Not all Product roles are alike. Some companies expect and encourage Product Managers to take an active part in the marketing of the product, whereas in others (often in larger companies), there are clear divisions between Product & Marketing and there is little overlap between their responsibilities.
In my last role as a Product Manager, I worked in a very small company where collaboration between Marketing and Product was heavily encouraged. In fact, we were launching a completely new product into the market and so early discussions around Product positioning and establishing the product’s competitive differentiator were still taking place when I joined the company and so I was able to play an active part in those discussions. In that role, I learned just how intertwined Product Management and Marketing are in terms of their joint mission to bring the value of their product to customers. You could have the most fantastic Product, which delivers on solving all of your customers pain points, however if you fail to bring it to market in a way that customers resonate with, then your Product will fail. Whereas if you learn to work synergistically with your Marketing team, or even adopt a ‘marketing lens’ into your day-to-day Product work, it can only further enhance the chances of success for your Product.
So with that in mind, what are the most important Marketing concepts that Product Managers should understand?
1. Audience Segmentation
It’s often said that Product Managers must be the customer’s biggest advocate. In order to do this, you need to understand your customer: who they are (from a demographic perspective, ie age, gender, income level etc), what are their likes & dislikes, what are their intrinsic motivations etc. Are they married? Do they have kids? Do they like outdoor sports or staying indoors? Do they live in the city or in the suburbs? What language(s) do they speak? In marketing speak, this is known as ‘audience segmentation’. Audience segmentation involves breaking up a large target audience into smaller groups with more homogenous demographics or behaviors. This allows a business to then tailor their messaging and marketing efforts in a way that addresses each segment’s unique needs and preferences.
For example,in one of my Product Management gigs, I worked for a company that made subscription products for toddlers. Our audience segments included not only parents of toddlers, but also grandparents and aunts and uncles. Each of these audience segments had completely different needs and preferences. For example, the primary need for parents who were on the market for a subscription product for their toddlers, was to find a product that not only occupies their children’s time but also benefits them from a developmental and educational perspective. Whereas when it came to grandparents, for example, their primary need was to find a gift for a birthday or for Christmas that would delight their grandchild. These two are very different needs and even though our Product could deliver on both, as a company we needed to emphasize different features of our Product in order to resonate with parents vs grandparents.
The general idea is to tailor your messaging and the product itself to your audience segments based on their needs.With this understanding of the different audiences who were interested in engaging with our Products, as a Product team we then set out to build various features that targeted different customer segments. For example, we built a ‘Gift’ feature which was targeted specifically towards grandparents and aunt & uncles of toddlers. This feature allowed this portion of our audience to send our subscription product as a gift and involved a completely different workflow from buying the subscription as a Parent. For example, you could choose to buy a 3 month gift subscription that got canceled automatically after the 3 month period elapsed, as opposed to a subscription that renewed itself automatically. This feature was important because most gift givers see the cost of a gift as being a one time expense, whereas a ‘subscription’ is generally an expense that recurs.
Having this knowledge of our various audience segments and their unique needs therefore not only helped us to market our product better but also to improve our product and bring it in line with the needs of our customers.
2. Product Positioning & Competitive Differentiation
Product positioning is the exercise of figuring out where your product ‘fits’ within the market and what sets your product apart from your competitors. This activity should be undertaken cross-functionally, with involvement from the Product & Marketing teams. Usually, a prerequisite to this activity is conducting research around the market and your competitors. Understanding who your competitors are and what each of their unique value propositions is the starting point.
Beyond this, you must establish what your product’s competitive differentiator is: ie what is it about your product that is different from your competitors and why should customers choose you over them? Competitive differentiators could be anything from certain features or functionality, to pricing or a specific type of customer service offering. The underlying question that you want to answer is why was this product made and who was it made for? What challenges can it help the user overcome and what value can it add to their lives?
Using the above example of the subscription product for toddlers, most of our competitors in that space were advertising their products as being ‘educational’. This was because it’s important to parents that the products they buy for their children aid in their learning and development and our customer research confirmed this as well. However, another thing that our customer research showed us was that a lot of parents noticed that their kids did not ‘enjoy’ those products and so simply stopped using them after playing with them a few times. At our company however, we designed our products with a massive emphasis on ‘fun’. Our goal was to help children learn through the process of playing. This was what set us apart from our competitors and so became our competitive differentiator.
