IN THIS CHAPTER
- Getting a handle on marketing fundamentals
- Using forecasting to look ahead
- Making your marketing plan the best it can be
- T racking marketing activities
- Adjusting your plan to increase success
This chapter discusses the phase that your product is likely to stay in the longest:
maximize. Many products in the mature phase of the four-phase product life cycle (see
Chapter 3 ) stay there for years or even decades. Maximizing revenues requires working
through all aspects of marketing to continually improve the message, marketing programs, pricing, channels, and possibly the product itself .
Marketing is a vast topic, and it’s covered in-depth in books such as Marketing For
Dummies by Alexander Hiam (Wiley). In this chapter , we focus on the marketing
knowledge and tools that allow you as a product manager to have an effective conversation with your sales and marketing colleagues. In the end, product management, marketing and sales all want to maximize sales and profits. This book can’t possibly cover every possible
situation and all the in-depth concepts of marketing, so this chapter concentrates on core marketing concepts.
By getting some basic marketing know-how , you can effectively contribute to the
marketing plan and track whether the marketing campaign is a success. This chapter
introduces the fundamentals of both marketing and forecasting and shows you how to put them into practice after your product has launched.
Grasping the Basics of Marketing
Marketing basics give you the vocabulary to talk to the folks in your marketing department and effectively work with them. You often work closely with marketing people (more often known as marcom, short for marketing communications), so speaking their language is important.
The following sections give you some insight on what goes on in the marketing department so you can be an active participant.
Marketing mix is the interplay of several different factors you can act on to change how
your customer perceives your total product offering. The marketing mix is traditionally
known as the four P s, although there are actually seven P s worth considering. We spell
them out in the following sections. As you work through your marketing plan, you look at
all aspects of your whole product offering and adjust it so that everything works together
to tell your story to the customer .
When you plan your marketing activities and all the associated services (or review a plan
being created by someone else), keep these seven marketing mix variables in mind as you build up a picture of how to best both sell the product and have customers remain satisfied with it after purchase.
The four core Ps
The four traditional P s are product, price, place (which is really distribution, but that word doesn’t start with a p ), and promotion.
To better address your target markets’ needs, you can vary or adjust your product in the
following common ways:
- Variety: How many different kinds of product do you offer? One common way to vary your line is to have a series of products that correspond to good, better , and best.
- Quality: Do products offer different quality levels? Is one longer lasting than another?
- Design: Products can be designed to look more or less expensive or scale to cater to more or fewer users.
- Features: What features are available? Which ones aren’t available in a lower-end product?
- Brand: A high-end, luxury brand brings an expectation of a higher product quality than a non-branded product.
- Packaging: What story does the packaging tell? Is it luxurious for a high-end product? Simpler for a lower-end one? Does the packaging itself form part of the value of the product? One example is the circus box of cookies. The string that goes across the top is what children use to hold the box, and any product manager who takes over that product is told, “Don’t mess with the string!” The string is such an inherent part of the part of the experience that it’s untouchable even as other parts of the package may change.
- Services: Are any services associated directly with the product or available in addition to the core product?
Most product changes are made earlier in the development process. But as you sell your
product, new target markets arise and you should be ready to adjust your offering
accordingly . You would typically go back to the beginning of the product life cycle process and start with conceive. Instead of marching through every step of the detailed process,however , you would quickly move through the phases to reach a final product because you are basing your revision on a pre-existing underlying understanding of the market.
To get the base price, start with the manufacturer’s suggested retail price (MSRP). Most
products are then discounted depending on volume and location. One additional service
product to consider offering customers is financing. Financing enables customers to buy
big-ticket products and pay them off over time. This increases the number of customers
who can afford your product. For a more in-depth look at pricing, head to Chapter 10 .
Sometimes prices are discounted for a certain time only . This promotional pricing creates artificial urgency , meaning customers will tend to buy earlier than they otherwise would because they want to take advantage of the good price. Each industry has its own special pricing vocabulary . Your salespeople are great sources of information on how they vary price to generate sales faster .Product managers have more or less control over pricing depending on regulation,
complexity of pricing in a particular industry , and the amount of control that the finance
organization demands over pricing. When product managers are able to, they recommend pricing which is then approved by management and finance.
Pricing is driven by your market positioning. If you’re a high-end brand, moving to
a lower price point confuses your customers. Let your brand and product strategy
drive the price, not the other way around.
Your product is typically distributed according to where your customers are used to buying your type of product. If you don’t have (or don’t want) direct relationships with everyone who sells your product (such as stores or online sites), you can use distributors.
Distributors sell a range of products through to the outlet that sells your product to the
end user . A strong interplay exists between distribution and what the end user pays
because a distribution partner introduces one more intermediary . The more intermediaries requiring margins and profits from the product, the higher the price to the end user .
Product managers do not decide which distribution mechanism a company uses. Sales is the key decision maker on distribution. However , you should know how much information customers need to be comfortable buying your product from a particular reseller , channel partner , or website. In high-end goods, the type of experience that customers get from the reseller is also a factor . For example, you may find a product cheaper on Amazon, but you don’t get nearly the retail experience as you would through a high-end retail shop, which may handle returns or product setup or allow you to try out the product more easily .
