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Product management and the marketing of financialservices
Jeffrey StrieterAssistant Professor, Department of Business Administration, SUNY Brockport,New York, USAAshok K. GuptaProfessor of Marketing, College of Business Administration, Ohio University,Athens, Ohio, USAS.P. RajDistinguished Professor of Marketing, School of Management, SyracuseUniversity, Syracuse, New York, USADavid WilemonProfessor of Marketing and Director of the Innovation Management Program,School of Management, Syracuse University, Syracuse, New York, USA
Background
The commercial banking industry has
undergone significant change in the past 15
years. From the origin of commercial bank-
ing, the cost of its key ingredient ± money ±
was controlled. The business activities in
which banks could and could not compete
were largely determined by legislation (Sul-
livan, 1986). Today, large commercial banks
operate in a far more dynamic marketplace.
The cost of funds fluctuates rapidly and there
is increased competition from both inside
and outside the traditional banking industry
(Yang, 1990). Federal and state legislation
continues to exert influence on the industry,
products and customers are increasingly
sophisticated and the rate of change in the
industry continues unabated (LeGrand,
1992). Such rapidly changing circumstances
have prompted a number of significant
changes in traditional bank management.
Challenges confronting bank managers
include developing: a capacity to meet and
exceed the performance levels of sophisti-
cated competitors; a customer-focussed mar-
keting approach; an ability to manage
numerous and often very diverse products
and services; a capability to measure both
market performance and product profitabil-
ity; and initiative and entrepreneurial
thinking within their organizations (Cooper
et al., 1994; Cosse and Swan, 1983; Franozoni,
1991; Wichman, 1989, 1986).
In response to the need for more responsive
management approaches, banks began
implementing product management. First
used in 1927, by Procter & Gamble, product
management is a logical choice when pro-
ducts are quite different from one another or
if the number of products offered is too large
to be managed by a functional department
(Kotler, 1984). Major benefits of the product
management system include: improved cus-
tomer focus, product specialization and co-
ordination, maximum use of resources,
product accountability and the generation of
new ideas. Placing a single person or even a
department in charge of a product or a group
of products is more likely to assure that no
product is overlooked in the marketplace
(Eckles and Novotny, 1984).
Banks have used the product management
system for over a decade. While some banks
continue to find new applications for product
management, other banks are scaling back
their reliance on product management in
favor of more traditional management
approaches (Berggren and Dewar, 1992).
Although there is much anecdotal evidence
of the uses and applications of product
management in banking, little systematic
research has been conducted to examine the
organizational and individual issues
encountered in applying product manage-
ment to large full-service commercial banks.
In fact, our literature review revealed few
previously published studies focussing on the
major conceptual issues of product manage-
ment in banking.
Unfortunately, many banking organiza-
tions adopt the product management system
without completely understanding it and
without providing the necessary support
(Cummings et al., 1989). Despite the many
benefits product management offers both
commercial banks and package goods mar-
keters, there are several management and
organizational issues which must be dealt
with for product management to be success-
ful. One stream of research specifically
explores the challenges product managers
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International Journal of BankMarketing17/7 [1999] 342±354
# MCB University Press[ISSN 0265-2323]
KeywordsBanking, Financial services,
Marketing, Product management,
USA
AbstractOne of the most important devel-
opments in banking is the
increased emphasis on marketing
a wide array of financial services.
This emphasis has led to the
adoption of the product manage-
ment system in one form or an-
other by many large, full-service
commercial banks. The transition
to a product management system
has required banks to change how
they organize and manage their
operations. Examines several of
the major challenges and issues
faced by product managers in the
banking environment, namely, the
identification of the product man-
ager's task responsibilities; the
role of organizational support in
facilitating product management;
the influence of organizational
culture; and the impact of power
and conflict on product managers
and the product management sys-
tem. Also examines how product
managers assess their job perfor-
mance, work satisfaction, and the
performance of the overall product
management system in their bank.
The authors thank TedRuddick for his assistanceduring the early phases ofthis research. They alsoappreciate the efforts of theproduct managers whoshared their knowledge,expertise, andorganizational wisdom withthem during this study.
encounter in the package goods industry
(Lysonski, 1985; Reid, 1988). A second
research stream explicates the issues con-
cerning the application of product manage-
ment to the management of services
(Lysonski et al., 1988; Southerst, 1994). Other
research into the application of product
management has focussed on decision-
making authority and interpersonal rela-
tionships (Churchill and Pecotich, 1982;
Cummings et al., 1984; Hise and Kelly, 1978;
Kelly and Hise, 1979), the role of strategic
planning and product management (Crosse
and Swan, 1983) and product managers' job
satisfaction and job performance and their
relationship to select organizational beha-
vioral variables (Cummings et al., 1989).