Once we landed on this competitive differentiator, this informed all of our messaging and Product Marketing collateral. One of our taglines for example, became ‘Learn through Play’ and we found that this messaging gave us a competitive edge in our advertising campaigns.
Finding out which competitive differentiator resonates best with your audience takes a level of experimentation, but the effort is well worth it in the long term.
3. Core Digital Marketing Concepts:
Ad spend on traditional media like TV, radio, newspapers etc is shrinking. What’s taking its place is Display & Search ads on platforms like Google, Facebook, Instagram etc. Because of this, it’s important to have an understanding of how these digital advertising platforms work in general. As a Product Manager, it’s very unlikely that you will be setting up any of these digital ad campaigns yourself, however you will need to have a basic level of understanding in order to discuss campaign performance with your Marketing teams and help to optimize them.
In a nutshell, search engines like Google and social media platforms like Facebook understand a user’s interests based on their search history and interactions on their platforms. For example, if a user is present in a Cat Owners Facebook group, Facebook will assume that this user is interested in the topic ‘cats’. When a company that makes cat food wants to advertise on Facebook, while setting up their ad campaign, they will mention that their ads should be targeted to users who have an interest in ‘cats’. They will also set other targeting parameters like location, age, gender etc which may be important to their business. They will also set a ‘bid’ of how much they want to pay per thousand impressions of their ad or per click (for Google) and based on their budget, the ad platform will serve those ads to the relevant audience. This means that the cat food producer’s ‘bid’ is competing with bids from other cat food producers who also want to advertise on Facebook, in what is essentially an auction style system. In this way, the cat food producer gets to serve its ads to only those Facebook users who have shown an interest in ‘cats’ and the ad platform gets paid for serving those ads to that audience.
Affiliate and Influencer marketing are a little bit different, but are also advertising models that are growing vastly in terms of ad spend. Affiliate marketing is when a company partners with an individual or another business (the affiliate) that promotes its products. The affiliate will promote the company’s products on social media, blogs, vlogs etc and will usually give their audience a specific link or coupon code to purchase the company’s product. When the product is purchased (or a ‘lead’ is generated for the company) using that link or coupon code, the affiliate earns a commission. Influencer marketing is similar, in that companies hire ‘social media influencers’, i.e. individuals who have large followings on Instagram, TikTok etc to promote their products. They are usually paid to create the content that promotes their products, rather than paid via commission. Companies tie up with affiliates and influencers, usually through the help of middlemen like Affiliate or Influencer networks like Upfluence, which are essentially platforms that connect marketers with affiliates/influencers, rather than seeking out affiliates/influencers individually.
Other than understanding the basics of these digital advertising models, Product Managers need to be able to assess the performance of their digital ad campaigns. Below are the most common performance indicators used to assess digital campaign performance:
- Cost of Acquisition (CAC) is how much it costs to acquire a single customer. Of course, the lower this number, the better. CAC can give you a general idea on how far your Marketing budget can get you in terms of acquiring new customers.
- CPM meanwhile, stands for “Cost per Mille”, with ‘mille’ being the latin word for thousand. That is, CPM is the cost that you pay for your ad to receive 1000 impressions. An ‘impression’ refers to each instance in which an ad is displayed on a webpage or in an app, regardless of whether the user interacts with the ad or not.
- Cost per click (CPC), as its name suggests, is when the advertiser pays a fee per click on their ad.
- Return on Ad Spend (ROAS) is an indicator of how much revenue your advertising campaigns are generating, in relation to how much they cost. This is a very important Marketing metric which can be used to make decisions on future budgeting and advertising channels. Marketing teams generally compare the ROAS of different campaigns and marketing channels to each other in order to understand which of their Marketing efforts have been the most efficient, which therefore provides direction for future Marketing spend.
Conclusion
As a Product Manager, learning to thinking like a Marketer, by understanding audience segmentation, product positioning and the basics of digital marketing can help to not only improve your collaboration with the Marketing team, thereby resulting in higher quality marketing campaigns for your product, but can also improve your Product itself, by bringing it more closely in line with what your customers true needs and expectations are.
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Are there any other core Marketing concepts that you think Product Managers should understand? Let me know in the comments below!
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