Certain high-end brands have extremely limited distribution because in their cases, being hard to find is part of the attraction.
Another distribution issue has to do with logistics and inventory . If you don’t want to pay to keep your product in your own warehouse and don’t want to have the hassle of dealing with stores and resellers directly , the distributors will do it for you. This distribution service is paid for with the margin that they take as they sell the product on.
Promotion is probably what you first picture when you think of marketing: ads, sales
campaigns, and press tours, among others. Y es, promoting your product is fun. It’s even
better when you’re really clear on the message that causes customers to buy (quickly , and at the highest reasonable price) and you communicate that message through the right marketing vehicle. It’s a complicated juggling act — one you get better at it over time.
Look to “Fitting into the sales and marketing funnel ” later in this chapter to better
understand all the parts of the promotion sequence.
The three additional Ps
If you work with service products like airlines, banks, churches, and car rentals, the
following three P s are also very useful. In fact, they’re useful for any product because
virtually any sale requires an interaction which relies on one of these P s. For service
products, however , understanding them can mean the difference between success and
failure since these three P s represent the only interaction that a customer has with the
The employees who deliver a service to your customers are sometimes the only contact a customer has with your product or brand. Y our people (employees) and their ability to
consistently and carefully deal with a wide range of customer requests determine the
success of your company . Training in how to treat customers consistently and well is
critical to your success as a service.
Because a service is by and large intangible, consistency in how you provide that service
makes your customers feel confident that you know what you’re doing. If they call to
accomplish a task, they want to be able to expect certain procedures and processes are
being followed. For example, if you call your bank, the correct process is to verify your
identity through a variety of checks. Calling a bank isn’t the core banking product;
however , by following a consistent process, customers are confident that their bank can be trusted with the entirety of the banking products that they use. The bank, is after all
looking after the customer’s money! If you receive lots of negative feedback from
customers, dissect how your people are following the given process. The process may need to be updated, improved, or simply followed more closely .
In today’s online world, you have very little evidence that a transaction has taken place.
The physical evidence (or even the user interface or online receipt, for that matter) is the
only manifestation that a transaction occurred. If the evidence available is unclear in any
way , it substantially devalues the product that was provided.
Here are a few examples of physical evidence supporting the value of a service product:
- A customer at Nordstrom interacts with a salesperson at Nordstrom and is handed the salesperson’s business card. This reinforces the high-end brand value of Nordstrom.
- Your anti-virus software works in the background. Occasionally a window pops up to let you know how many viruses have been blocked.
- You use a coupon service at a store. Once a quarter you get an email outlining how much money you saved.
Keep physical evidence in mind for anything that the customer looks at. The physical
evidence is what determines their assumption of whether a product is good, viable, and
Working with marcom and creating marketing
Marketing collateral refers to all the virtual, printed, videoed, and other pieces you use to
communicate about your company and your product. Your marcom people know how best to create the entire pack of materials in the most cost efficient way . For example, if they insist that a piece of collateral be a particular size, it may be because they know that increasing it by half an inch doubles the cost. They know how long it takes to create and print something or make a web page available online — including design time. They know the role of fonts, layout, and design and how best to communicate the message so the customer can actually understand and use it. Work closely with them; you’ll gain a huge appreciation for their specialized skills, and they’ll help greatly in your product success.
Much like picking out an outfit for a special event, the marcom person will propose a range of marketing materials to choose from. Marcom creates some of the collateral items. Some
items like the product presentation may be created by you, the product manager . However ,
marcom’s catalog of the most common marketing items created can guide you as to what
salespeople find useful. If you aren’t convinced by what marcom has proposed, go ask a
few salespeople directly what they find useful. Based on our experience sales never even uses about 40 percent of all marketing material, so you may be able to save money by researching what exactly sales and customers need and then just focus on key marketing pieces.
The following team prepares marketing collateral
- Product manager: Responsible for core content, technical facts, initial drafts, and final technical checks.
- Product marketing manager (if available): Wordsmiths initial drafts to ensure customer-focused language. Checks final layouts prepared by marcom. If you don’t have a product marketing manager , the product manager does these tasks.
- Marcom: Takes initial texts and adds images and graphics. Creates a layout of the information that adheres to company collateral standards. Checks with product management and product marketing that the final versions are correct and arranges for the materials created to be posted (web) or printed (hard copies).
Here are a few possible collateral pieces:
- Datasheets and brochures: Datasheets are the source point for product information that is shared with your customers. Often it’s the first piece of collateral generated and the one most frequently referred to. The trick to an effective data sheet is to have enough data and information but not so much you overwhelm potential customers with detail. One good idea is to focus the beginning of a datasheet on customer benefits and work toward the most technical bits at the end. Brochures join several products to tell a larger story about your company’s solutions. The information in a brochure is an abbreviated version of the datasheet or tells the story of a solution that the product solves.
- Success stories or case histories: More commonly used in B2B settings, these items are written-up stories of actual customers who agree to promote your product or solution. Essentially , they’re testimonies of how your product or group of products (solution) helped a customer solve an actual problem. Success stories are used to convince prospective customers that your offering solves their need. Success stories are very powerful sales tools, so keep working on getting a few of them for your salespeople, especially if you see your competitors have them.
