At our recent brainmates Product Talks event, we discussed incorporating customer feedback and input into the product development and ongoing management process. Unsurprisingly perhaps, the attendees felt that despite the importance of this input, many product managers may not spend enough time actually talking with customers – the normal grind of day-to-day work, busy schedules, budgets and other administration means customer interaction often slips down the priority list.

All present though said that talking or engaging with customers was invaluable and it got us to thinking of different ways in which busy product managers can garner such input quickly, easily and for little or (relatively) low cost.

Before going out to get feedback it is important to determine what it is you’d like to know. Are you seeking information on your existing products and services and how these are being used? Do you want to review the problems, challenges and opportunities that your customers face? Are you planning new product development? (Check out our earlier blog about asking customers the right questions)

Think through your information requirements and prepare some questions around this before you go out to get feedback. Once you’ve done this it’s time to get the conversation started.

Here’s just a few ideas and thoughts on channels and methods in which you can gather information

• Use the telephone: Old fashioned but effective, calling customers is a great way to gather feedback and needn’t be hard to do. Send off personal emails to 10 of your most important customers and tell them you’d like thirty minutes of their time in the next 2 weeks for a chat. Set a time and let them change it if they wish. You should end up with a few agreements. Try to keep the conversation open and allow them to say what they want to. They’ll appreciate it and you’ll gather invaluable information.
• Web survey: Tools such as surveymonkey are very easy to use and are great to capture quantitative information and some qualitative feedback. This is more useful when you require specific information and given these sites are free and widely used you should have little problem justifying their use and getting it out to customers.
• Site visit: Going out and meeting customers to talk face-to-face is about as good as it gets – you’ll really get a feel of what challenges and opportunities they face and see how they go about their work day-to-day. This may take a bit more organisation and have some cost involved, but the value of the feedback will be significant. See if you can set yourself a goal of seeing a customer once a month, or once a quarter.
• Sales & customer service feedback: If your organisation uses sales and customer service teams, spend some time talking to them. Rather than ad-hoc conversations which can often be very specific or problem related, set a meeting and an agenda in which you want to discuss a topic – say a new product development or a review of what the customer’s challenges will be in the year ahead. Your colleagues will appreciate the opportunity to be heard and you’ll encourage a more open and constructive debate around solving customer problems.
• Scour the web: With so many people blogging these days – competitors, customers, users – you’ll find a swathe of information out there of relevance. It can take a bit of time, but done effectively – e.g. searching for a specific topic and keeping well organised browser favourites of useful sites/blogs – you’ll be able to get important information quickly and easily. Sign up for RSS feeds of relevance to your products, services and market.
• Engage Web 2.0: If you’ve not done so already, you should look into social media tools – these are much more than a buzz word and reflect a shift in customer-provider relationships. Proactive organisations are out there with blogs, twitter, facebook pages and other sites that encourage conversations to take place – getting your customers to provide input, feedback and suggestions. You can keep very sensitive information off these sites but you should focus more on the value you gain from being active rather than worry about competitors unearthing information or data from you.

How often do you speak to your customers? How does this benefit you?

Have you used any of the above channels and methods to gather feedback and if so what has your experience been? Are there other ways to gather feedback that we have missed?

Standing out from the crowd

Product positioning is an important part of a product marketing strategy. It helps buyers and users understand where a product ‘fits’ in terms what it offers, and how it compares with competing products.

Simple example: think of a major car manufacturer like Toyota. It has a number of distinct brands, each of which are designed with particular buyers in mind. Its utility vehicle Hilux is designed for guys that get their hands dirty; it’s small, zippy Yaris on the other hand is for urbanites who use their car for short trips.

Why does product positioning matter?

In this globalised world of ours, competition is strong and it is critical that marketers position their products effectively so as to ensure they appeal to buyers and users. Product positioning feeds into the development of marketing activities such as the channels through which it is sold and the messaging used in promotional activities. Done well, product positioning can help a product succeed. Done badly, even a strong product can fail.

Take note: Buyers will draw their own conclusions of where your products fit, and your competitors will be working away at positioning their own products and perhaps even trying to cast yours in a negative light. For all of these reasons, it’s worth your while to take active steps to position your products.

