The competitive strategy of a company dictates its product portfolio, and product management is how the company maintains that product and service portfolio based on that strategy. For example, a company that competes on product variety has a larger product portfolio. Small companies have smaller product portfolios than larger ones; as a result, mistakes in strategic product management can have dire consequences for the smaller company.
Every product has a life cycle. The life cycle starts when the product is launched and continues until the product is discontinued. The product life cycle includes three stages: product development, product operation and decommissioning. Just as human beings have different needs during different stages of life, a product requires different product management strategies at different stages of its life cycle. For example, technological change or shifts in customer needs may call for planned discontinuation of a product.
Customers also have a life cycle, and customer needs vary at each stage. The customer life cycle consists of customer purchase and customer product use. For example, at the purchase stage the customer needs information to make the right choice. With the right choice, the customer is satisfied and her word of mouth helps sales grow. At the product use stage, the customer may require troubleshooting and after-sales service.
Products reflect customers’ needs and requirements. Changes in customer requirements dictate product line decisions. When a product does not meet any customer needs, product withdrawal is the right decision. Alternatively, new customer needs call for the introduction of new products. Sales and profitability of products also affect product line decisions.
Product planning is done to give the company a competitive edge in the market. Effective product plans meet customer needs and help increase sales. Product development is the main component of product planning. The decision on what product to develop translates into product specifications and marketing strategy. To gain competitive advantage, the company should introduce the new product as soon as possible. This helps the company gain a foothold in the market before imitators attack.
