Financial Outcome & Consumer Experience - The Dilemma of Every Product Manager
kHUB post date: October 19, 2022
Read time: 5 minutes
Financial outcome will always be the driving force that senior executives look at when evaluating any new initiative that Product Teams bring on the table, yet what many product teams fail to understand is that these are just projections, if your experience is not really 10x Experience and better than competition, then why would a consumer buy your product.
This is the dilemma of everyday product manager, you can either choose to compete in commoditized segment with a me-too product at a lower price and better commercial execution or similar price and better valuable features or you choose to compete in a differentiated segment with a better experience product all over and a positioning/pricing that is justified by your experience.
Your financial projections come from good product and good positioning and good product and good positioning comes from good experience and good experience comes from getting a consumer job done and getting a consumer job done comes from understanding the pain points, fears, journey the consumer pass through. It all starts with the right insight and right understanding to driver the experience to deliver the product to deliver the financial outcome. We just don’t look for a product to put in market to increase our sales.
Correct Opportunity Assessment from the Start
As a product manager you always have to start from the consumer and that part starts when you first evaluate what is your total addressable market size and within this total market size, you need to go a second step which is the serviceable addressable market. Based on your segmentation & positioning, you can really understand what your total market size is and how much of that can you actually address with your product. The mistake that many product managers do is that they assume that since the market is 100 million, I can target 10% share in that 100 million. While this is fairly straight forward, it is significantly wrong. You have to understand that based on your Segmentation/Positioning/Offering (4 Ps) this will define what is your serviceable addressable market size. And within that market size, realistically, you will have to initiate your target market share.
Does that mean that the remaining of the Total Addressable market is lost, in reality NO, but a product manager has also to understand that you cannot always have ONE SIZE FITS ALL SOLUTION. There are lots of ways to penetrate the remaining of the market and it has to be done based on a thorough understanding.
- Is it just a matter of price coverage with Good/Better/Best ranging where you expand your serviceable addressable market?
- Do I need initiate different offering to stretch the Product Line Expansion Vertically to target more segments below and above?
At the end of the day, you can really evaluate the right share of market only when you have an understanding of what the real job to be done is. Otherwise, in reality you are either overestimating or underestimating the market size and possibly creating a product no one really wants in the market because it doesn't help them get the Job done, targeted to the wrong consumers.
Monitoring Financial Outcome
So, Let's assume that you already did your homework, and you have clear understanding of the job to be done, opportunity size, your strategic direction and the solution you want to launch in the market, what's next ?!!
You have to set and monitor your financial outcomes correctly from the start which means that you have to set from the beginning what is your target price positioning and that has to take into consideration the market landscape (to do a really good market landscape with thorough understanding requires not just focus but also deep understanding on the ground, that's why your sales team are crucial at this stage). Just giving cost target with product requirement to your fellow innovation team of product development team will not solve the issue, you have to establish governance in terms how do we ensure we reach this target, are we being realistic with our numbers? do we have the competencies needed to achieve these targets?
Some people will tell me that I am asking trivial questions but believe me when I tell you that these are so trivial questions that in some cases experienced people dismiss even asking and assume (Please Note the word assume) that it can be reached. Thorough analysis at the beginning of any development is a must if you want to avoid wasting Money, Resources & Opportunities.
Monitoring this kind of financial outcome and being Agile along the development road to take tough decisions with clear strategic direction is key. Always make sure that your team not just understand your direction, but they lead with it their own teams.
Setting Expectations from the Start
Sometimes and I have seen it many times unfortunately, setting the expectations is not done in a proper way from the start. What are we delivering in terms of Experience?! Are we challenging ourselves enough that when this product launches, it will deliver the outcomes we expect. Success of a product is not just done based on the product, that's 1P of the 4Ps, yet we are always fixed on the product itself that we don't really give the rest of the 3Ps the right attention. Yet in some cases, with excellent product, great pricing, if your promotion & place is on the low side, your sales will be short-lived.
As a product manager, it is 360 views from your side. What is your expectations from Each of the 4Ps? You have to set this very clearly from the start to your Product Team, Innovation team & Sales Team. Assuming that we have been doing launches for long time so why this one is different than the other is a key recipe for failure. As much as having a process and following it is important. Understanding also the conditions of effect of the process on every new launch and tailoring/customizing the needed ingredient for a successful launch is crucial.
As an example, let's assume you are launching a new appliance in one of your regular markets and for simplicity's sake your product and pricing is spot on. Your sales team start utilizing the regular process flow for promotion and place deliverables, yet you want to achieve bigger market share & penetration with this product to pave the road for new generation in next 2 years which would require your promotion strategy to be tweaked differently to try and get more consumers to mix up & mix down from competitor models. That will require so much tweaking for that specific launch that will not just affect your promotion but also affect where you will display this product and possibility of different customization for the mixing up & down.
About the Author
Energetic Product Development Expert, Product & Project Manager aspiring for challenging opportunities in the application of new technologies & innovations in the home appliances industry, collaborating with an international multicultural team
I strive to be a leader in every position I fill, every team I am in and every project I manage or take part in. Becoming a leader doesn't mean you need to be at the head of the table but it means that you always try to make the initiatives and try to lead people by example ad stand out for your ideas.
Determination and Focus are the qualities that always drive to success. A continuous life learning process is one the values I live by. No matter how strong you become in your field you need to continue learning everyday to enhance your skills and better serve your customers