A few days ago, we introduced the idea that there were six basic functions every high-tech company has to do in order to market their products. Why six?  Actually there are many more… dozens… of things that marketing has to do but when you organize them they fit nicely into six groups.  And for me, I have always found that the kinds of people that can best do those functions fall into six different personality types.  If you find a single person that can do them all… the renaissance man… you’ll probably be working for him!  But by breaking things into six different groups, you’ll be able to find people that are by their very nature, good at the tasks in that group.

Now let’s delve into the first of these in some detail.  In this post, we’ll look at the function that many consider to be the heart and guts of marketing — Product Marketing.  The idea here is to have a person or group of people assigned to each of the major product lines.  Those people then drive their product lines, meaning they plan the new products, push them out in major product launches, see that all of the necessary literature and applications material gets done, sets the basic pricing, trains the sales force, and even makes sales calls on major customers, accompanied by the appropriate sales person, of  course.  Here is where the competitors’ products are studied to make sure your products have clearly defined differentiation points — features or specifications that set them apart from the competitors’ products and can command higher margins.

This is where the products are “managed.”  Want to know when something is going to be introduced?  Ask Product Marketing.  Want to know how it compares to the competior’s product?  Ask Product Marketing.  Want a PowerPoint presentation on a product?  Call Product Marketing.  Need datasheets and app notes? You guessed it… Product Marketing.

One of the most important things Product Marketing does is to “judge” the sales forecast.  In future posts, we’ll talk about the way a sales forecast is put together, and it will come as no surprise that it starts with a sales person creating a personal forecast.  But that’s not the forecast the company turns into their business plan for that period.  No no.  For one thing, the forecast may be for more parts or systems than the company can produce?  Just adding up all the individual sales forecasts to build a combined forecast is almost never the final version.  What happens after that combining takes place?  Product Marketing gets it and judges it up or down.  In many companies a significant portion of the sales come from small customers that never find their way into a formal forecast… in fact, they call the company directly with orders and get shipment of their stuff the same month, something frequently called “turns business.”  Turns never get into the raw forecast… it’s added later by Product Marketing.  That’s a case of judging the forecast up… judging it down is what happens when the company can’t produce everything the sales force forecasted. Consider this:  Product Marketing has commissioned a new product from engineering, now it’s built and ready for sale.  Who is going to do the forecast for it?  The sales force has never had one of these new widgets before, and while they certainly have ideas about where to pitch it, the responsibility for this product belongs to Product Marketing and they’re the ones that build the forecast for it… they own that part of the forecast.

The final result, the judged forecast, has the individual sales people taken out and deals just with total quantities of the various product types.  It is the build forecast for the company, and the company’s financial projections will be based on it.  There are lots of ways errors and bias slip into sales forecasts… we’re not going to go through them all here.  Just remember, it’s Product Marketing that builds the judged forecast the company operates from.

That’s why it’s the appropriate Product Marketing Manager that stands up in front of management and does the review of sales and new projections.  And as part of it, they show the gross margins for that product.  Marketing ultimately is charged with maximizing the gross margin dollars the products bring in.  Notice I did not say maximize gross margin percentage — sometimes you can increase the total gross margin dollars by lowering the price to increase sales (and decrease gross margin percentage).  All marketing should be concerned with is maximizing the gross margin dollars.  That’s their charter.

Each Product Marketing Line Manager runs his or her product line as though it was a business — their business.  That means that they’re setting the strategies for that product line.  Oh, they work within the overall framework set by the CEO and CMO for the company marketing strategy, but within those bounds the line strategy is set within Product Marketing.  Management of the product lines by Product Marketing is the first of the six functions the company does to do the complete marketing function.  When they do all six, they’re doing the “complete” marketing function — that’s what we refer to as Big-M Marketing.

Tags: Big-M Marketing

This entry was posted on Monday, August 4th, 2008 at 6:55 am and is filed under Big-M Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.