Easy as S-T-P

Product positioning should not be rushed, and if possible you should take the time to speak to customers, both existing and potential to make sure you’re focusing correctly. That said, the whole process can be broken down into three steps: Segmentation, Targeting and Positioning.

Step 1: Segment your market

Start off with a big-picture view. What’s the market in which your product or service will be sold? The fact is that few products appeal to all people so you will need to break the market down into smaller ’segments’. Textbooks refer to these as homogeneous groupings of buyers with shared traits, characteristics and requirements. They will all have similar problems and be interested in products that solve these.

It can help to visualise things by putting together some simple 2 x 2 diagrams, putting one variable on the x-axis (e.g. price) and another on the y-axis (e.g. functionality). Even without hard data, it doesn’t take long to overlay the competing products onto this diagram. This gives you a ‘lay of the land’ and can reveal the spaces where competition is strong, or gaps that may signify an opportunity.

Read our “How to…” Segment your market guide for more information about this topic

Step 2: Pick your targets

Now that you’ve split your market up into a number of segments, you’ll need to decide which ones you should focus on. Ideally, this sort of thinking was used in the product development process. If it’s an existing product, look at who your customers are and find out why they like your product. How does it solve their problems? If it’s a new product, spend some time thinking through some buyer personas, to understand who you may be able to satisfy. Try to identify the segment which your product appeals to most. Why is that? What problems is it that your product solves that would make these buyers happy?

Step 3: Position your product

Once you’ve picked your target segment, the next step is to prioritise their requirements and wants and cross-check this with your product. What do they want most? What don’t they care about? If possible, try to quantify and prioritse these requirements so that you can determine which are most important.

Compare your product with those of your competitors – how does it stack up? If it has unique strengths or significant advantages then emphasise these. If you’re lacking in a dimension that’s of low importance then don’t pay it too much heed. If your product is significantly misaligned with your target market’s requirements, have a think about whether you can adapt or change your product, or if you need to refine your target.

Compelling products and services

Going through the above steps will allow you to develop a Product Positioning Statement – a one or two sentence description that articulates why your product is the absolute best solution to the target segments requirements.

This in turn should be used to develop three to four clear and simple marketing messages ideally backed up and validated by data.

Do this correctly and you’ll be better equipped to cut through the clutter and be perceived as relevant and of interest to your target buyers and users.

Share your thoughts

How do you go about product positioning in your organisation?

We’ve been putting off writing about price. Its a tricky subject because there is so much to write about. In this “How to…” blog, we’ll try to simplify the process of pricing and suggest a few strategies you can apply when pricing your product.

Pricing is complex. Both internal (organisational) and external (market) factors affect the price of a product. Economists talk about market conditions (pure competition, monopolistic competition, pure monopoly and oligopoly) affecting price. Product Managers are concerned about understanding gross margin and balancing the concept of value when setting price. Marketers talk in terms of pricing gimmicks such as “free” or “$0.00″.

Although saying that Chris Anderson argues that with the technological onslaught, free has emerged as a valid pricing model

So how do we go about pricing a product?

Step 1: Evaluate the pricing environment

This includes the state of the economy, the product’s existing competitors, new entrants to the market place and consumer trends.

External factors will influence your pricing objectives. If your market is saturated with existing stalwarts, you may decide to fight for market share through price .

Step 2: Define your pricing objectives

Pricing objectives describe what an organisation wants to achieve through the price of its products. Pricing objectives should therefore be influenced by the organisation’s view on market share, sales, competition, customer satisfaction, profit and its image within the market place.

Your organisation may be sales driven and may be prepared to offer the product at a price that will generate large sales volumes. Depending on the price set, a sales driven pricing strategy may lead to a price war.

Alternatively, your organisation may strive to uphold its image as a producer of  luxury, quality products. Status conscious customers will delight in paying a high price for the product and will shy away from the product if the price drops.

Before you price your product, think through the pricing objectives.

Step 3: Choose a pricing strategy

You should choose a pricing strategy that ultimately meets your pricing objectives.

