Market management vs product management

QUESTION: I’m a marketing director in an FMCG (fast moving consumer goods) company and an avid reader of your column.

In fact, I clip many of your columns and distribute copies to members of my marketing team.

In the early 1980s, I worked as a brand assistant at Unilab where you introduced and taught us more than 3 years the product and brand management system in both our prescription and OTC divisions.

When I left, I brought with me your brand management and research manual. I have to say that the FMCG company I’m now with grew its business because of product management I learned from you. And that system is still doing it.

My close business friends and I were bothered about what you wrote in the past 3 Fridays. You’re now into what you call “market management” to replace “product management.”

We’ve all grown our business through product management and product management continues to grow it. Those of us who learned our marketing from you still remember that you once said to us: “Do not change what’s still working.”

For us, product management is still working. So why should we change?

Answer: Thank you for acknowledging my contribution to Unilab’s marketing success. Unfortunately, what you recall about my advice on how to manage change is incomplete. There were two parts in it and you had chosen to remember only the first part. My complete admonition was: “Do not change what’s still working unless there’s a compelling reason to do so.”

The preceding Marketing Rx columns were all about that compelling reason. I meant that to motivate you to integrate market management into your product management system. It’s clear that you failed to understand that compelling reason and even misinterpreted it to mean displacing product management with market management.

So let me first recall and explain that compelling reason.

My research and consulting engagements in business growing via the product management system over the past three decades are summarized in my 2010 book, “Segmenting: How Market Segmenting, Self-Segmenting and Desegmenting Are Changing the Marketing Game.”

My analysis of all those stories about successful product management strategies came to this surprising conclusion: “The ultimate source of growing any business is market segments. Products or new products are only secondary sources. Even if R&D comes out with a most interesting new product, if there is no market segment in need of it, it will have zero sales.”

What did this mean about product management? Definitely, it’s not about displacing product management. There are now two systems, two generic strategies to work with: product management and market management.

There’s nothing in the conclusion that even hints of an either market management or product management kind of choice. The real implication is about a both-this-and-that kind of choice. Both market management and product management must now rule the marketing game.

Does this mean that if you choose to stay with product management, you will fail? Of course not. But if you do marketing by the product management based strategy only, your success will just be suboptimal. Optimal success is now a function of doing both product management and market management.

How do you do both? In corporate strategy, there’s an old rule that’s still observed and respected today. That’s the rule that the late Johns Hopkins University Professor Alfred Chandler became famous for: “Structure must follow strategy.”

So, if you now have the twin strategy of product management with market management, then the rule says you set up for this. It’s therefore wrong to tailor your strategy to your existing structure.

What organizational structure are we talking about here? Organizational development (OD) authors speak of the “formal structure” and the “functional structure.”

The formal structure refers to the boxes and dark and dotted lines in the company’s organizational chart. These are difficult, if not impossible, to change immediately. It entails large and small, as well as numerous changes, including almost trivial but still sensitive changes like those in business letterheads, business cards, titles on the executive doors, and so on.

On the other hand, functional structure relates to the “white spaces” in the organizational chart and the interactions taking place among and between occupants of the boxes and the dark and dotted lines. Those interactions are dictated by people’s designated job responsibilities. They are open to more immediate changes especially when those changes come from top management.

You may prefer to take this line of attack and favor the functional structural changes. But for the latest effective approaches, consult the literature on matrix organization, both those that failed so you can learn what to avoid, and those that succeeded so you’ll know what to adopt. In the local scene, learn from the evolving experience of the large consumer companies like Unilever, P&G, Nestle and J&J. The two leading telcos, Smart and Globe had organized their marketing under a market management plus product management system.

So next time, be more careful about your interpretations. But I’m glad you wrote and gave me this opportunity to clarify and explain. Most important of all, may I encourage you to be more open to change and continuing changes in the market and learn how you should respond to them. Remember what the late Harvard business history professor David Landes’ Law of Nemesis stated: “Every success bears the seed of its own reversal.”

In relation to your dedication to product management, that simply tells you that your product management successes have already in them the start of its eventual failure.

Keep your questions coming. Send them to me at [email protected].