The Brand Management System
part 2 in the Product Management Frameworks Series
The Brand Management System was pioneered by Procter and Gamble’s original brand management approach in the Consumer Packaged Goods industry starting in the 1930s.
Think of the golden age of marketing in the era of Mad Men. Now fast forward. Today every MBA program offers tracks in Marketing with a focus on Brand Management or Market Research. Before you think this has nothing to do with tech, remember that the very first product management roles in tech developed under a certain CEO at Microsoft who was trained at Proctor & Gamble.
Today, the brand management approach is most often used in large companies with established product categories. It is especially relevant in markets with long product development cycles, an established product category, and companies with the financial resources to invest in market research. If you’re going to launch a new HDTV or consumer pharmaceutical costing tens of millions of dollars in R&D, you can’t afford to misread the market.
Origins: The Birth of Product Management
Procter & Gamble’s Neil McElroy, created the brand management role with his famous 1931 ‘brand men’ memo.
The original brand manager was responsible for:
- Owning the Product P&L & coordinating the cross functional team across
- Market Research
- Tracking Sales across territories and distribution channels
- Managing the Marketing Mix and tracking results
- Continuously improving the product category by re-enforcing successful products and improving on others
Brand Management emerged in an era when industrial manufacturing was churning out new products at an unprecedented scale. Consumers were having a hard time telling all those new household items apart. At P&G, the role was first created to maximize profit and minimize confusion across product lines. The first brand managers were focused on the marketing mix, what was working, what was not.
The Four Ps
By the 1960s, marketing professors had indoctrinated this into the four Ps:
|What is the product positioning?
How is it perceived by customers?
How do we want it to be perceived?
What features and attributes should it have?
|What price should the product be?
How much more will customers pay for your brand vs others?
How can we get the market to pay more or buy more?
|How will we promote the product?
What advertising media will we use?
How will we re-enforce brand positioning?
|Where will we sell the product?
How will we distribute it?
How will it be displayed?
The Birth of Market Research
Procter & Gamble also invented modern Market Research in 1924 and pioneered the methods of modern, data-driven Product Management. This was the first time in history that managers of a product were expected to invest serious resources in collecting data to inform their decisions. The market research team at Proctor and Gamble was famous for sending armies of researchers out into the market to make house calls on consumers.
Over time, five core techniques developed that are still heavily used today:
|Exploratory research was conducted to identify hypotheses for customer perceived value of the product.
Qualitative techniques helped uncover hypotheses for what product features or attributes were most valuable.
Interviews focused on lead users with heavy product usage or small market segments. Focus Groups focused on lead users of the product and target customer segments.
These techniques developed hypotheses for confirmation. The most famous mistake in market research is to treat these results as facts. When you hear “The Focus Groups got it wrong”, it’s usually someone who doesn’t know how to use focus groups.
|Confirmatory research collected the hard core data to prove management’s hypotheses. Surveys are the most common tool. They were used to develop:
|Observation involved sending field researchers to the market to observe consumers in their “natural setting”. It is often used as a way to understand user purchase behavior and identify feature gaps in an existing product.
It was the precursor to many modern usability techniques used today.
|Market Tests were the final step in product acceptance.
Releasing the product in a limited market enabled managers to collect hard data before committing to a mass market release.
Brand Management Strengths
- Develops a better understanding of the customer across the market
- Market Research emphasis is less risky than the latest persona based methods that may type the market based on a few people
- Traditional research can develop more granular understanding of market segments
- Sets an company up for repeatable success and reliable planning in mature product categories
Brand Management Weaknesses
- Expensive. There are guerrilla methods like social media and online surveys, but most small teams don’t have the resources.
- Weak on Product Discovery. Assumes your R&D is in touch with the customer and will come up with the next disruptive technology and not just a better mousetrap.
- Weak for New Tech and New Product Categories. In Market Research, customers and focus groups are famously misleading for not knowing what they want until they use it.
- Slow. In markets where rapid prototyping is possible, like Internet products, it’s faster to build the product and get feedback before conducting any research. In today’s Agile world, a lot of market research focuses on users after launch, not before.
The Brand Management Legacy in Education
Today, neither Harvard nor Stanford offer a Product Management program. Most business schools offer only a few courses under the Marketing curriculum. Berkeley, MIT, and NYU Stern offer some of the best recognized courses.
All of these programs teach an important piece of product management that is hard to find in a technical major. Still, half of what the average practicing product manager needs is usually missing.
Product management at a tech company emphasizes skills that go well beyond the original brand management role. Many of today’s startups don’t even have access to the tools that companies like P&G originally used. Business schools are catching up to this trend, so there are many ongoing education programs and boot camps trying to fill the gap. Product management is a very hot career these days, so we can expect schools to adapt to this market need in time.
Brand Management Conclusions
Brand management was the original framework that created the first product management role. The core principles are still used by almost any product manager today. However, as technology evolved and the role of product development and commercialization became more important, new frameworks emerged.
The next major phase in product management focused on the role of the business case and stage gate processes to successfully launching new products.
Next: Stage Gate Models
More from this series: