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Have we Entered the Post-Product Management Economy?

Seth Godin recently made a post about Why Be Good?  Godin states that the worst thing for a Marketer is to be given a “good” product to market.  He’d much rather have a “bad” product.  Godin is a marketer, not a product manager, so his view doesn’t surprise me at all.  Ethan at On Product Management reacts strongly to Godin’s thoughts and turns Godin’s examples around, stating that the opposite is actually true – it’s better to have the best product, because that is what customers will buy.

This is a great interaction because it illustrates the rift between marketing and product management.  First, I suspect that Godin isn’t really saying that for any given company it is better to have an inferior product.  He’s saying that for a marketer it is better.  I’ll go a step further – for a great marketer (which Godin is) it is better.  The first question I always get from Marketing is “what are this product’s differentiating features?”  Lazy marketers love to have the leading product in a market because they just need to maintain the status quo.  A great marketer likes the challenge of winning with a product that doesn’t necessarily win on all of the features.  It was a painful lesson the first time I learned that it is not enough to have the best product on the market, you must also have great marketing to let people know about it and get people excited about buying.

Have you and your competitors reached near parity?  Do you differentiate using price?  Does sales laugh when you point out differentiating features of your product because those features don’t really matter?  Do you wordsmith new “features” just to have something the other guy doesn’t on your product slicks?

We’ve had “winning product solve customer problems” beaten into our heads as product managers.  In every market there is a set of features that solves the customer’s problem that everyone’s product has, e.g. the “baseline” feature set.  This is the barrier to entry that any new competitor must meet to play in your market.  You use features above that baseline to differentiate your product.

In commoditized markets, the size and relevance of the features above the baseline shrinks to near zero.  The importance of marketing increases as differentiation shrinks.  Eventually the barriers to entry become so low that nearly anyone can enter, at which point operational efficiency becomes the most important aspect for success, and marketing becomes primarily packaging and pricing.

One of my mentors used to work as a brand manager in consumer goods for P&G.  He told me a story about laundry detergent that is a great metaphor for where we are heading in technology.  The laundry detergent market is highly commoditized.  There are dozens of companies selling everything from luxury to economy detergents and everything in between.  P&G sold several different brands under different names, aimed at different customer segments.  The ability to segment and target customers in consumer goods is astounding – they have it down to a fine science.  “College educated Caucasian mothers under 40 with 3 kids living in a major metro area with a household income of >$125,000” is an example of the level of their segmentation.  If you go to the grocery and turn the detergent boxes on their side and read the ingredients, they are all nearly identical.  The major differences are pricing, and packaging.  It turns out that the mother above just doesn’t feel comfortable buying the “economy” brand, and will instead opt to pay more for Tide to basically buy a prettier box.  That much is obvious; the really interesting piece was the product differentiation.

People buy the pretty box but they aren’t dumb.  They open the box and see the white powder, the same stuff in the economy box, and they resent paying more.  P&G experimented with lots of options, and ended up adding green crystals to the Tide powder.  What did these crystals do?  NOTHING.  People assumed that they got their clothes cleaner or smelled better.  They were there to make you feel better about buying a nicer box with “power crystals.”

Over time, if you take several companies competing for the same market, they will commoditize it even without product management.  You don’t need product management to copy your competitor.  Lots of companies that have identified operational efficiency as their core competency are happy to let other companies take the first mover risk and be the second mover into a market.  If all of those companies have good product managers, they’ll be talking to the same kinds of customers and potentials, hearing similar problems, and developing similar products and features.  Price will become the differentiator and the market will commoditize.

I see a lot of green crystals in technology today.  There are lots of products where the baseline has risen to “good enough” and the differentiating features either aren’t compelling enough to justify paying for them, or customers just don’t care.  On the cost side, we’re squeezed by free and open source products.  What role does the product manager play in a commodity product?  I hypothesize that the markets where companies need product managers will shrink at roughly the rate that those markets commoditize.

What do you think – are we entering the post-Product Management economy?

Using New Media for Product Marketing

Last week, I had the opportunity to participate in a Marketing roundtable hosted by Austin Ventures. Marketing leaders from several AV portfolio companies came together to talk about prescient topics. The topic was “What’s Working in New Media” (paraphrased). It was almost like a mini-ProductCamp, because everyone brought a single slide to talk about their online strategies and what was or was not working well.

Sam Decker, CMO of Bazaarvoice gave an interesting talk about how they are using their blog Bazaarblog to as both a new form of communications, and relationship marketing. It was refreshing to see a company actually have a blog strategy more defined than “let’s give the CEO a TypePad account.” Bazaarvoice targets specific bloggers in their space and treats them like royalty, and does smart things like proactively linking to them and farming their sites for content to create multi-blog conversations. They get it.

Online, everyone looks equal. I can go out and buy a URL and put up a WordPress blog, and in less than an hour have a turnkey site that looks just as good if not better than yours. At first glance, how is a potential customer ever going to know a credible from a non-credible source? You can’t control the blogs (so don’t try). As a Product Marketer, you can increase positive coverage through good relationships and demonstrating that you’re responsive to complaints over time. See The New Rules of Marketing and PR for a good book about this general topic.

One of the initiatives I’ve spearheaded at NetStreams is building a community site for our dealers, who are notoriously fickle. Sometimes they complain publicly on our forums and get other dealers riled up, which then spreads to our sales team, the VP of Sales, and the CEO. When we started the forums, I had all of the above people come to me the first time we had a negative thread demanding that we “take down that negative feedback.” That’s one of the worst actions you can take!

Marcomm looks at negative feedback from customers as they would a poor review in a magazine. It’s meant to be depositioned, explained away, and spun. Look at it from the customer’s perspective: they are telling you that you aren’t solving their problem, and worse, you’re not listening to them. Marcomm and PR speak…but don’t listen (unless they’re paying an analyst and then they have to pretend to listen). I love negative feedback, because those are the best opportunities to both get great product feedback and to demonstrate your responsiveness as a company.

When a negative thread or blog post shows up, acknowledge it. Reply to the post stating that:

  • They’re right; this is a problem, and we recognize that
  • We’re sorry that they had this problem and that we caused it (even if you didn’t cause it)
  • That we’re going to do everything we can to make it right

Doing just those 3 things will turn around 99% of problem customers. In my case, just the basic acknowledgment of their problem was like finding as oasis in the desert to these customers, because we had done a poor job of responding to issues in the past.

Is your company doing anything new and interesting with blogs or other new media to influence your product plans or change your marketing strategies? Reply in comments.