PRODUCT MANAGEMENT ORGANISATION
Product
Management Organisation
The principles of organisation apply
whether you are designing the entire organisation or a department within it.
The three most basic functions necessary for any business organisation are finance,
production and marketing. Each of these functions is organised separately.
Thus, within the organisation structure of the firm you would have distinct
organisations for each function.
Broadly
speaking, marketing is concerned with all aspects of the product,
pricing, promotion and distribution. All sub-functions or activities
relating to these four basic dimensions are included in the marketing function.
You have to account for these various activities when designing the marketing
organisation.
The structure of a marketing organisation
can be studied at different levels, such as overall firm level or divisional
level or market level.
There are many ways of organising the
marketing department. We shall discuss in detail the four basic methods:
C. Market Centred Organisation and
Methods other than these four are either
their derivatives or combinations.
PRODUCT MANAGEMENT ORGANISATION
The
functional organisation works well when there is a single product. But when
there are multiple products and/or the products are very different from one
another, the functional marketing organisation is no longer effective. The
functional specialists cannot possibly coordinate all aspects of the marketing
mix of each of the diverse products, with the result that some products are
neglected and eventually become money losers.
Such a situation given rise to the concept
of product manager. In a product management organisation, the marketing
organisation is differentiated on the basis of different products. Each product
or product group is assigned to a manager who is known as the product manager.
The product manager is responsible for managing all aspects of the marketing
mix pertaining to a specific product. Thus in a multi-product firm you would
have as many product managers as the number of products. If there are many
brands within.
the same product, as in the case of soaps, each brand may be
assigned to an individual manager who is known as a brand manager. Table-1
describes the typical responsibilities of a product manager.
The
role of a product manager in relation to his specific product is to:
-
design strategies
-
make plans
-
monitor progress
-
provide information
relating to the product and
-
interface with other
departments within the organisation and outside with customers, distributors,
and advertising agencies.
The first three roles are self-explanatory
but the last two need some elaboration. In today's competitive world, a manager's power
is based on information or the access to the information he has. This is
especially true in case of product manager who is a man placed in a conceptual
and informational hub of the organisation. To maintain competitive position and
profit of his products, with his performance starkly exposed to higher
management, he must strive to be the best informed man about any aspect
substantially affecting their future. He must arrange and nurture a number of
information interfaces.
'As
described in Table-1, the product manager has a number of diverse
responsibilities. To discharge the responsibilities he has to interact with
other departments in the firm. Though on paper the product manager is assigned
all the responsibilities, but in practical terms he is rarely given the
requisite authority to effectively discharge them. At best, he may be given
direct authority over one or two areas say advertising and may be marketing
research. For getting co-operation from the other departments he has to use all
his persuasive charms and skills, which may not work all the time, resulting in
conflicts and tensions.
It
is this interfacing aspect of the product manager's role which has potential
for all types of conflicts and leads to erosion of his power. Responsibility
without authority over resources could reduce the role of product manager from
that of a product `mini president' to a bureaucratic clerk. Instead of being a
decision maker responsible for profits the product manager is reduced to a low
level coordinator.
These
problems can be solved by clearly defining the limits of the product
manager's role, giving him authority over the resources which affect his
products' profitability, taking into account areas of potential conflict
between product managers and functional specialists, and establishing a
system for their amicable settlement.
Despite
this role ambiguity and potential for conflict the product manager concept is
gaining .acceptance.
In Richardson Hindustan Limited (manufacturing and marketing the Vicks
and Clearasil range of products) the marketing organisation comprises 20
product teams. Each product team includes junior and middle level managers
representing marketing, manufacturing, R & D, and purchase. In the words of
the company president, Mr. Gurcharan Das, "we tell them it is they who
are responsible, and that the senior people should be looked upon as resources
only. With delegation of power they are more creative, more innovative and ideas
come from the lowest level". The organisation on product team basis
has led to greater decentralisation of responsibility and decision-making
within the company and the result is vastly improved performance.
The
product manager concept introduces a number of advantages into the marketing
organisation. Firstly, given the increased complexity of the marketing mix and
diversity of products and brand, the product manager offers a way of coping
with these complex marketing inputs in a balanced way. It ensures that all
products and brands get proper attention and no product is allowed to languish.
Secondly, it introduces flexibility into the system as the product manager can
react quickly to a changed market condition since he has the overall
responsibility for managing the product’s profitability and does not have to
waste time over long consultations. Quick reaction and timely action sometimes
prove to be the winning factors in a fast changing market situation.
Third,
the product manager concept provides a focal point for integrating and
co-ordinating all efforts and resources for planning and implementing the
marketing strategy.
Fourth, the product manager role provides
excellent training for future managers, as they are exposed to all the
operational aspects of management viz., marketing, finance and production.
However, there are some disadvantages of the product management
organisation as follows:
The
anomaly of responsibility without control over resources, and lack of a direct
line of authority lead to a situation in which conflict is always simmering
under the surface, ready to explode at the slightest provocation.
A
product manager is in a situation which can be aptly described as `jack of all
trades but master of none'. A product manager has a general and cursory
knowledge of all functions but no specialised skill in any one function. This
lack of expertise often puts him at a disadvantage when dealing with functional
specialists, who are able to brow-beat him on technical points (often to the
detriment of the product success).
The
product manager has usually too many interfaces to manage, which consume a
great deal of his time, with the result that important strategic decisions may
be delayed or even ignored. The product manager concept may turn out to be
costly, as even minor products with a small sales turnover are assigned to full
time managers.
Figure-I
: Types of Product Manager Organisation
(a)
In
recent times the product manager organisation has been undergoing a number of
changes. In many firms the product manager has given way to product team. The
product team may be arranged vertically or in a triangular form (Figure-I). Some other companies have introduced the concept of horizontal
product teams. Each team is headed by a leader who is supported by functional
specialists. This horizontal product team organisation considerably reduces the
potential for conflict with other departments, since now the product manager
has his own independent resource pool of functional specialists. Finally, some
companies are combining two or three brands/products under one product manager.
This is done when the products are individually not important enough to require
full time attention or they serve similar customer needs, so that clubbing them
together is meaningful and can help serve the customers better.
If you wish to adopt the product management
concept, you must define the role in precise terms, clearly specifying the
limits of his authority. Moreover, you must bear in mind that the contribution
of the product to the company's total turnover justifies the expenses of a full
time product manager.
