Organizing for Effective Product Marketing
Before we dive into the product portfolio it is important to understand how products are organized in most businesses.
Johnson & Johnson has hundreds of products. They sell baby shampoo to new parents and knee systems to surgeons who perform knee-replacement surgeries. Imagine trying to understand all of the different products and their target buyers. It would be impossible to span all of those products well. At the same time, what if your organization owns a single product—say, Johnson & Johnson’s Neutrogena face wash? A different organization owns Johnson & Johnson’s Aveeno face wash. It would be easy to optimize for a single product, rather than trying to achieve company objectives across all the products.
Typically, organizations group like products into product lines, and then group lines of business targeting a common set of customers into something called strategic business units (SBUs).
A product line is a group of products marketed by an organization to one general market. The products have some characteristics, customers, and uses in common, and may also share technologies, distribution channels, prices, services, etc. There are often product lines within product lines.[1]
A product line inside a product line? Johnson & Johnson has a product line of skin and hair care products. Within that product line, there are a number of brands that have a set of complementary products. Returning to our previous example, the Neutrogena product line includes a complete set of dermatologist-recommended skin and hair care products. The Aveeno product line includes a complete set of natural skin care products. Neutrogena products target buyers who place greater trust doctors, and Aveeno targets buyers who trust natural products, but both are part of the Johnson & Johnson skin and hair care product line.
The skin and hair care product line is part of a larger strategic business unit for Johnson & Johnson: the consumer health care products business unit. This SBU includes:
- baby care
- skin and hair care
- wound care and topicals
- oral health care
- over-the-counter medicines
- vision care
- nutritionals
Think about this list. There are differences in the target buyer for each product line, but drugstores like Walgreen’s and CVS carry all of these products, and they are, of course, all targeting consumers.
Johnson & Johnson’s other SBUs include medical devices and prescription products.
Let’s pause and review all of these definitions within product organizations.
A product is a bundle of attributes (features, functions, benefits, and uses) that a person receives in an exchange. In essence, the term “product” refers to anything offered by a firm to provide customer satisfaction—tangible or intangible. Thus, a product may be an idea (recycling) , a physical good (a pair of jeans), a service (banking), or any combination of the three.
- An example of a product is Tylenol pain reliever.
A product line is a group of products marketed by an organization to one general market. The products have some characteristics, customers, and/or uses in common, and may also share technologies, distribution channels, prices, services, etc. There are often product lines within product lines.
- An example of a product line is the full range of Tylenol products, or over-the-counter medicines.
A strategic business unit or SBU is a self-contained planning unit for which discrete business strategies can be developed.
- An example of a strategic business unit is consumer health care products.