Product Marketing and the P&L
Product Marketing is a broad profession. The responsibilities vary by industry, business sector and company. Aspects of Product Marketing like creating collateral, sales support, and bottom of the funnel activities – are standard across most companies. It is true that Product Marketing Managers (PMM) create the datasheets, product pages, brochures, and product oriented script that goes onto the website. However, ownership of the P&L (Profit & Loss statement) is a thornier question. Here philosophies and policies vary. Even among practicing PMMs there are different opinions. Whether PMMs should or should not own the P&L depends on definitions and expectations of the role, and the desire for the success of the overall product.
Separating Product Marketing and Product Management
Firms that are beyond the garage startup phase, must at some point consider separating technical product management and product marketing functions. Dave Daniels of Pragmatic Marketing makes a compelling case for this separation, in his article about “When we should look at introducing Product Marketing Managers into the Product Management Mix”. Once separated, technical product management should have product development P&L responsibility to make sound strategic technical decisions. For the best interest of a product’s success the PMM must have the business oriented P&L responsibility. This would include marketing budget ownership, discount setting authority, responsibility for the product top and bottom line, gross margin, promotional offerings, and so on.
In this case the PMM is not purely marketing oriented. Rather a senior PMM would have strategy, marketing and business management responsibilities. Leadership here means responsibility for the full product category, including top and bottom of the funnel strategies and activities (awareness, consideration, preference and purchase). This means owning the sales volumes, setting the forecasts, monitoring units sold, velocity of sales, average discounting levels, profitability, geographic successes, market share, promotional needs and effectiveness, demand generation, and so on. A holistic category approach to product marketing means focusing on the category, the needs of the market, and driving growth. Diffusing P&L responsibility by leaving it to executives without strict product-market responsibility can result in confused messaging, programs, and an undefended product P&L with eroding performance.
Category Product Marketing – the HP Way
Hewlett-Packard (HP) is a great example of developing Category Product Marketing / Category Business Management (CBM) roles with holistic market responsibilities. At the country level, HP organises its products in to logical categories. Category examples include laptops, desktop computers, accessories, inkjet, laserjet, wide format, and production press printers, and so on. CBMs are assigned different product categories which they fully own. CBMs set the Go-To-Market Strategy (route to market), commit to forecasts, train sales, introduce new products to market, create the product marketing collateral, direct demand generation efforts, allocate budget to marketing programs, monitor a series of web and business analytics, monitor inventory – and most importantly they live and die by their P&L. This ownership and focused category responsibility means the CBM fights for their category’s market success, and ensures irrational costs are not inappropriately allocated against their product line. Ultimately, the P&L responsibility helps the CBM make business decisions with impact. It helps CBMs defend their product brand, in market – minimizing conflicting messages, promotions and directions. Simply put, this comes from having a single source of strategic co-ordination. Computing and printing markets are highly competitive. By embracing this CBM – P&L ownership model, HP has succeed in them as one of Forbes’ “World’s Most Valuable Brands” listed at over $57.9 Billion as of May 2015.
Product Marketing P&L – the Wrong Way
In contrast, a firm we shall call PDO (P&L Diffused Organisation), did not embrace such a model – with predictable results. PDO is loosely based on a multinational firm with a confused vision of the PMM function. PDO initially designated the PMM function to launch a major new product offering, set the strategy (4P’s/7P’s, target markets, sales strategy), create GTM strategy, create all web and product oriented collateral, guide digital and traditional marketing efforts, train sales teams, drive demos, help sales directly in the field, and monitor various business analytics. However, P&L responsibility was off the table. Aside from PMMs playing an advisory function to guide discounting levels, quota setting, and other business efforts – direct responsibility and ownership of the P&L was diffused among several members of the C-Suite. Ultimately, the Chief Marketing Officer (CMO), Chief Sales Officer (CSO), and Chief Information Technology Officer (CIO) – wrestled for control of the product P&L. With no clarity of ownership, conflicting promotions emerged between the direct sales teams and channel organisations. Marketing messages conflicted with sales driven promotional offers. At times even product oriented demand generation activities took place without the PMM team’s involvement or knowledge. Communications were dysfunctional as each well meaning C-level did what they thought best for the business. Ironically this often damaged the product brand perception in market among customers. Customers were confronted with conflicting messages, often resulting in sales lost to astute competitors. Despite an astounding launch and a massive market lead ahead of its competitors, within three years major sales over-achievement became alarming quota shortfalls.
Like the case of PDO, Navin Ganeshan – outlines similar confusion and concerns in diffuse P&L ownership. His slides make their point succinctly by raising various important questions in “Adventures in P&L.”
The key difference between the two examples in the PMM function was the level of responsibility and clearly centralized P&L ownership. A diffusion of interests harmed PDO. On the other hand, a focused defense of the category and brand by HP’s CBMs helped it achieve a status of one of the worlds’ most valuable and recognized brands.
Back to the Question
Return now to the question, “Should Product Marketing own the P&L?”
Without a doubt, the answer is YES!
About the Author:
Charles Dimov is Consulting Director of Strategy D, a Digital and Product Marketing consultancy (www.StrategyD.org). He has 20 years of experience in High Technology, with 15+ years in Product Marketing functions – having successfully introduced over 80+ new product to global markets. Charles has a MASc.(MBA), BASc.(Eng), and a BA.(Econ), and loves Photography, Marketing Strategy, and rolling up his sleeves to drive market success. He can be reached at Charles@DimovStrat.com