- Product demonstrations: A great product demonstration can do wonders in the right hands. Create a detailed script if it’s a live demonstration. If it’s not something that can easily be replicated, plan a video or scripted screenshots in Microsoft PowerPoint.
- Web pages: Create a few key web pages that tell your story . If your company website doesn’t work well for explaining your particular product story , look at what you like in other company’s websites to get some more ideas. Then work with your marcom people to implement your company’s version of successful websites you’ve seen.
- Videos: Videos tell your product story visually . A good video will generate traffic from another website, such as YouTube, which increases your site’s ranking on search engines. As a bonus, you can embed ads in the video and generate sales or capture immediate interest directly from it. Beware of boring videos, though. Customers who don’t desperately need your product will leave quickly if they aren’t entertained.
- Presentations: Along with the datasheet, the product presentation is usually the other critical piece of the collateral puzzle. The presentation is used to describe your product to sales, support, outside channel partners, and the press at a range of events before, through, and then long after the launch of a product. If you have funds or an internal graphic designer , it helps to work with a professional to improve the look of it. Refer to PowerPoint 2016 For Dummies by Doug Lowe (Wiley) to increase your skill with presentations.
- Updated FAQs: Capture all the questions you get during your presentations and
from talking with customers and use them to create your product F AQs (frequently asked questions). You may have to generate one for internal audiences like sales and support and another one for customers with less sensitive information. Depending on your company , your product and how you sell it, F AQs are emailed, uploaded to internal
information databases and posted on websites. As the product manager , you’re often the only person who has the answers, so having F AQs you can refer others to will save you alot of time in answering questions for each person who has them.
- Channel collateral: Channel partners are external companies who sell your product
to customers on your behalf . If you rely on channel partners to generate sales for you, you should provide them with collateral to use. Doing so ensures the messaging is consistent and the look and feel of the materials are professional. Talk to your channel partners to find out what they need. Typical requests include sample customer emails, graphics, a presentation that they can add their logos to, and sales training sheets (which are called lots of different names in different industries and companies). By delivering what your channel partners want, you make selling your product easier for them (and cut down on the likelihood that they’ll create their own collateral that doesn’t match your approach).
In turn, they’re more prone to sell your product.
- Blog and social media posts: Create a list of possible blog posts and a publishing
schedule. (Plan additional time if your company needs to have legal approval on what you write.) Publish the completed posts on the company website, use them as LinkedIn posts, and then post to LinkedIn groups that are interested in the topic. We highlight LinkedIn here because it works well for B2B industries. Blog posts are less valuable for B2C products. Post to social media platforms that your customers spend time using; doing so increases the value and awareness of each post that you create.
WRITING READABLE ENGLISH
English teachers spend enormous effort trying to get students to expand their vocabularies and use complex sentence structures. Writing for marketing means unlearning some of that teaching. Good marketing writing typically contains three elements:
- Simpler language: Use simple words to get your point across. To simplify a very long linguistics lesson, English is built on a base of Anglo-Saxon words topped with words of French and Latin origin. You can tell the French words. Usually , they’re long and have lots of syllables. Guess what? The kind of English that is most effective in getting to the point and generating action comes from the Anglo-Saxon base of English.
- Simple, concise sentence structure: Break up your sentences so that it’s more interesting to read. Have both shorter and somewhat longer sentences. Your customers will more easily understand what you write.
- Humor and wit: Humor makes the message stick better . If you can’t work in gentle humor from time to time, try a good story or example. It will keep your audience’s attention.
As more and more marketing activity moves to the digital realm, you also need to know how digital marketing works. This topic goes far beyond the scope of this book; it includes everything from analyzing email and web traffic to targeting ads on various platforms to customer relationship management (CRM) systems for tracking sales opportunities.
Your digital marketing or channel marketing person should be using a dashboard to visualize what is happening with different marketing activities. Ask her to show you the system’s capabilities, and look out for opportunities to track what your customers are actually doing. Make adjustments based on what you find. Y our job is to work out, in conjunction with your marketing folks, why customers aren’t doing
what you expect them to do and adjust your marketing programs to improve response rates.
Fitting into the sales and marketing funnel
Instead of approaching a marketing plan as a monolithic set of tasks, break down what you need to do during each phase of the purchase process (awareness, interest, evaluation, commitment, and referral) using a sales funnel as shown in Figure 15-1 . If you look over a salesperson’s shoulder , you may see this information displayed in their sales software.
However , marketing also has a role in the different stages of this funnel.
It’s a funnel because a lot of customers start out in the awareness stage. As they investigate product solutions, they start focusing down on fewer options that really seem to meet their needs. They then may evaluate even fewer options before making a final commitment to one solution.
Depending on your product type, the transition between marketing and sales may be simpler or more complex and may happen rapidly or slowly . For example, when was the last time you had a sales conversation to buy a book online? You most likely didn’t. You probably completed the sale entirely through a hands-off set of marketing activities that didn’t involve a salesperson. If you were buying a new roof for your house, though, you’d most likely go through a complex sales cycle that would include a lot of interaction with salespeople.
