profit. They are called the 4 P’s: Product Price Place Promotion Mary Brice November 2016

The Product This includes all the features and benefits of the product. These might include: Its size Its functions Its flavor or scent Its durability Its color Its design Mary Brice November 2016

The Price Pricing can include: Base price Sale pricing Discounts (for volume sales, repeat sales, to certain types of customers) Pricing “fences” Mary Brice November 2016

The Place Place refers to anything by which the product gets to the customer It can include distribution channels and sales outlets such as Retail stores and other traditional channels Home delivery (of on-line purchases, dry-cleaning delivery, etc.) Products brought directly or closer to you away from home: Vending machines in a business Car rental at an airport Mary Brice November 2016

Promotion This includes anything that communicates the value of the product or brand, such as: Traditional promotion, such as advertising, PR, or “trial” offers Also packaging (this can be part of “product,” such as “easy- open” or SFCP packaging) All communication about the product in non-traditional ways, such as sponsorships of sporting or entertainment events or support of charities Mary Brice November 2016

These 4 P’s are the adjustable parts of a business that drive profitability. Thinking of a business this way helps you see what changes you can make to maximize profit. It limits you to one clear goal. The clear goal you focus on is profit. This is what “manage to the P&L” means—you continually consider how these four things can be changed to drive profit. Mary Brice November 2016

However, the 4 P’s do not act in isolation However, the 4 P’s do not act in isolation. They interact with each other. Example: Desserts Out the Jar Product features: ready-to-eat, in glass mason jar Place: kiosk is shopping mall Promotion is partly through foot traffic seeing the kiosk signage If we change just one feature: sell the product frozen How will this affect place? How will those two changes affect price? How will they affect promotion? Mary Brice November 2016

You can start with any one of the 4 P’s to think about changing your business to make it more profitable. Example: Start with price and go backward Start with Desserts Out the Jar single serve, retail pricing Product and package Place: kiosk is shopping mall Promotion is partly through foot traffic seeing the kiosk signage If we change the pricing, to twice as much: How will this affect product decisions? What would it have to be to be worth twice as much? What ingredients? What packaging? How will this affect place? Where would we have to sell it to get that price? How will it affect promotion? What would you have to communicate about the product to justify the pricing? How would you do that? Mary Brice November 2016

And each of the changes you make affects costs. Consider Place, in our Desserts Out the Jar example: A kiosk in a mall has a cost A storefront in the same mall has a higher cost A free-standing store has an even higher cost Changing Place entirely by selling directly to restaurants has an entirely different cost Mary Brice November 2016

So even though the 4 P’s fit together, there isn’t just one right way to get them to fit. Product Management is less like a Rubik’s Cube and more like Tic Tac Toe. There are multiple ways to put together a win.

The 4 P’s of the product management approach give you power. They should help you see all the adjustable parts of your business together. They should help you maximize profit. You can keep changing them to test new ideas. You should not treat any one P as fixed. Re-examine all of them. Mary Brice November 2016

How can we apply the product management approach to your business? Mary Brice November 2016