Companies that produce a variety of products and brands often establish a product-(or brand-) management organization as another layer of management within the marketing function. A product manager supervises product category managers, who in turn supervise specific product and brand managers. A product-management organization makes sense if the firm's products are quite different, or if the sheer number of products is beyond the ability of a functional marketing organization to handle.
In both consumer and industrial markets, product and brand managers are responsible for product planning and strategy; preparing annual marketing plans and sales forecasts; working with advertising and merchandising agencies to create programs and campaigns; stimulating support among sales reps and distributors; ongoing research into product performance, customer and dealer attitudes, opportunities and threats; and initiating product improvements to meet changing market needs.
The product-management organization allows the product manager to concentrate on developing a cost-effective marketing mix for each product, to react more quickly to marketplace changes, and to watch over smaller brands. On the other hand, it can lead to conflict and frustration when product managers are not given enough authority to carry out their responsibilities effectively. In addition, product managers become experts in their product but rarely achieve functional expertise. And appointing product managers and associate product managers for even minor products can bloat payroll costs. Finally, brand managers normally move up in a few years to another brand or transfer to another company, leading to short-term thinking that plays havoc with long-term brand building.
To counter these disadvantages, some companies have switched from product managers to product teams. For example, Hallmark uses a triangular marketing team consisting of a market manager (the leader), a marketing manager, and a distribution manager; 3M uses a horizontal product team consisting of a team leader and representatives from sales, marketing, laboratory, engineering, accounting, and marketing research.
Another alternative is to introduce category management, in which a company focuses on product categories to manage its brands. Kraft has changed from a classic brand-management structure, in which each brand competed for resources and market share, to a category-based structure in which category business directors (or "product integrators") lead cross-functional teams of representatives from marketing, R&D, consumer promotion, and finance. These category teams work with process teams dedicated to each product category and with customer teams dedicated to each major customer.20 Still, category management is essentially product-driven, which is why Colgate recently moved from brand management (Colgate toothpaste) to category management (toothpaste category) to a new stage called "customer-need management" (mouth care). This last step finally focuses the organization on a basic customer need.21
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