When a product manager finds himself / herself in charge of a product that is targeted towards a niche segment, they have to change how they mange the product. A lot of things that may not matter for a mainstream product matter a great deal when you have a smaller target market. Let’s take a look at what you need to be thinking about…
Produce Just Enough, But Not Too Much
When you are dealing with a niche product, the goal is to sell it at a higher price since it uniquely meets the needs of your target customers. However, the downside to this situation is that you can run into production problems.
Since you are trying to meet the unique needs of your target customers, most niche products are offered in a large number of configurations. This is where a product manager needs to step in. You can’t limit the number of configurations or else you’ll shrink your already small market. Instead, you need to make sure that you are able to easily complete production of the exact models that have been ordered when they are needed. One way to do this is to put off the product’s final assembly until after it has been ordered.
Since it takes resources (and workers) to create niche products, product managers need to make sure that the company’s production facilities and staff are fully utilized. One way of doing this is to add a non-niche higher volume product to your marketing mix. Although you may not make as much profit from the sale of this product, it will serve to take up any slack in your niche production facilities.
Keep A Handle On Your Product’s Cost Of Distribution
When you are tasked with managing a niche product, you need to be careful that your profit margins don’t get eaten alive by your distribution costs. Since you will be sending small numbers of products to lots of different customers, these costs can quickly spiral out of control.
There are a number of ways of keeping your distribution costs down. One very effective technique is to find another niche company and find ways to share distribution costs with them.
Distribution plays a very important role in your relationship with your customer. Once the customer has placed their order, they have an expectation that the product that they ordered will arrive in short order. An out-of-stock condition or a botched delivery can easily change an eager customer into a former customer.
Get Out The Pruning Shears (Often)
The one thing that product managers do a poor job of is walking away from products that aren’t doing well. We always think that a product can be made more profitable if we just try one more thing.
However, this is not the right thing for a product manager to be doing. Instead what we need to be doing is to always be checking on each of our niche product’s contribution to the company’s profitability.
As each niche product is retired, the lessons learned while marketing it need to be identified. As these lessons are learned and recorded, they then need to be applied to the niche products that come next.
What All Of This Means For You
Niche products require a different type of product management technique. What works for products that have a large potential customer market won’t work when that potential market is much smaller – now every customer counts.
The core concepts of managing a profitable product are even more important when you are managing a niche product. Product and distribution costs can easily mount up when you don’t have the advantage of working with large volumes of customers. Careful management can keep both of these under control. However, product managers need to carefully monitor the profitability of their products and not be afraid to end the product’s life if it is no longer a good business.
The business of managing niche products is unlike anything else a product manager will do during their career. Carefully managing the parts of the process that can generate costs will allow the product manager to guide each niche product to long-term success.
Question For You: What do you think is the best way to get niche products out to customers while keeping distribution costs low?
What We’ll Be Talking About Next Time
I’m guessing that you wouldn’tgo to work naked. Then why-oh-why are heading off to your product management job when you don’t have all of the skills that you’ll need to do the job correctly?