Here are a couple of common pricing strategies.

• Cost Based Pricing – Uses cost as its primary decision factor. The objective of this strategy is to ensure that the cost of developing the product is covered. A percentage or the desired profitability is added to the cost of the product which determines its sale price.
• Market Value Pricing – Pricing is based on the perceived value of the product by customers. It requires research effort to determine customer needs, preferences and expectations before price can be set.

Step 4: Formulate pricing tactics

Pricing tactics are a set of actions that effect the price strategy. Pricing tactics must be considered in relation to the product’s lifecycle.

Gabriel Steinhardt of Blackblot says various tactics such as “price skimming” for new innovative product entrants can be used when applying Market Value Pricing strategy. Companies such as Apple set a high price for a new product such as the iPhone to earn maximum revenues from a small segment of the market that is willing to pay for the first release of the product.

Products in the growth stage of their lifecyle may deploy tactics such as “diversification” to capture a larger portion of the target market and a bigger share of the revenue pie. Price diversification enables companies to charge a smaller price for the basic product and a high price for the premium product.

Bundling as a pricing tactic is used when a product is mature and possibly in decline. Telstra and Optus bundle fixed line telephony with newer, more relevant products such as Subscription TV and or Wireless Broadband Internet access to maintain some level of product penetration.

Step 5: Assemble a pricing mix

Step 5 is the nuts and bolts of pricing. At the final stage, you should consider discounts (if any), other variables such as shipment costs, tax, terms and conditions, payment methods, payment terms, licence fees and so forth.

Exploring a potential marketing opportunity is one of the most exciting stages of the product development cycle.  It is the time to delve into a customer need or problem, assess how large the business opportunity might be to meet the customers’ needs through a product or service.

No solutions to meet the customer need are proposed at this point.  The development of the solution comes much further down the track, once the marketing opportunity has been thoroughly evaluated, defined and the requirements have been articulated in much detail.

So, how do we go about exploring a Market Opportunity?

Step 1: Identify the target market

During the planning stages of the product development process, define the characteristics of the target audience by describing their geographic, demographic, and behavioural profile and skills levels in relation to the customer problem.  Consider the motivators and influencers of the potential customer, as well as what their goals might be.

Step 2: Scope the Market Problem

The next step in the planning stage is to identify and describe the target market’s problem that needs solving.  There are 3 aspects of the market problem that may be considered:-

1. Consumer problem – consumer needs in the B2C market that are unsatisfied
2. Product problem – product requirements that unmet by a product or market offering, particularly in the B2B market
3. Technology problem – the challenges in the applied science of  product development

Step 3: Quantify the Market Opportunity

At this final stage, quantify the financial benefits if the business were to solve the target market’s problem.  Calculate the volume of the market; multiplied by the estimate of the value of the benefit to the customer by solving the problem to quantify the value of the opportunity to the business if the problem is solved.

Other considerations when validating whether a market opportunity is worth pursuing is the duration for which the value may be derived for the business and whether the competitive advantage is sustainable.

If the market opportunity looks attractive enough to pursue at this stage, then the data and benefits compiled can then be used when preparing the business case for the solution as well as the Market Requirements Document.

The development of use cases is vital to understanding the “real world” interactions of customers when using a product to meet their need.

Step 1: Create persona and identify her goals

During the planning stages of the product delivery process, it is important to create a user persona, a fictional character that embodies the characteristics of your target audience. A user persona enables you to better understand the habits, activities and more importantly, the goals of your target market. The role of the user persona is to guide you to make better decisions during the product delivery process.

User Persona – Nancy, 25 years of age, single, lives in Paddington, Sydney. Nancy works in the marketing department for a financial services company. She earns $65,000 per annum. Nancy has access to the internet from her phone, from work and at home. Nancy enjoys connecting with friends on Facebook and she is just starting to tweet.

Nancy’s Goal: Nancy wants to be able to access information and emails away from the office. Her company has agreed to pay for her mobile phone bill but only up to the level of the capped call and data plan that she is on. Nancy wants to minimise the likelihood of exceeding her usage and incurring additional costs.

