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Common pitfalls of product management
The “Value Chain” in business and operations is defined as the cumulative increase in value of a product as it moves across the innovation path and into the functionalized product development process.
With each step forward, the value chain gains momentum and grows in size. But it starts with an idea.
An idea has very little value but significant potential. This idea is nurtured and cultivated by the organization as it progresses from ideation to preliminary investigation phases. A “proof of concept” is born and the idea starts to take flight.
During this development process, there are several critical roles/functions that support the sourcing, engineering, manufacturing and commercialization of the idea into a product reality. As more time and effort is added to this idea, the idea starts to gain value.
Some of the value added by each of these functions includes:
- Sourcing support – raw material procurement is a critical value-add function of the development process. It requires an understanding of the desired end-product pricing strategy such that procurement professionals can identify appropriate raw material suppliers that fit within the overall commercial strategy.
- Manufacturing – after sourcing of the appropriate raw materials, manufacturing has to assemble the product, thereby giving it shape and size. Value continues to accrue not only in the assembly of the product but in the refinement of the processes and costs that contribute to the manufacturing.
- Marketing – marketing enhances the product value by positioning it in such a way as to make it attractive to prospective buyers. The value that marketing adds comes by way of marketing messaging, branding and perception.
- Sales – sellers are the external-facing cog in the value chain of an organization. A company’s sales team helps to directly communicate and ultimately realize the value of that product with customers.
- Customers – the final and perhaps most important part of the value chain is the customer purchase. This purchase decision validates the value assigned by the company on that product and also serves to potentially increase the perceived value of that product to others via promotion and positive reviews. Note: the converse is also true. The value that a company generates in a product may erode based on customer feedback.
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What does product management do?