When your marketing plan is taking shape, a good tool to use is the marketing activity by stage in Figure 15-2 . For each stage of the sales and marketing funnel, you have a goal and a list of the marketing needed to achieve that goal. The right-hand column is the call to action — what the marketing piece specifically asks the customer to do.
Here is what to look for in marketing activities at each stage of the marketing and sales
- Awareness: What activities are generating awareness of your brand and your product?
Are they generating awareness in the right places to reach your customer personas
(which we describe in Chapter 5 )? What do customers need to know to get them to move to the next step? What type of information is overkill at this point? Is your message
compelling enough to make potential customers aware of your product?
Another factor is whether your marketing is persistent enough to catch people when they enter the buying cycle. For example, you see a lot of car ads. Most of the time, you ignore the ads — until you want or need to buy a car . Then you find yourself watching intently , trying to decide which car gives you the features you need and matches the image you have of yourself .
- Interest: What will convince customers that your product may solve their problem?
How will they find that message? How will they access it? What information do they need to determine that the product is worth investigating? The results of online search engine results can drive potential customers to you directly to this stage.
- Evaluation: After customers have narrowed down their options, they reach out to
buy or get more information. What information do customers require to evaluate your product?
Do they need a sample? Do they need encouragement to get on and try your product?
Many software products successfully use a 30-day free trial option. Other types of
products may require a no-risk money-back guarantee.
- Commitment: All of your sales and marketing activities won’t matter unless
the customer says yes. At this stage, your focus is on what tips the scales for a sale and
prevents the customer from backing away .
A key concept here is frictionless purchasing. You don’t want the customer to need to go through a lot of steps to actually buy your product. You want to make saying yes as easy as possible. Amazon 1-Click is a great example of how a company reduced the purchase process to only one click of a button.
In the digital arena, if customers visit your website, respond to your emails, or
click on your ads, you can keep reminding those people about your product for an
extended period of time by using a technique called remarketing ads. Y ou can set up
remarketing ads so they appear as often as you want, reminding your customer to keep
considering your product. Unfortunately , these tools don’t distinguish between people
who bought and people who didn’t, so, you may keep reminding people to buy a product
that they already purchased.
- Referral: In most cases, companies stop at commitment, but you can create marketing campaigns that focus on having customers refer their friends and colleagues. In an ideal world, customers happy with their purchases tell everyone about them. Instead, most happy customers keep their delight to themselves; the unhappy customers spread their displeasure all over the Internet. A referral from a customer is typically seen as being more truthful than a company’s own marketing, so think of ways to use customer loyalty to drive other customers into the sales funnel.
Getting sales the tools to sell the product
Marketing activities are focused on motivating customers to change their behavior (that is, get them to buy your stuff). Sales enablement is where you pass the baton from impersonal mass communication to the salespeople. T o do their jobs and complete the sale, salespeople need materials that help them communicate the value proposition effectively and easily . A value proposition defines the key reasons that cause a customer to select your product over another offering. The positioning and messaging statements from Chapter 10 for the basis of your value proposition. At a basic level, you need to help sales sell your product by doing the following:
- Telling them who the target customers are and what their specific needs are.
- Giving them whatever tools will help make the sale: written documents, spreadsheets that help them calculate the customer’s return on investment, demo scripts, competitive selling sheets (how to sell against specific competitive offerings), email templates to use under various scenarios, and much more. These sales tools go much deeper in content and are above and beyond the customer-oriented marketing collateral covered earlier in this chapter .
What you share with sales is sometimes material that shouldn’t be given to
customers, so you need to be careful. If something is highly confidential and shouldn’t be shared (such as a road map of your product’s future or a controversial competitive
analysis), always mark it clearly so it doesn’t get shared inappropriately . In some
countries and industries, you aren’t allowed to publicly compare your products to the
competition. And in many instances, you don’t want to draw attention to the competition
The big problem with sales enablement is that marketing often builds a one-size-fits-all set of collateral for both customers and salespeople, and not all parts are useful to both
parties. To really boost your sales, you need to get proactive and build the most effective tools with a sales enablement improvement plan. A sales enablement improvement plan is a series of changes in marketing and sales activities that leads to increasing sales success.
Here’s how to put a plan together:
- Visit customers who have bought and not bought from you.
Find out why they really bought/didn’t buy the product. Find out what sales
tools influenced their decision and which they find most useful.
- Interview successful salespeople and work out the process they use to
close the sale.
Probe them to find out what they actually use when selling and what they need
- Prepare a sales (increase) enablement plan that uses the messaging
actual customers have given you and deliver it in the way successful
salespeople have told you works.
Your customers told you why they bought your product. T ake their words and
create marketing messages from it.
- Train all your salespeople in how to use the sales enablement and tools
Becoming marketing aware
In addition to focusing on customer understanding, practice becoming marketing aware.
Pay attention to your reaction when you see an ad (or any marketing — even a datasheet)
for all the products you’re exposed to daily . Gauge your reaction to it. Do you think it’s
effective? Why or why not? Who do you think the target customer is? Is it the same market segment you’re targeting? If you’re with others, ask them what they think of the ad. What did they notice about it (if they noticed it at all)? Then ask yourself , “What is the intended purpose and target of this ad or marketing?” Also think about the cost of the marketing, its potential return on investment, and so on. Over time, you’ll get better at deciphering the marketing intent behind any kind of communication and at costing marketing material and actions yourself .