However, we know far less about the organi-
zational and individual issues and how they,
in turn, influence the performance of product
management systems in commercial
banking.
Focus
This exploratory study is designed to identify
and examine the major issues and challenges
of product management systems in large
commercial banks. We began our study with
a thorough review of the germane literature
on product management as used in the
packaged goods industries, services and
banking. This literature review revealed
several insights which provided the concep-
tual focus for this study. For example, we
found that, despite the increasingly wide-
spread application of product management in
banking, researchers have seldom probed the
roles of the organization and the individual
product managers in carrying out this
dynamic activity. Based on our literature
review (Cooper et al., 1994; Cummings et al.,
1984, 1989; LeGrand, 1992; Lysonski, 1985;
Reid, 1988; Reidenbach and Moak, 1986), we
hypothesized that there are four major fac-
tors which have a significant influence on
product managers in banking:
1 task responsibilities;
2 organizational support;
3 organizational culture; and
4 power/conflict issues.
We then developed a conceptual model of
these factors and their likely influence on
banking product manager. In turn, we posit
that these factors influence individual per-
formance, satisfaction and the overall pro-
duct management system performance. The
hypothesized relationships among these
variables are shown in Figure 1.
This exploratory study examines the
current state of product management in
banking. Data were collected via mail ques-
tionnaire from product managers at com-
mercial banks in the USA. (The survey
methodology is detailed in the Appendix.) In
order to identify the major issues bank
product managers encounter in carrying out
their responsibilities, we asked the product
managers in our study to respond to ques-
tions such as:. What are the major responsibilities of
product managers and how do product
managers learn about them?. What are the advantages and disadvan-
tages of the product management system
in large, full-service banks?. How do bank product managers compare
with brand managers in package-goods
companies?. What specific banking departments
employ the product manager system?. What status do product managers have in
their banks?. How successful has product management
been in your bank?. How do product managers gain the needed
support for their product lines?. How effective is the performance of bank
product managers?. What role does senior management play
in facilitating and supporting the product
management system?
Research findings
Task responsibilitiesTo begin our examination of product man-
agement in banking, we asked product
Figure 1Product manager role dimensions
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Jeffrey Strieter,Ashok K. Gupta, S.P. Raj andDavid WilemonProduct management and themarketing of financialservices
International Journal of BankMarketing17/7 [1999] 342±354
managers in large commercial banks to share
with us details about their specific job
responsibilities.
Understanding job expectationsAlmost one-half of the product managers
indicated that they learned what was
expected of them from their on-the-job ex-
periences. Approximately one-third (32 per-
cent) indicated that they received significant
direction from their superiors, while 18
percent stated that their roles were generally
well defined owing to the existence of a
product management system in their banks.
A total of 54 percent felt they had consider-
able freedom in shaping their own jobs,
including both defining their areas of re-
sponsibility and making significant changes
in these activities. Many of the product
managers noted that they had to `̀ make their
own way'' in their organizations. We did not
determine whether this freedom reflects
management's confidence in the product
manager concept or is simply due to an
incomplete understanding by management of
the role of product management and its
relationship to other management functions.
As one manager stated:The commodity nature of most products in
banks creates a position of influence for the
product manager, but offers no specific
direction or leadership.
Product managers also were asked to indi-
cate how they allocated their time among
various responsibilities. As a group, they
estimated that approximately 70 percent of
their time was spent on activities related to
the management of their established pro-
ducts, 20 percent of their time was allocated
to other marketing activities, and 5 percent
was allocated to both developing completely
new products and developing product im-
provements. The major job responsibilities
and time allocated to each are shown in
Figure 2.
Within these general categories, the product
managers in this study identified the follow-
ing major responsibilities:. Pricing new and existing banking pro-
ducts and services.. Developing profitable marketing pro-
grams.. Improving/enhancing existing products.. Developing new products.. Defining marketing needs.. Defining advertising objectives.. Developing annual marketing plans.. Forecasting sales.. Repositioning products in the market.. Environmental scanning.. Strategic planning.. Coordinating activities within the bank,
including integrating functional and staff
group efforts to support product lines.
The major product manager responsibilities
and challenges encountered in implementing
product management in banking are exam-
ined in greater detail in the following section.
PricingApproximately 90 percent of the product
managers indicated that the pricing of pro-
ducts and services was a major responsibil-
ity. These respondents noted that pricing
decisions within the bank were made in
several ways. For example, many managers
indicated that pricing decisions were the
responsibility of a pricing committee. Typi-
cally, this committee consisted of product
managers, regional and corporate-level man-
agers as well as affiliate bank personnel. A
second method used to arrive at pricing
decisions found the product manager making
pricing recommendations, with the final
decision made by line executives.
