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Chief Merchandising Officer In a Box conintued -- page 2 2. Product Managers. Now and then, a great product developer has the ability to manage a group of products. And that is the critical distinction: product managers were first successful product developers. The succinct difference between the two is that managers actually can manage the products and guide them successfully through the product lifecycle. Product groups are generally horizontal product categories. In a business-to-business application like shipping supplies, a product manager may have responsibility for standard boxes; another for taping and sealing products; another for custom containers; and yet another for dunnage, peanuts and air cushioning products. The hierarchy is immediately understood if you think of the dunnage, peanuts and cushioning products manager having three product developers reporting: one creating paper dunnage products; one creating peanuts products (preferably new, static-free peanuts); and the third creating bubble wraps and other inflatable cushions for protecting items in transit. Suddenly, the product manager has to have some people skills and employee relationship skills. It is not enough that this person is a proven product developer with customer empathy; now management skills intrude on an otherwise successful career. My experience tells me that only about one product developer in ten has the ability to succeed as a product manager. Yes, there is a great deal of specialized knowledge to be learned to become an effective product manager. There really is no school one can attend; it is mostly absorbed from on-the-job experience and effective mentoring. It is possible to serve apprenticeships in product management at the legendary founts of product knowledge such as Procter & Gamble or Gillette, but oddly most direct marketing CEOs I have talked to don’t want these ‘corporate robots’ working for them. It’s as if they feel all the individual creative potential has been nullified in the Bath of Conformation that occurs within these product mills. Product managers are required to have a working knowledge, related to their product group, of competition, pricing, channels, sourcing, and the three foundational elements of product management:
Notice, they do not have to have this level of skill, talent and experience for total product merchandising, just for their specific group of products at this point. If a product manager is to continue on the career path to Chief Merchandising Officer, it is essential that the capacity for effectively managing a group of products exists first. As would be expected, there are experienced product managers within specific business-to-business and consumer markets. In office supplies, I know two skilled product managers who have never moved out of their niches. One is in paper (specifically copier and laser printer papers) and another is in office furniture (specifically desks and related products made from wood or laminates). These are top-of-the-line pros. If you need to know anything about the newest developments in laser printer papers or in composition wood bookcases, you go to these product managers. The paper person has three product developers, one for laser papers, one for copier papers, and one for experimental papers. The office furniture person has two product developers, one for wood desks and matching furniture and one for wood seating products. Again, in my experience (and yours will be different), a product manager generally can be effective with about five or six product developers, and no more than eight. If you have sixteen product developers, you will need, minimally, two product managers, perhaps more depending on the complexity and extent of the product groups. Here, it is important to comment on the natural progression of a multi-channel direct marketing company. If a business is begun as a start-up, products are most often developed horizontally first. A smattering of products are initially developed across the entire product spectrum. As the business grows, there comes a day when most of the product groups have been developed and it is time to begin the vertical expansion of products. This is the point where red ones and green ones, and bigger ones and smaller ones, and double-thickness ones and single-ply ones are all introduced. This is also the time when the emphasis shifts from product developers to product managers. The business is now entering the inventory management phase of its life and will never again look back to the simple days when all it needed was a product genius, a pillow and a few bucks. One of the product developers either is promoted or layered. Product managers likely would have five or more years experience in product development or management. 3. Line Product Developer. The natural progression is towards more and more people. When there are thirty-five product developers, it is effective to separate them into product lines. Twelve people developing a line of papers will ultimately self-destruct if they are not supervised and controlled. The best paper product developer with the most fertile mind will leave all the others in the dust and you will wind up with a warehouse full of products that don’t sell. But, by golly, you’ll look like you ‘have a line.’ Enter the line product developer. This is a successful product developer and a successful product manager who has the talent and sensibility to move beyond a group of products to an entire line of products while still retaining customer empathy and good people and management skills. The subtle distinction here is that the line product developer is charged with developing an entire line of products and that entails managing a group of product managers who, in turn, are managing a number of product developers. The line developer is taking the product manager experience and turning it back to now developing multiple products to meet numerous, related customer needs. These are unique people. By definition, they must be schizophrenic. The line product developer’s training lies in the building of the discretionary skills of product mix. And, for the first time, a comprehensive line and mix awareness must be applied to the product lifecycle curves for the entire line. The Point: For the Line Product Developer, the entire line is the product. And that is an extraordinarily difficult concept to understand and even more difficult to execute. It is essential that this person understands advanced financial analyses and is able to forecast line performance behavior flawlessly. There are many good product developers and a fair number of good product managers, but there are very few good line product developers. If we start with one hundred product developers, we narrow to ten product managers, and further to maybe two line product developers. As you can see, the merchandising talent pool becomes valuable fast. A line product developer would likely have six to eight years of experience in increasingly responsible merchandising positions. 