Let’s assume that we have completed our research and Nancy exhibits the characteristics of our key market segment. We have also verified that the target market considers the achievement of this goal to be very important and is currently poorly satisfied in the market place.  We are therefore confident that satisfying this goal represents a great opportunity for adding value to the product.

Step 2: Define the use case

Our next step in the planning stage is to bring together the primary persona, the persona’s goal and to describe the situation in which a ”user need” arises. A use case will help you do just that.

The minimum requirements of this use case are:

• Primary Actor who is the user that is interacting with the Product to achieve their Goal
• Goal of the Primary Actor
• Start conditions that the interaction will take place in.
• Trigger conditions that will initiate the interaction
• Ending Conditions that specifically state what has changed from the Start Conditions.

Nancy (Primary Actor) needs to minimise the likely hood of exceeding her usage and incurring additional costs (Goal). She has been receiving emails at home on a weekend (Start Conditions) and has downloaded a number of email attachments for review. These emails seemed quite large and now she is concerned that her data usage allowance may have been exceeded. (Trigger)

At the end of the process Nancy will know her current data usage relative to the phone plan allowance. (Ending Conditions)

You can see that if the start conditions are different then the solution may be different even if the start conditions are for the same persona with the same goal. For example if Nancy is in a bus watching video content on a mobile phone and is concerned about paying for additional charges, the use case may require a different solution to meet her goal.

As there may be a large number of start conditions, it is very important to ensure that only the most likely scenarios are addressed first and as a priority.

Step 3: List the user tasks

For each of the use cases identified in Step 2, additional information should be added to help us gain a deeper understanding of the user’s interactions.

Additional information should be provided in the form of user tasks. We should step through each individual task that the primary actor performs from the starting condition to the ending condition. This is known as the basic task flow. When identifying each task, we should avoid defining the product solution.

1. Contact mobile phone provider
2. Identify account number to mobile phone provider
3. Request usage data report relative to mobile data plan
4. Retrieve data usage report

Step 4: Translate into market requirements

To ensure that the resulting product is effective in the market place, we should review each use case and extract the market requirements, while applying any relevant business rules or constraints that can place limits on the types of solutions that may be developed.

Market segmentation helps Product Mangers quantify and define the market opportunity when developing new products.

Market segmentation is one of the basics of Product Management but there are many Product Managers that blindly embark on the product development journey without completing this activity.

Before developing any new product, Product Managers should determine which market their new product is targetting and the size of that market. Without these 2 inputs, the business case is flaky. Of course once it has been determined that the market size can sufficiently support the new product, it’s also important to determine if that market has a need for your product and the presence of competitors in that market.

So how do we go about segmenting the market?

Market segmentation at its most basic level refers to the categorisation of a market with similar characteristics and behaviours. A market can be categorised by geography so that we only develop a product for a particular country, a state or a region within that country. Some companies such as AUSTAR (an Australian Subscription TV company) for example, create products that are suitable for citizens of a geographic region. In this case, AUSTAR services regional and rural Australia only. Quantifying the market based on geography is also simple using basic information from the Australian Bureau of Statics.

Demographic segmentation is common. Gender, age, educational levels are some demographic inputs that can be used to segment your market. You may choose to use a combination of these inputs. For example, your product may be pitched at women aged 22 to 28 years of age in full time employment with an annual income of $50K or more per annum.  Demographic segmentation is almost always used when strategising but it may not provide the detail that is required to create differentiation in your product.

Pyschographic segmentation sub-divides the market based on customer values, attitudes and lifestyle. To apply this type of market segmentation, you may decide to create a statement or use an image that best represents your customer. For example, you may say that your product is targetted at consumers that “are busy travellers demanding up to date news regardless of cost”.  This can subsequently be qualified through research asking consumers if they agree or disagree with the statement.  

Behavioural segmentation is based on consumer actions. For example, you may segment the market for an Internet product based on consumer Internet usage habits. Once you have determined that you want to target consumers that use the Internet in a particular way, you may choose to develop a specific product based on that habit. This method of segmentation is potentially the most useful to identify common customer needs and will ultimately lead to products that best address those needs .

