Product Management

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PRODUCT MANAGEMENT

Product management has played an important role in business strategy since the early 1930s. A product manager's job description can vary from organization to organization, but it typically includes overseeing many aspects of a product's life cycle, ranging from product creation and development to marketing and selling of the product. The advent of e-business during the 1990s added yet another facet to product management, as the Web created a new, global marketing and selling channel for both consumer retailers and business-to-business (B2B) enterprises. Traditional retailers including Levi Strauss & Co. and cataloger Lands' End Inc., along with technology-based firms like IBM Corp. were forced to change their product management strategies in order to compete in the changing marketplace. Dot.com start-ups like Amazon.com Inc. and Datek Online Brokerage Services LLC also placed strong emphasis on product management in order to stake their claim in the online arena.

EARLY HISTORY

The concept of product management was created in the early 1930s by Proctor & Gamble. At the time, the company's Ivory soap was a top seller. Its Camay soap, on the other hand, was not performing as well. Proctor & Gamble executives appointed a brand manager to focus specifically on the Camay line in hopes of reviving the product. This management approach proved successful and soon other consumer packaged goods firms began using a similar strategy to manage their products.

As product management began to take hold in many business organizations, the concept gained popularity among business colleges and became part of the curriculum of marketing classes. During the 1960s, Harvard Business School professor N. Borden created the four P's of marketing: product, which involved the creation and development of a product; place, the markets in which the product would be sold; price, how much the product would sell for; and promotion, how the product would be marketed and sold. Borden's marketing theory soon became a standard in business classes throughout the United States. Soon thereafter, three additional P's were added to that concept: people, process, and provision of customer service. While product management has traditionally encompassed all of these P's, changing technology and evolving market conditions leave it subject to constant change within an organization.

IMPACT OF THE INTERNET

Up until the 1990s, product managers relied on traditional marketing and sales channels such as television ads and retail outlets to promote their product or brand. As the Internet became a more common tool used by enterprises for advertising and selling in the late 1990s, product managers were forced to reposition their products to compete on the Web. Product management also started to become interchangeable with brand management, as establishing a strong, recognizable brand name became increasingly important. An August 2001 BusinessWeek Online article claimed that "for companies in almost every industry, brands are important in a way they never were before. Why? For one thing, customers for everything from soda pop to software now have a staggering number of choices. And the Net can bring the full array to any computer screen with a click of the mouse."

Lands' End Inc. is one catalog apparel company who successfully adapted its product management strategies to the Internet. Launched in 1995, LandsEnd.com started out selling 100 items. To promote its products online, the firm used both print and television advertising and also launched innovative technology on its site to draw in customers. Lands' End Live, for example, provided online shoppers with real-time personal assistance twenty-four hours a day, seven days a week. Shop With a Friend enabled people in different locations to shop online together. Outfits Online allowed an online customer to coordinate outfits with 4,750 different items on the LandsEnd.com Web site. Another feature included Your Personal Model, which allowed a user to create a three-dimensional model of their body shape. The tool would then suggest clothing that was appropriate for that body type. By 2000, LandsEnd.com included all Lands' End catalog products and was visited by 38 million Web surfers. Due in large part to its successful product management, Landsend.com grew into the leading online apparel site with $218 million in sales in fiscal 2001.