4. Line Product Manager. If the company has two or more line product developers who are primarily concerned with individual line expansion, there arises a need for the management of that process and for the overall line management for a large number of product groups. This is the specialty of, perhaps, the most experienced of the former product managers, the line product manager. This person is capable of managing multiple product groups, both for development and for effectiveness and financial profitability. In the grocery business, this person would have responsibility for produce, seafood, meat, dairy, bakery, delicatessen, and would be known as the Fresh Products Manager. The produce manager, meat manager, seafood manager, dairy manager, bakery manager and deli manager would report to this line product manager. There would be another equal, the Dry Products Manager, responsible for all canned, bottled, paper, household, and sundry products. Line product managers are eternally balancing the demands of one or more line product developers, especially for total SKUs, catalog pages, website product pages, and price concessions. Often, it seems this person excels because of the ability to say, “No.” Maybe that is the key discretionary talent that emerges in a productive line product manager. The ability to understand how the parts influence the whole is essential in this person’s background. This manager still has customer empathy, but is working equally for the company’s needs (that would be: earnings). Here, it is necessary to state that many of our direct marketing companies only have product developers and, maybe, a product manager. A few are large enough to have line product developers and line product managers, but most kind of jump from product developers to Chief Merchandising Officer. And, that’s a problem. You know from experience in cataloging how complex circulation planning and execution becomes. That’s why you have trusted advisors—your brokers—who help you with that discipline. You also know how complex creative is, especially the disciplines of effective photography, copywriting and design. And, you recognize the complexity with operations and order entry and tracking. You invest enormous sums of capital to control those variables and turn them into assets. Yet, because the discipline of merchandising is still a relatively new and not well-understood discipline within direct marketing, we assume it can be done successfully by someone who has cobbled together a few products and managed to sell at least half of them. No! If you are going to win the merchandising game, you have to import talent. This is a highly specialized discipline and one that demands the same level of expertise as you furnish for the other foundation pillars of your business. If I had to choose, I would fund merchandising. I can obtain expert circulation and market expansion advice from my broker, but I must have the relevance in product development and management that can only come from empathy with my customers, understanding of the product processes, and the resulting product-customer affinities. A line product manager likely has eight to ten years of experience in increasingly responsible merchandising positions. 5 & 6. Channel Product Developer and Channel Product Manager. Only the largest direct marketing companies will have channel merchandising specialists. As an example, there are merchandising specialists for Williams-Sonoma practicing in retail store products and others practicing in catalog products and yet others for online products. By-and-large, this is a channel division of merchandising due to the economies of labor; there is simply too much to do for it to be done on a consolidated basis. In the very largest companies, such as J.C. Penney, Target Corporation, and others, there may actually be full CMOs for each channel. Some would say this is a healthy internal competition, and I might agree having observed a number of companies where the retail channel merchant, the online channel merchant and the catalog channel merchant battled for supremacy and all three had fine-tuned their channel performance to near-optimal efficiency. For some merchants, mastering the merchandising of multiple lines in a single channel is the zenith of the career. Indeed, except for a goodly number of catalog merchants, I can think of only thirty or so true channel master merchants in direct marketing today. In the direct organization of the future, after we have had ten to fifteen years and more of distinct channel merchandising experience under our direct marketing belts, the Chief Merchants will rise from the small cadre of multiple-channel merchant masters; that is, those senior merchants who have made their way successively from the catalog channel to the online channel and to the retail channel and who can bring to bear the unique experiences, perspectives and ‘secret sauces’ of all three channels. A channel product developer, similar to a line product developer, has a responsibility for nurturing product growth both horizontally and vertically. If you think of QVC and HSN, for example, the channel product developers are constantly looking for products that can be promoted, whether it is Estaban’s guitars or Chef Tony’s Miracle Knives. The developer finds products that work; the channel product manager allocates the time and the exposure, delivering a full schedule of profitable product offerings. Even at this rarified level, there is a very real difference between a developer and a manager. A channel product developer would likely have a minimum of ten to twelve years experience in increasingly responsible merchandising positions with a solid history in the specific channel. A channel product manager would likely have a minimum of twelve to fifteen years experience, or more, in increasingly responsible merchandising positions, as well as extensive channel experience. |
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