Once you have determined your market segment using some of the methods above, you should describe which market you selected and explain the rational supporting why these segments should be pursued.

A Product Comparison unlike a Competitor Analysis provides a simple way to compare product features or the product’s capabilities across multiple products. Undertaking a Product Comparison allows you to determine if your product is on par or has more or different or better features than your competitors’.

So how do we go about conducting a Product Comparison?

Step 1: Create a list of competiting products

Determine which products compete directly in the same marketplace as your product. You may want to provide a brief summary of each of these products before commencing the detailed analysis. The summary should include a general product description, its purpose and functionality.

Step 2: Undertake research

Just like a Competitor Analysis, Product Comparisons require research. Use available material such as marketing collateral and the web as the basis of your research.
However, if possible you may want to purchase or subscribe to products that you are comparing. This will give you an opportunity to complete the subscription or purchase process and experience the product as a customer. Using the product will give you the ability to test the product features and determine if the features are useful, a hinderance or just nice to haves.

Depending on the type of product, you may want to grab a few images and or record the use of the product. Its good to refer to the visuals time and time again to ensure that you’ve understood the detailed functions of the product.

Step 3: Create a Product Comparison table

There are different types of Product Comparison tables that you can use to evaluate one product from another.

• Qualitative Product Comparison table
• Quantitative Product Comparison table
• Product Comparison checklist

 The Qualitative Product Comparison table compares products in a rudimentary way. The features of each product for each competitor are listed and compared. The “best” product feature receives a score of 1, while the other products receive a score of 0. The Product Manager’s role is to list the feature and assign the score. The win/loss score is subsequently tallied to determine which product has the most “winning” features.

The Quantitative Product Comparison table has more depth than the Qualitative Product Comparison table. Each feature listed in the table for each competitor is assigned a weight (by the Product Manager) designating its relative importance. Scores from 1 to 10 are given to each product (by the Product Manager) at the feature level. The total score is tallied by summing the results of each weight multiplied by the score.

The Product Comparison checklist simply lists each feature and determines which product has this feature.

Step 4: Conclusion

So now that you’ve got a good understanding of your competitors’ product features, you’ll need to establish and present a conclusion. Part of your conclusion should determine if your product requires additional features. Be mindful not to simply add features because your competitor’s product has more features than your product. Its still important to consider product features in light of your customers’ needs.

We’ve recently decided to create a series of “How To…” blogs to provide Product Managers with tools that they can easily use in their day to day activity.

The first blog in this series is “How To Undertake a Competitor Analysis”.

Preparing a Competitor Analysis is an activity that all Product Managers undertake at some point in the job. As Product Managers, having solid knowledge of our rivals and their activity in the marketplace helps us make better decisions during the strategic product planning phase. It ensures that we’re ready to respond to our competitors and exploit any weakness in order to gain a larger share of the pie.

An important distinction to make before we begin is that a Competitor Analysis is not a Product Comparison. Although we may make mention of the types of products sold, we should not be including the detailed product features in a Competitor Analysis. At its core, a Competitor Analysis is a document that evaluates the strengths and weaknesses of your rivals.

So how do we go about preparing a Competitor Analysis?

Step 1: Create a list of your direct competitors

A direct competitor includes any company that sells a very similar or identical product or service in the same footprint as your organisation. For example; if your company sells Cable TV service, you would only list your competitors as those offering a similar service that your customers can also purchase. If the competitor’s service does not extend to your company’s geographical footprint, there may be no point including this competitor in your analysis. Their product offering however may be interesting and you may include it in a Product Comparison paper.

If there are many competitors in your market, choose a handful of competitors that you believe are the largest threat to your organisation.

Step 2: Undertake research

Unless you have a budget to conduct formal research, its best to use available resources such as news articles, industry journals, analyst reports, the company’s website, marketing collateral, company reports and so forth. You may also want to do a general blog search to find out what their customers’ and others are saying about the company and the products they offer. Networking events and tradeshows also present great opportunities to collect data about your competitors.

