When I was at Telanav, I remember our CEO beingvery big on empowerment. He used to say that a product manager is responsible for managing the product describednot just as a set of features, but as the whole business that spans from sales to marketing to support. Product Managers were truly considered the CEO of the products.
One of the most important technique that he thought me was the “4Ps &3Cs” framework. Initially, like every new tool, it may seem a waste of time, but you’ll soon realize how incredibly valuable and insightful this exercise is. In fact, it forces youto create and maintain a completeview of the product youown, it allows youto think about a business venture in a structured way and, finally, it lets you realize how much you didn’t know about the business you are in. The first time, I was skeptical, but as I diggedinto it, I quicklystarted to see the benefits.
Today, as product manager for multiple products, I make sure to run the 4Ps& 3Cs exercise for each of them.
Let’s learn a little bit more about this framework which is thought also in great schools like Duke and Harvard.
The 4Ps is often called “The Marketing Mix” and it has been a very popular framework forthe last 30 years. It gets complemented by the 3Cs model, developed by the Japanese strategy guru Kenichi Ohmae, that offers a strategic look at otherneeded factorsfor success. Combined together, the 4Ps and 3Cs models, define the first planning step you’ll need to take in order to understand your current situation and drive your product.
The 4 Ps are Product, Price, Promotion and Place - the four marketing mix variables under your control.
The 3 Cs are: Company, Customers and Competitors - the three semi-fixed environmental factors in your market.
As the 4 Ps and 3 Cs all need to be considered in relation to each other, it doesn’t really matter in what order you define them.
The 4 Ps
Product: This is where you define your product or service. Product Managers must ensure to have the right type of product that is in demand for themarket. So during the product development phase, youmust do an extensive research on the life cycle of the product that they are creating. Describe the benefits, the use cases, the technology. You need to clearly articulate what you do offer and what you don’t offer. If this is not clear, then you may fall victim to “scope creep” where customers, partners and internal members will keep expanding the scope of what you had originally envision.
Price: This is where you define your pricing structure. Pricing always shapes the perception of your product. If a company is new to the market and has not made a name for themselves yet, it is unlikely that your target market will be willing to pay a high price. On the other hand, a low price usually means an inferior productin the customer's eyes as they compare your productto a competitor. There are many different price strategies. Price can be based on subscription only (pure Subscription base) or can have a monthly or yearly maintenance fee, it can decrease as the number of users goes up (Tier Pricing), can be free up to a certain number of users or a certain number of features usage (Freemium). Price can also change based on geographical territory. Price determinations will impact profit margins, supply, demand and marketing strategy. It is not easy to find the right amount for the right audience. Probably, the best way to start is simply responding to the following questions:
- How much did it cost to produce the product?
- What is the customer's perceived value?
- Will a slight price decrease could significantly increase your market share?
- Can the current price keep up with the price of the product’s competitors?
Promotion: This describes your marketing strategy and it mainly influences brand recognition and sales. There are multiple ways to promote a product and the best strategy includes a little bit of all. For example, Advertising and Public relations are two types of communications. The first one is typically paid for, while the second is often free and includes press releases, exhibitions, sponsorship deals, seminars, conferences, and events. Word of mouth is also a type of product promotion. Itis an informal communication about the benefits of the product by satisfied customers and ordinary individuals. Each touch point must be supported by a well positioned brand to truly maximize return on investment.
Place: This should explain your distribution model. This comes with a deep understanding of your target market. Basically, you need to figure out how you’re going to get your product to customers and partners, your supplier to your warehouse and then to your customer.
The 3 Cs
Company: You first need to know your company very well: define or learn the vision and the mission. The location. The logo. The organization and its culture. Finally the core product and value. A company needs to carefully evaluate both the short term and long term strategies to beat competition and have a sustainable competitive advantage.
Customers: Define your target audience. Deeply research the type of customer, their demographics, their spending power, their habits, and their needs. A common mistake that companies do is to consider the shareholders as their customers. Instead, the main focus should be on the customers as it is the customer who can improve the performance of the organization and can cause the failure of the organization.
Competitors: To be successful, you need to know your market and especially your competitors. You want to learn how they operate, what marketing tactics they use, who their partners are, what financial position they are, who their employees and customers are. You can learn for your competitors'mistakes, model what works for them, discover from them new market opportunities.
Keep the 4Ps &3Cs framework in your pocket, always.
In conclusion, the 4Ps &3Cs is a living exercise, it will continually need updating as your business grows and changes. The exercise may seem obvious, but once you start thinking about each step in the process, you’ll be amazed at how much more organized and therefore successful your business planning will become. My suggestion is to review this sheet at least every quarter in order to monitor the pulse of the products you manage.
Be an awesome Product Manager!