Forecasting: A Look to the Future
Forecasting is an integral part of life for many product managers of physical goods; for
service and software product managers, it may or may not be a big part of their work
responsibility . The reason forecasting is part of the maximize phase is because that’s when the need to forecast correctly becomes an ongoing part of tracking the success and failure of your products.
Learn everything you can about the entire supply chain. Be creative in solving
forecasting issues as you come across them. And don’t worry about being 100 percent
correct – it simply isn’t possible. The following sections look at how to become as
accurate as possible given the uncertainty surrounding any forecast.
Collecting data for forecasting
Forecasting can be defined as estimating future sales. The first rule of forecasting is very
simple: Y ou can’t come up with a perfect forecast. It’s always just an estimate, and no
matter how many techniques and how much analysis you use, the answer you come up
with will be incorrect. When you get beyond attempting the perfect forecast, here are a
few suggestions for getting better at forecasting.
History has a role to play
Your historical data is a great starting point. If you sold 100 units last month, all things
being equal, you should sell about 100 units next month. This point is why one of your first jobs as a product manager is to research the sales data of your product line (including discontinued products) going as far back as possible. Group products to understand the sales trends at the product line level.
If you have no historical data, try a top-down and bottom-up forecast:
- Top-down forecast: For the top-down portion, work from the total market size. Estimate how much of the total market is your target market. Determine how much of the target market you can actually reach, and then decide what a defensible figure for your market share of that reachable market is. Get your salespeople involved in this discussion.
- Bottom-up forecast: For the bottom-up component, define the marketing programs that drive sales and the likely sales results from a certain amount spent on marketing programs. For example, how much awareness will your marketing activities drive, and then how many leads will it create? What percentage of these leads will actually buy the product? How well is the sales channel (overall) able to sell your product depending on what you prime it to do?
Table 15-1 shows a sample top-down and bottom-up forecasts. In each month, choose the lower of the two estimates — June: 500, July: 600, August: 600, and September 800.
TABLE 15-1 T op-Down and Bottom-Up Forecast Results
|Top-Down Monthly Sales Result over 6–12 Months||Bottom-Up Monthly Sales Results over 6–12 Months|
|June: 700||June: 500|
|July: 600||July: 700|
|August: 600||August: 600|
|Septembe r: 800||September: 1,200|
You can also use proxies to generate a forecast. If you sell 1,000 units of a camera,
then from total industry sales data and your knowledge of customer buying habits,
you expect that 3 percent of your customers also want a wide angle lens.
Quarterly and seasonal variations can impact forecasts
Quarterly sales cycles affect how much you sell, because your salespeople want to make
their target sales numbers and will push hard to close deals in the last month of the
quarter . Seasonality may also hit. Toy sales are big in November and December , but don’t count on those volumes in January after the Christmas rush. Big companies and
governmental agencies buy just before the end of their fiscal years to use up budget, which can mean a large spike during this time. The point is that as a product manager you need to have a deep understanding of what drives differences in your product’s sales from one month to the next and across longer periods of time. Your historical data (see the preceding section) helps you get a sense of what those drivers are. And your sales, marketing, and operations counterparts often have great insight into the “why” of the numbers.
Forecasting lead times are critical
Physical products are often planned and built long before they arrive to customers. You
need to be aware that submitting a forecast often actually drives production at a different time than what you think. You need to be very aware of the length of time that it takes to order parts, plan manufacturing capacity and transport goods. The total of these activities is your lead time .
For example, in Figure 15-3 , the forecasting waterfall chart shows that in December the
company submitted a forecast of 1,000 units for the month of July . In other words, in July , the new product will be introduced in the market and in the previous December , the company believes that the unit demand for July will be 1,000 units. This is a complicated concept, so beware of the difference between when a forecast is made (December) and the month that the forecast is for (July). Each month, the company revisits the July forecast number . And it fluctuates between 1,000 and 2,500 units. However , operations and manufacturing stop reacting to forecasting changes after December . They have a lead time for manufacturing of six months (December to June when the units need to be in the warehouse for the July launch). Even if the forecast is changing, the plan for product delivery isn’t changing. It’s still 1,000 units. Since product managers are aware of their product’s lead time, they often control the forecast, especially for the first few months of the product life.
Operational constraints may come into play
Operations and manufacturing people can pull off what may seem like miracles if you ask them to. They can ship products faster (at a much higher cost). They can source additional parts if demand spikes and delay production if demand falls. If you have lead time issues with your product, work closely with your operations partners to see how flexible they can be. A word of warning: When you ask manufacturing partners for heroic measures, your company pays a price in terms of profits and stress. Y our manufacturing and production partners may become less eager to do business with you, and they may even raise their prices.
The sell-in cycle may have an effect
You need to understand how fast customers will actually buy new products. The sell-in
cycle is a time measurement of how long it takes customers to actually buy a product once they know about it. If , for example, you launch your product in July , big customers may take six months to evaluate the product and start buying in volume. So, six months is your sell-in cycle. Until six months are up, you won’t need much volume. How much is enough? Look at historical data for products that came to market before for guidance.