According to Davidson (1997) in his book, “Even More Offensive Marketing” sources of information can be grouped into 3 categories:

• Recorded Data: This includes published information such as an Annual Report.

• Observable Data: This includes data based on a range of sources.

• Opportunistic Data: This is qualitative data coming from discussions with suppliers, ex-employees or information from blogs by customers.

Source: http://www.tutor2u.net/business/strategy/competitor_analysis.htm

This is a useful method of categorising data and may help you determine what information holds true or may be false.

Step 3: Create a simple table

Once you’ve gathered your data, its best to organise the information in a table format.

Consider the following headings in your table:

• Company Name

• Competitor Description – Describe the company.

• Competing Product – Describe the competing product, its purpose and high level functionality.

• Competing Price – List the price of the competing product.

• Target Market Description – Describe the market at which the competing product is targeted.

• Distinctive Strengths – Describe the core business strengths of the company.

• Distinctive Weaknesses – Describe the core business weaknesses of the company.

• Market Strategy – Describe the company’s market strategy. A market strategy is the way in which the company has approached the market. (niche market player, price leader etc)

• Market Share – Describe the market share the competing product has in your main target market.

• Sales Volume – Describe the sales volume the competing product has generated in your main target market.

• Threat Level – Describe the threat level the competing company poses to your company, relative to your product.

Here is a sample Competitor Analysis template that you can use to capture this information. It is part of the full Product Managers Tool Kit.

Step 4: Analyse data

The final step in preparing a Competitor Analysis is to review and analyse the data. What story is the data presenting? Are your competitors a threat or is your organisation on par with the largest competitor in the marketplace? Is your product lagging in the marketplace?

More importantly, analyse the data against your company’s strategy and product so you know where your company and product stand relative to the competitors’.

Your conclusion should be presented to other business stakeholders especially when you’ve decided the next steps. For example, you may alter your Product Roadmap  as a result of the competitor analysis.

Step 5: Maintain the data

Lastly, if you have the opportunity, maintain the competitor review and analysis every 6 months. It provides you with an external perspective.

At brainmates, we use a fairly extensive Product Requirements gathering process to produce a Business and Product Requirements Document that technology teams use as the basis for their Solutions Document and ultimately a solution. In fact, we support and sell a number of templates to support this process.

Whilst the “Market Driven” requirements gathering process produces solid results, some of our clients have asked us to “speed” up the process. Without wanting to compromise the final outcome, we have produced a single template that will help organisations develop innovative products that their target market ultimately desires.

Here’s a copy of our template. brainmates-prd-template-v12

Please let us know what you think. If you want a copy in word format, please call us on + 61 2 9232 8147.

Part of the role of Product Manager in many companies in Australia is to prepare Product Requirements. For some, this may be a daunting task. Other Product Managers love the challenge of crafting a great Product Requirements Document (PRD).

Here are some quick tips on how I approach writing a PRD.

Before you begin writing the PRD, you must have an understanding of the customer need or problem that the new product or feature is trying to solve. Preferably, the “customer problem” should be articulated in the Market Requirements Document (MRD) but if it’s not, write the high level or “big picture” requirements before descending into the detail.

1. Describe or sketch your ideas on paper before sitting down at the computer. This will better help formulate your thoughts and ideas.
2. Talk about or workshop the requirements with others. As you talk, your idea and the requirements become clearer. You may want to run several workshops with other Product Managers and Developers during the PRD phase. The conversation will help you think of scenarios that you may have missed.
3. Use or create a good PRD template that incorporates the market requirements. A good template will guide you through the process and prevent you from missing any key elements. Including the market requirements in the PRD, will help you stay focus and exclude superfluous product requirements.
4. Dump out a first draft. Get past writers block by ignoring the quality of the writing. Don’t worry about your sentence structure or your grammar for the moment. Just write. You can finesse the wording and your sentence structure later.
5. Take time out to think. If you are struggling thinking about the requirements itself, stop writing. Do something else. As you work on something completely unrelated, ideas will begin to form. 

Do you have to write PRD’s? What tips do you have that make the process easier? Go ahead and add them in the comments below…