Just imagine if you were the product manager who was in charge of one of the world’s simplest products: a pen. How successful could you be in this era of fancy smartphones and high-tech tablets? I would have been willing to say that your pen product had reached the end of its product life; however, the product managers over at Parker Pen have proven me wrong…
Say Hello To China
If, just I did, you thought that the days of pens being sold were on their way out, it turns out that you were only half right. In North America and Europe, pen product managers had made the decision to make money by boosting volume and lowering prices. That’s why you see lots and lots of cheap pens everywhere.
According to Cameron McWhirter, Parker and another brand called Waterman owned by their parent company, own about 25% of the global market for fine writing instruments. When sales started to go down in the U.S. and Europe, Parker turned their sights towards China.
China is a different story. The reason for this is that pens are seen as a status symbol by those middle-class Chinese who are busy climbing the social ladders. Not only are they seen as a status symbol, but they are also within reach – it is possible for middle-class Chinese to buy one or more fine pens.
When the Parker product managers realized that China represented a great opportunity for them, they sent their design teams to China. They realized that in order to be successful in China, they needed to customize their pen products for the Chinese market.
They did this by making two key changes. The first is that they added the Chinese character for “good luck” to the pen’s head. They also darkened the ink that the pen used so that the Chinese characters that they were being used to create would appear more attractive. These are exactly the kinds of actions that every product manager should be in the position to add to their product manager resume
Why The Chinese Buy Parker Pens
So why do the Chinese buy high-end Parker Pens? There are two primary reasons. The first is that they are an affordable accessory. Yes, they do cost a lot, but not so much as to be out of reach. Secondly, in China’s business culture, the concept of giving gifts is very important. Pens represent a great gift to give – they are practical and they can clearly show how much value you place on the relationship.
So how much do the Parker product managers sell their pens for? High-end Parker pens can run as much as US$7,500 (for “the golden dragon”) and more typically run in the $200 – $500 range.
Clearly the strategy of designing custom high-end pens for the Chinese market has paid off. The office products division of Parker Pen’s parent company has accounted for 40% of its sales and 30% of its revenues.
What All Of This Means For You
There are some very clear lessons for all of us from what the Parker Pen product managers have been able to accomplish. We need to take a close look and add them to our product manager job description.
First, just because your product has a pre-existing image in one market, that does not mean that you can’t create a new one for it in a new market. Maybe all product managers should add this to our product development definition. Parker Pens are a low-end commodity item in the U.S. and a high-end item in China. Next, customizing your basic product to meet the needs of a specific market can pay off handsomely. Finally, we need to understand how our product is going to be used and use that information to price it accordingly.
I’m not saying that we should all start to sell our products in China (but maybe we should!). However, the Parker Pen product managers have shown us that it is always possible to reinvent our products in new markets. That should give hope to product managers everywhere…!
Question For You: What steps do you think that product managers at Parker Pen should take to fight off the competition that will be coming after their Chinese market share?
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
It is the best of times to be a pharmaceutical drug product manager, it is the worst of times to be a pharmaceutical drug product manager. Over at the drug powerhouse Pfizer they’ve got a very, very popular cholesterol-lowering drug that they market under the brand name Lipitor. Unfortunately, patents on drugs only last for so long and the patent on Lipitor is just about ready to run out. That means low-cost generic versions of Lipitor will be flooding into drugstores everywhere. What’s a (drug) product manager to do?