Levis.com, launched by fashion retailer Levi Strauss in 1996, is another example of a traditional retailer utilizing the Web as part of its product management strategy. While the site never took off as a sales channel, it did become an effective marketing tool for the company. Levis.com was originally launched as an informative company Web site; however, the site became a sales outlet for over 120 clothing items in 3,000 different styles in 1998. Levi Strauss' share of the denim jeans market slipped from 30 percent in 1990 to 17 percent in 1998. The firm saw the Internet as a potentially lucrative sales and marketing channel for its products and believed its online efforts might bolster Levi Strauss' faltering image. The company's move into online sales arena did not fare well, however, because of several product management-related issues. For example, Levi Strauss' transition from selling large quantities of merchandise to retail outlets to shipping specific items to individual online consumers did not go smoothly. The firm faced product distribution problems both in its retail and online channels due to major cuts in workforce. When sales continued to falter in the late 1990s, the advertising budget for Levis.com was slashed, leaving it unable to compete with its online competitors. As a result, Levi Strauss shifted the site's focus from selling to marketing Levi's products. Along with promoting the Levi's brand image, the site also encouraged Web surfers to purchase Levi's apparel from its retailer's Web sites. Used as a marketing tool, Levis.com included information on men's, women's, and children's Levi's apparel. The site also featured company commercials, information on fashion, and the firm's Original Spin program, which allowed consumers to order customized jeans at certain Levi Strauss stores. While unsuccessful as a sales channel, Levis.com played an important role in Levi Strauss' product management strategy as a marketing outlet for its products.

Hardware and information technology services giant IBM was also forced to adopt a new product management culture. As technology advanced at breakneck speed in the 1990s, IBM not only had to develop cutting edge products and services, but also market and manage them effectively as well. In the early 1990s, the company's different product groups were disorganized and had no clear marketing objective, leaving consumers confused about IBM's product line. As a result, the firm turned to advertising firm Ogilvy & Mather Worldwide Inc. to bring all of IBM's products under a single brand image. The move to unify IBM's products and services proved successful, especially during the dot.com boom of the late 1990s. The company also weathered the subsequent dot.com fallout successfully because of the popular brand image it had established over the past several years. In fact, other technology firms, including software company SAP AG, began to follow suit, adopting IBM's branding strategy. The chairman of Ogilvy & Mather claimed in the aforementioned Business Week article that, "once an enterprise understands what the brand is all about, it gives direction to the whole enterprise. You know what products you're supposed to make and not make. You know how you're supposed to answer your telephone. You know how you're supposed to package things. It gives a set of principles to an entire enterprise."

Along with traditional retailers, dot.com startups also used product management to reposition their brands. For example, Amazon.com, which began selling books online in 1995, eventually forged partnerships with leading Internet players such as America Online Inc. and Yahoo! Inc. as part of its overall branding campaign. A key component deals such as these was Amazon.com 's promotion on high traffic Web sites. In 1999, Amazon.com began to diversify its product holdings; to manage these products, the firm organized them into online "stores" including Software, Video Games, Gift Ideas, and Tools and Hardware. By 2001, the company advertised its offerings as the Earth's Biggest Selection of products including books, e-cards, online auctions, CDs, videos, DVDs, toys and games, kitchenware, and electronics. Having established its brand, by successfully managing its various products, Amazon.com had secured millions of customers in over 220 countries.

Another dot.com start-up that fared well was Datek Online, an online trading site launched in 1996 by Jeffrey Citron and Peter Stern. Considered a pioneer in the online trading industry, the firm quickly grew to become one of the largest online traders with over 640,000 customer accounts and nearly 100,000 trades per day. A significant factor in Datek's success its product and brand management. From the start, Citron and Stern diligently worked to establish Datek's brand throughout the online industry. The company lured day traders with a low commission fee of $9.99 per trade and also developed innovative products and services to attract industry attention. It was the first online brokerage to offer free real-time streaming quotes and was also among the first to offer real-time account portfolio updates and account balance information to its customers. In July 1999, the firm became the first to offer extended hours trading sessions, which enabled members to trade NASDAQ securities from 8 a.m. to 8 p.m. Roughly one year later, Datek became the first to offer decimal-based online trading, a dramatic change from the traditional fractional system. By managing its innovative products successfully, Datek secured its position as a leader among online trading firms.

According to Linda Gorchels, author of The Product Manager's Handbook, a product manager's job is to "oversee all aspects of a product/service line to create and deliver superior customer satisfaction while simultaneously providing long-term value for the company." Regardless of industry, this job will continue to hold a significant role in an enterprise's business strategy as the Web continues to evolve into a popular marketing and selling channel, and the global marketplace continues to become increasingly competitive.