Different POVs provide insight
One other technique for forecasting is to get forecasts from a group of experts, let them
each know the others’ results, and then ask them to reforecast. Just listening to the
differences in points of view gives you insight into a possible forecast. Keep in mind that,
generally speaking, experts are more familiar with new product technologies and will
assume a faster adoption of new products than that experienced in real life.
The best way to make sure that your forecast is reliable is to be clear on the assumptions you make. Write them each down and let the operations people and salespeople know what they are. They may have different information, so pulling it all into one place is an incredibly powerful tactic to getting a better forecast.
To practice, look at Figure 15-4 , which shows Product A ’s historical sales data. Answer the following questions:
- What can you learn from the historical data trends?
- What would you estimate for the March, April, and May forecasts?
In reading the chart, notice the following:
- Quarterly cycle: There is a three-month cycle to sales. January and February have lower sales than March, and this happens every quarter . One good assumption is that salespeople are pushing product out in the last month of a quarter to make their numbers.
- Annual sales cycles: Another assumption is that there is a reason for the large spike in sales in September . Is it a market like finance or insurance that doesn’t buy after September so that installation is complete by the end of the year? Is the product sold into retail customers who also don’t like to make big changes as they go into the Christmas season?
- Overall sales trends: What about the overall sales trend? The dotted line shows an overall annual increase. So another assumption is that the market (or your share of it) is growing.
There are no right answers, but you can make good assumptions and draw some logical,
Creating an Effective Marketing Plan
Marketing plans are the ongoing version of the launch plan — often with less time urgency because the “new” product is finished and released for sale. However , your company has to continue to generate market excitement and awareness for your products. Using the marketing concepts discussed earlier in this chapter and the outline of how to create a plan coming up in this section, you can create and maintain a high level of interest in you pr duct, which leads to meeting your sales and profit goals.
Recognizing the importance of a top-notch
A great marketing plan considers the customer’s decision-making process and also outlines what the most effective communication method or methods are at each particular point in the journey toward buying. Each exposure a customer has to your message is called a touchpoint. For example, seeing an ad is a touchpoint. Reading a review is a touchpoint.
Many marketers and product managers make the mistake of assuming that potential
customers will only have to hear about their product once to become interested because
the product is so good. For less-expensive purchases or items that are purely impulse buys, one may be enough, but for a larger or more important purchase it’s likely to be many more. A good rule of thumb is to assume a customer needs at least seven touchpoints to become interested and ultimately decide to purchase your product.
Outlining your marketing plan: What to include
As a product manager , the marketing plan most likely isn’t a plan you own or create but
rather one that belongs to your marketing department. That said, if you have new product offerings or need ongoing marketing for existing products, the plan should reflect your ongoing requests as part of marketing’s overall objectives. Your input should drive the contents of the marketing plan. Here are the main elements of the marketing plan:
- Executive summary: A summary covering the market situation, key objectives, key strategies, and approaches to addressing marketing objectives. What are the risks and the return on investment, and what is marketing’s recommendation? Remember that the executive summary is written once all other parts are completed.
- Situational analysis: What is the market landscape? What happened in the past? What is the current opportunity and what marketing resources (money , people) are available?
- Marketing objectives and strategy: What are overall marketing objectives (and product specific ones, if necessary) and key marketing strategies? Which markets does the company or division plan to target? Does marketing need to take any other considerations into account? And product specific information in this section should come from the market strategy and possibly the market needs documents.
- Program mix: In this section, define all your marketing mix components. (We discuss marketing mix earlier in this chapter .)
Branding and messaging: How will marketing support your brand?
Advertising: Document any and all advertising including online ad plans here.
Social media plan: What social media outlets is marketing planning to use? Be
Public relations: What are the public relations strategies? Again, be specific.
Direct mail/email: What are the direct mail and email plans? Does the marketing
plan call for sending out a regular newsletter or buy-in lists of potential new
customers from list vendors? What activities will marketing undertake to grow email
Trade shows and events: What events does marketing plan to support and how?
Will your company be there, or will marketing, product management, and sales
support a partner’s efforts? What are specific goals and objectives for each event?
Channel: What are sales and marketing’s plans for working with the channel? If
marketing funds are set aside as a percentage of sales, what is the best use of that
Timelines: What happens when? Activities should be spread out so that something
is happening over time. On the other hand, marketing should avoid spending money
when customers are unlikely to buy .
Deliverables: What are the key deliverables? Videos? Collateral pieces? A new
- Budget and return on investment (ROI): What is the budget for marketing activities over a certain period? What are spending plans for each part of the marketing mix? As a result of all these activities, what is the expected ROI?
- Governance: Who are the core marketing team members? Who needs to approve this document? Have a space for each person to physically or electronically sign.
- Risks, assumptions, open issues, exhibits, and appendices: As with all documents,note the risks, assumptions, and open issues and provide appropriate exhibits and appendices.
As a product manager , your focus should be on the following key parts of the marketing
- What are the marketing objectives and strategy? Does it support what you need it to in order to make the product succeed? The marketing plan may detail activities that support an overall revenue number . Does it align with what your forecast and expectations are?
