Introduction
Product managers are often quizzed on their understanding of the value chain during interviews with prestigious tech companies. In this blog post, we aim to enhance your interviewing skills by providing a structured strategy for discussing the Value Chain of a particular type of customer for a product. Specifically, we’ll apply this to a product that I have previously worked on to give a realistic and practical example.
Detailed Guide on Framework Application
The framework we’ll use to dissect the value chain is Porter’s Value Chain Analysis. It’s a comprehensive model that helps examine the activities that deliver value to customers.
Porter’s Value Chain Analysis consists of:
- Inbound logistics
- Operations
- Outbound logistics
- Marketing and Sales
- Service
- Infrastructure (Firm)
- Human Resource Management
- Technology Development
- Procurement
Step 1: Identify the Product and Customer Segment
Let’s take a fitness app that I worked on and focus on the busy professionals segment.
Step 2: Inbound Logistics
For a fitness app, this refers to the content creation process and gathering user data to personalize experiences. The value here comes from curated workout and nutrition plans based on user preferences.
Step 3: Operations
Operations involve app development and maintenance. The customer finds value in the seamless functionality and constant updates that introduce new features or fix bugs.
Step 4: Outbound Logistics
This is about delivery mechanisms – for an app, it’s the distribution via app stores. Busy professionals appreciate the easy download and installation process.
Step 5: Marketing and Sales
Efforts here are tailored to show how the app fits into a hectic schedule effectively. Promotions and free trials are significant value propositions for this customer type.
Step 6: Service
Post-purchase support is crucial. For our customers, value is in customer service responsiveness and the community that provides motivation and advice.
Step 7: Supporting Activities
Firm infrastructure, HRM, technology, and procurement provide the backbone of the service. For instance, using customer feedback to improve the app adds value to the busy professional by ensuring the product evolves with their needs.
Effective Communication Tips
Use real-life examples to illustrate your points and make your narrative relatable. Charts or visual representations of the value chain can also add clarity to your explanation.
Conclusion
Understanding and articulating the value chain for a specific customer segment is a crucial skill for product managers. By using Porter’s Value Chain Analysis, you can break down the complex ecosystem of value creation and effectively communicate how each element contributes to customer satisfaction and product success. As you prepare for your interviews, remember to consider not just the direct interactions a customer has with your product but the entire lifecycle and the broad scope of activities that support it.