Typical – Pricing

CalculatorWith my abundance of spare time lately, I have been picking up some of the books I have on a variety of business topics. Books that I have skimmed or have done some spear fishing for in the past when I needed to quickly get up to speed.

As one of the core tasks of product management, pricing has always been somewhat of a challenge. Not the act of setting prices, although at some places I have been, that can be quite cumbersome, the hurdles and barriers put in place. No, the challenge is more on how to determine the reference price, and what “value” your differentiation brings to the plate and how to put a price on that.

One of the chapters in the book I am reading “The Strategy and Tactics of Pricing” is on the financial analysis around pricing. Cool, I have a degree in physics, and I love love mathematics. Right up my alley. So the big example is to calculate a break even table and graph for what happens when you reduce the price.

Conceptually, it is simple, you figure out the variable costs per unit, the number of units, calculate the contribution margin, and then figure out how many more units you need to sell so that your price reduction is profitable.

Me, being a physicist, mathematics geek, I look at how to make it more difficult than it is. I am building elaborate excel spreadsheets, doing regression analysis, and not quite getting it.

Then I go old school. I get pencil and paper out, my trusty HP-41C out and manually do the math.

Damn, I was making it far more difficult than it needed to be. It wasn’t even requiring algebra to get answers.

Curse my geek-y side.

The Dreaded Zombie Product

At every company I have been at with some history (more than a decade or two), I have found there to be at least one product that is long beyond the “Milk it” stage. Orders have dropped off, and customers have moved to either a different technology, or into a replacement product. Of course, you still get the occasional batch of orders for it, thus the hesitancy to discontinue it formally.

The development of a product should follow a lifecycle from investigation, definition, to alpha, then beta and production. You will note that I didn’t say “and finally, production”, that is because there is one more phase that is difficult to actually achieve, obsolescence or discontinuance.

Read more

Strategic Marketing Definition

The words “Strategic Marketing” evokes grand ideas and concepts. But as with many phrases, there is more than a little bit of ambiguity in the perception of those who hear it. Different groups within the organization will likely have quite different interpretations of “Strategic Marketing

Sales

When Sales hears the term “Strategic Marketing,” they think that means helping them sell more to what they know they can sell, focusing on the obvious, proven strengths and strong markets. They think of you helping them find more opportunities that are invisible today.

Read more

Managing un-sexy products

If you follow the #prodmgmt or #prodmktg hashtags on Twitter, and the ever increasing variety of product management blogs, it would seem like every product management job is some leading edge, hyper tech start up product that is positioned to be the next Facebook, (or Dropbox, or {insert cool cloud technology}).  However, it is much more likely that you work at a company that has a history, and that you will find yourself managing a ho-hum product, in a market that you may not be super excited about.

Example:  A foolish mistake on a recent trip found me without my toilet kit.  Yep, I forgot it hung in the bathroom.  Apart from my electric shaver, there wasn’t anything worth crying about.  But it did mean I needed to replace my shaver.  Bummer.

Read more