- What is the mix of marketing programs? Make sure you understand how the choice of marketing activities helps or hurts your product’s overall success. Is there enough online advertising? Not enough focus on public relations or getting good reviews? Make sure the mix supports getting enough touch points to the market you’re targeting.
To get started, have a look at last year’s or last quarter’s marketing plan for your
products or other products in your company . See what the thinking is behind it and
how it could apply to your product’s plan.
Figure 15-2 earlier in the chapter shows what you should have as a marketing component for each stage. T o really succeed, you need to add in another column to cover what the metric of success for each stage is and/or what percentage of people should be moving from one stage to another . Use these numbers to drive specific goals for the marketing plan.
Here are some examples of goals that you can set for each stage.
- Awareness: How many people will be exposed to the product, and how many touchpoints do they need before they take action? Even when people are interested in a topic, they need to see an ad roughly three times before they even register having seen it at all. If the goal is to reach 100,000 people with an ad three times, work with your marketing manager to figure out how to do so and what the costs will be. Marketing professionals are the best placed to flesh out this part of the sales stage.
- Interest: Online search is the way most people investigate their options. Even if they don’t know your brand or product, you’re likely to have customers come looking if you know their likely search terms and are in the top three options that show up. Make sure that the few words that they see in the search engine results (or advertisements delivered through Google AdWords) deliver a short, compelling message that convinces them to click through. Rely on marketing’s expertise to work through the search terms and compelling messages. These same marketing co-workers will likely know what a good click-through rate is. For example, in some industries a 1 percent click through rate is considered successful. If your awareness goal is to reach 100,000 people, at a 1 percent click-through rate 1,000 people will have clicked through to visit your website.
- Evaluation: The evaluation goal you set depends on your product. For example, software companies can simply allow customers to sign up and try a product for 30 days. This approach dramatically lowers the risk for customers trying the product. And if they aren’t paying for it, at least initially , they may just give it a try . But what about larger- ticket items that require complex installation, have high costs, or may be mission-critical for a business? How do you convince these customers to evaluate the product?
Many companies offer a free white paper , with in-depth technical details, or other kind of information. Customers give you their contact info, and then the company can send them a list of informative emails over time (called a drip email campaign ) or have a
salesperson call them. You’re always working toward a certain number of touchpoints. If your metric is a 10 percent evaluation rate and your interest stage goal is 1,000 people,
your aim here is to get 100 customers to actually make it through to one kind of
evaluation or another .
- Commitment: When people evaluate products and have a positive experience, they become increasingly likely to buy . If you assume that 50 percent of the people who evaluate the product actually buy , your commitment goal is to sell 50 units for the original 100,000 people exposed to the product.
- Referral : Referrals are an advanced topic that is addressed in a couple of ways. For larger sales that require salespeople’s involvement, the salesperson will ask a customer for a referral or to be a reference on demand. For purchases that don’t involve sales, the most common way to move to the referral stage is to ask customers for reviews or ratings. Amazon asks for reviews once you have purchased a product, and smartphone apps are forever asking you to rate them. Product managers are not often asked to participate nor are they asked to track this activity .
The preceding calculation sets goals from the top down (from awareness and
interest through to commitment and referral), but you can also calculate from the
bottom up (from commitment to interest and awareness). Start with the level of
commitment you’re looking for: “I need 50 customers at an average sales value of
$100,000. How many potential customers do I need at each stage of purchasing to get
to 50 customers?” By using these two approaches and comparing them to the
programs in the marketing plan, you can gauge whether the marketing activities will
allow you to achieve the overall product goals.
Monitoring Product Success Metrics
Because companies have an overall sales goal they need to meet, keeping an eye on actual sales is where product managers spend a lot of time when they aren’t working on the next version of the product.
Keeping tabs on the sales funnel: Leads,
opportunities, and conversions
Traditionally , each step in the sales funnel (see Figure 15-1 ) has a different success rate for each product. Monitor each stage’s success rate on an ongoing basis and use the data to alter your product revenue expectations, plans, and forecast. T able 15-2 shows an example of sales tracking (including common terms that salespeople often use for each stage) through a sales funnel.
TABLE 15-2 Sales Funnel Expected Revenue Results
|Marketing and Sales Terms||Calculated Possible Revenue||Expected Revenue over the Sales Cycle|
|Interest or leads||1,000 × 10% × $100,000||$10 million|
|Evaluation or opportunities||100 × 50% × $100,000||$5 million|
|Commitment or conversions||50 × 90% × 100,000||$4.5 million|
|Expected revenue in the pipeline||$19.5 million|
If you believe that your selling cycle is over six months, you should expect to see about
$3.25 million in sales per month ($19.5 million ÷ 6).
This figure is sales revenue. Your focus is on spending marketing funds effectively . If you expected an ROI of 100 times what you spend on marketing, you should be spending no more than $195,000 over six months. This approach averages out to $32,500 per month. In reality , marketing budgets are rarely spent evenly . There are peaks and troughs, which is why marketing spends are calculated over at least a quarter
Examining revenues and profitability
Over time, revisiting the expected revenue and profitability of a product and keeping them up to date with actual data from what has occurred is important. (See Chapter 9 for a detailed analysis of how to figure out those numbers.) So is regularly reviewing your
revenue, overall profitability , and gross margins (particularly for physical goods). If these numbers leave an acceptable range, create a plan of action for addressing and fixing the problem.
