Product Management and Channel Strategy. Where Lean Creates the Foundation for Effective Marketing & Sales

Transcription

1 Product Management and Channel Strategy Where Lean Creates the Foundation for Effective Marketing & Sales Let s establish a couple of fundamentals: Lean is all about the elimination of waste And waste is anything that doesn t add value in the eyes of the customers Operation 1 Operation 2 Operation 3 Operation 4 Lean focuses on processes and improving them by eliminating the waste But the essence of the business is the creation and sale of its products The waste eliminated from processes has to translate into waste eliminated from the cost of the product TOTAL COST WASTE VALUE 1

2 When the product offers high value to customers relative to the price Marketing is simple: merely tell the customer the facts about its superior value MARKETING And the whole business has the enjoyable task of running downhill! And sales come easily merely take orders for great products from customers who know how great the product is. SALES and sales are tough to come by with an inferior product and a confusing marketing message SALES Marketing has to get creative smoke and mirrors to describe anything other than the facts of the product But when the product does not provide great value for the customers MARKETING And the business has the difficult challenge of always having to run uphill! 2

3 The Lean company is a product-centered company And the entire focus is on creating and providing products that create the maximum value for customers Design Processes Marketing Processes The Lean company is a product-centered company And the entire focus is on creating and providing products that create the maximum value for customers The Product Management function is the hub of the Lean organization Effective Sales & Marketing are derived from strong, well structured Product Management It is where the definition of customer value resides It directs and prioritizes product development It provides structure to and informs marketing It is the source of product content and sales enablement 3

4 The personas are the different end consumer profiles in a Lean environment they represent different consumer definitions of value The channels are the different paths to the consumer through which you sell For instance, let s say you make and sell snow shovels The personas might include: Light users people who will use the snow shovel very little either because they have little area to keep clear or they live somewhere with little snowfall Heavy users people who will use the snow shovel often either because they have a large area to keep clear or they live somewhere with considerable snowfall Limited users elderly or physically limited consumers who have less strength or stamina than most consumers Commercial users businesses that will buy the product for use by their employees 4

5 For instance, let s say you make and sell snow shovels The channels might include: General Big Box retailers such as Walmart, Target, etc DIY retailers such as The Home Depot, Lowes and Menards Specialty retailers including pharmacies such as Walgreen and CVS; as well as hardware chains such as TrueValue Commercial distributors such as Grainger, Matco and Harbor Freight Market and Consumer Research needs to answer What product aspects and features are most important to each persona? In which channel does each persona prefer to purchase? Light users Heavy users Limited users Commercial users General Big Box retailers DIY retailers Specialty retailers Commercial distributors 5

6 When we think of Marketing, we tend to think primarily about advertising, branding and other forms of outward communication The Lean company views Marketing as much more focused on consumer and market research. Inbound communication. Listening and learning This is how we can know better than the other guys exactly who the personas are and on what do they place most value When we think of Sales, we tend to think primarily about pitching products to customers The Lean company views Sales as much more focused on knowing the channels the keys to their business models and how to enable them to be successful General Big Box retailers DIY retailers Specialty retailers Commercial distributors This is how we can maximize the value we create for both our channel partners and the end consumer 6

7 When we know better than the other guys (1) how consumers define value, and (2) how to minimize waste for channels we win every time! Note: What we are doing here is a whole lot more customer centered than Good Better Best, which is actually very inward, cost focused thinking and grossly over-simplifies and underestimates our end consumers 7

8 A formal Product Management function is fairly common in B2C and B2B2C environments It is less common to see Product Managers in the B2B world where the mistake is often made of thinking that Product Management is the same as Product Development In fact the B2B environment often provides the greatest opportunities for creating value in broader ways Financing Service packages Kitting & bundling Design support Inventory management This requires a broader business view than typically assigned to Product Development engineers 8

9 So what does Product Management actually DO in a Lean company? It owns this matrix! Specifically, it owns each box within the matrix And a keen understanding of how the channel partner s business model works and is optimized With a keen understanding of how the customers (personas) define value And a keen understanding of how the competitors offer value in each box Product Management develops the plans to win in each box 9

10 The Plan to Win includes: Product features and specifications (both what the product should and should not have to assure optimum value without including costs for capabilities the customer does not value) Bundling and accessories Packaging Warranty, service, support Finance and supply chain requirements Anything else within the scope of the business that enables maximum customer value Product Management then provides the details to Marketing whose responsibility is to communicate the appropriate facts to channel partners and end consumers. Remember Marketing is a nonvalue adding function MARKETING This effort is simple and direct and at the least, yet effective expense SALES Lean companies do not build Marketing empires 10

11 And Product Management then provides the details to Sales in the form of appropriate sales enablement Fully detailed explanations of our offering relative to the competition MARKETING Clear explanation of how the product and its fully developed business aspects create superior value for the channel partner SALES Marketing Describing the product - Advertising Manufacturer Customer Listening to the customer market research The Leaner the company is, the more they understand that listening to the customer and continually honing their understanding of how customers define value is far more important than outbound communication and advertising 11

12 Sales Lean companies recognize that different customer types require different Sales models they define the value of their suppliers in different ways No One Size Fits All Sales models Manufacturer Manufacturer Manufacturer Fact based Relationship based Content based Big customers Walmart, GM Small customers Mom & Pop ECommerce And the sales Enablement facilitated by Product Management supports each unique Sales model Design Processes Marketing Processes The loop is closed when the Product Management output informs the input processes and they clearly understand what actually adds value for customers and what does not The Lean continuous improvement effort is driven by products and customers, rather than a theoretical definition of value adding 12

13 Feel free to call or with any questions, Or if I can assist in any way Bill Waddell (815) bill@bill-waddell.com 13