Gauging market share
Determining your market share isn’t easy . In some industries, there are analysts who
follow and ascertain market share for the overall market. If you’re in one of these
industries, you can buy these analysts’ reports and see where you’re ranked. Remember:
These market share rankings often are given in revenue terms. Y ou can check their biases given your known revenue to see whether they’re credible sources of information or adjust for their biases.
What happens if you have a very specialized type of product that isn’t tracked by analysts? You can use a few approaches:
- Look at your competitor’s publicly released revenue amounts and work the figure back against your known revenue.
- Ask your distributor for information about how much your product sells versus your competitors. Distributors rarely give you actual sales figures, but they may be willing to give you a total number or a ranking.
- Compare your overall sales to the total available market (TAM) you calculated as part of the market research into target markets and their size (see Chapters 5 and 10 ) to see what percentage of the market you’ve captured.
Unfortunately , there is no magic market share wand to calculate this figure. However ,
when you’ve hit on a method that gives reasonable data, keep using it consistently . What you’re really looking for is changes up or down.
Benchmarking: Tracking against the business plan
Reading through a business case (see Chapter 9 ) several months after your product
launches can be an exercise humility as you come face to face with how incorrect your
initial plans were, but it often provides great insight. Y our predictions may have been
wildly incorrect, but you can now learn from your past mistakes. Plan a meeting to go over actual versus planned sales results. Collectively list all the differences between the plan and the actual rollout. If possible, attribute percentage amounts to each of the variations.
Once you have reviewed your actual results against your planned business case results,
determine any changes that are needed in your marketing plan. Reviewing actual versus
planned results means you may avoid some of the mistakes the next time around. The more of these business reviews that you do, the more accurate you get. Finally , write up your findings. Whether you ever look at them again or not, you’ll remember it better if you write it down.
Changing Course: Making
Your marketing plan will likely need adjustments as it progresses and you get more data.
You need to look for ways to optimize what you’re spending, focus on what’s working, and eliminate what isn’t working.
Figure 15-5 shows two different axes of analysis and possible change you can look at:
- Margin drivers: Profitability can change due to a number of factors.
Selling price: Consider changing the price. Because price changes are usually
irreversible, this driver isn’t the best place for a product manager to make changes.
Volume mix: Volume mix is an analysis of how the number of each type of product
sold is changing the profitability of the whole product line. Are you selling more of a
low-end (less profitable) product or less of a high-end (more profitable) product than
expected? Does the value proposition for each specific product make sense to
customers or is one product sold more than any others? How does the mix of
products sold affect overall profitability?
Customer satisfaction: Are customers not satisfied after they buy your product?
Marketing effectiveness: Is your marketing not delivering the expected leads? Are
these leads not very good?
Sales effectiveness: Are salespeople clear on what they need to do? Are they
actually doing what is requested of them?
Cost of goods sold (COGS): Did the cost go up? Why , and what can be done about
- Angle of analysis: The angle of analysis can be through the lens of the product, the region, a customer segment, or a particular channel. Break down sales numbers and then chart them over time to see what piece of your product delivery system isn’t delivering.
Using Figure 15-5 , you can investigate sales of a particular product. You can also compare it to other products or product lines; if those products/lines are performing better , determine why and apply those drivers to your product.
Beefing up sales support
When conducting a product performance investigation, you often discover that the issue is localized to a couple of margin drivers. While you’re busy fixing the problems longer-term, you may want to provide better support to your sales folks as a short-term fix. For example, do they need any additional selling tools or information? Can you run a short-term promotion or discount that will fix pricing issues in a particular region? Rely on your
salespeople to tell you what may be stalling sales and use this information to react quickly .
Enhancing the product
If your product is failing across the board, you simply may not have gotten the value
proposition right. Now you have the tough job of fixing the product, and managing
customer and business expectations until you can deliver the right product. This situation takes you back to the conceive phase of the Optimal Product Process (see Chapter 4 ), where you need to brainstorm and gather ideas for features and additions to the product to make it more attractive to potential customers. If at all possible, talk to prospects who considered purchasing your product but ended up not buying, and get specific reasons as to why they didn’t buy your product and what they bought instead.
Product cost reductions may be challenging to find. However , if you rely on your team
members — such as those in operations — you may be able to cut costs which will increase profitability . These cost savings are an immediate boost to the company bottom line.
Here are a couple of ideas:
- For a hardware product, how can you trim component costs, and how can you build it less expensively? Can you switch parts suppliers? Will your manufacturing facility give you a price break based on the volume you’re building with them? Can you increase the number of products produced simultaneously to decrease your per-unit cost? If you build extra units at the same time, take into account the cost of storing extra inventory .
- For all products, examining the entire product delivery system by using techniques like the customer journey work in Chapter 11 may lead to insights into faster and cheaper ways to get the work done. For example, can you reduce support or warranty costs or shipping costs to the distributors or customers?