Several respondents complained that there
was a lack of market research used in many
pricing decisions, even though they viewed
pricing as a particularly important respon-
sibility. For example, they indicated that
pricing decisions were frequently made by a
`̀ seat of the pants'' process rather than by any
formal process. Pricing decisions also were
often in response to competitors' pricing,
with limited forethought or study of the
underlying market conditions. One respon-
dent indicated that most pricing decisions in
his bank were simply made in response to
other banks' pricing actions. Some observers
of banks are noting that banks may need to
change their accounting procedures in order
to generate more accurate reporting systems
to improve productivity and profitability
(Britt, 1995).
Figure 2How product managers allocate their time
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International Journal of BankMarketing17/7 [1999] 342±354
Product development/productimprovementOf the product managers, 91 percent indi-
cated that another major responsibility in-
cluded improving/enhancing existing bank
products or services. Despite the reported
importance of improving/enhancing existing
bank products, product managers indicated
they devoted only 10 percent of their time to
such activities. Developing new products was
a major responsibility for 80 percent of the
bank product managers, and approximately
three-quarters indicated defining marketing
needs (76 percent) and scanning the envir-
onment for new opportunities (74 percent) as
additional major responsibilities. Yet, only 34
percent indicated that market-testing new
products was a major responsibility. Ap-
proximately one-quarter (24 percent) indi-
cated marketing research was a major
responsibility. Once again, several respon-
dents indicated there was little market re-
search or competitive analysis conducted
before the introduction of new products.
Several product managers also expressed
concern about coordination problems during
both the introduction of new products and
when existing products were changed or
modified. Since commercial banks conduct
their business in many different branch
locations and affiliate offices, e.g. state-wide,
nationally and even globally, a successful
introduction requires that the market objec-
tives for new products be communicated to
many, diverse facilities. When the branch
offices or affiliates do not understand the
product itself, the reason for the introduc-
tion, or the overall marketing strategy, the
introduction is not likely to be successful.
The areas identified as problematic included
the lack of training and educating line
officers, the continually changing banking
environment, servicing national and global
customers and communications with a
diverse, international salesforce. Several of
the PMs noted that they had the general
responsibility for new product introductions
and existing product modifications without
the necessary authority to implement such
programs effectively.
Planning and forecastingApproximately one-half of the product man-
agers surveyed (50 percent) were required to
prepare a three- or five-year plan for their
products or services. Strategic planning was
a major responsibility for approximately two-
thirds (66 percent) of the product managers.
These plans frequently required the approval
of different bank managers. Frequently, the
review and approval authority included
other product line managers, the director of
product management, sales director, and
other functional area managers (such as the
trust and commercial banking departments).
In many instances, the approval of senior
management was also required. One man-
ager remarked:Generic products developed in a centralizedenvironment may not fit specific local mar-
kets. Product objectives may differ from local
unit plans and direction.
Cross-functional coordinationIn addition to the coordination problems
associated with new or existing products,
many managers expressed problems coordi-
nating their efforts with other departments
within the bank. One manager expressed this
concern:There is a corporate-level product manage-
ment group which facilitates product offer-ings to all affiliate banks. The affiliate banks,
in turn, coordinate the product offerings
between functional areas within each bank.
My overall rating of the effectiveness of
coordination with the bank as a whole is, atbest, average.
Another coordination challenge noted is the
problem of `̀ shared responsibility'' within a
bank. Functional bank managers responsible
for products sold within their respective
groups (retail banking, trust services, com-
mercial lending) can feel threatened by pro-
duct management in general, or by a specific
manager of a particular product. Sensing a
loss of responsibility and control over their
own `̀ turf'', some banking line managers may
not support the efforts of product managers.
One cause of this problem is that the role of
product managers in banking is generally not
as well-defined as the role of PMs in consumer
goods. We posit that one consequence is
increased stress, conflict, and role ambiguity
for bank product managers.
Organizational supportIn one study of bank marketers, it was found
that the biggest hindrance to the develop-
ment of new bank services was the lack of
commitment and support to manage new
service development (Bowers and Wallace,
1986). In our study, we examined several
indicators of organizational support, includ-
ing the availability of support services and
information, status in the organization, and
compensation. Slightly more than half of the
product managers' departments had their
own marketing services support group.
These groups conducted marketing research,
advertising, and other functions to support
the product managers' efforts. Many other
product managers, however, stated that they
did not have sufficient organizational sup-
port to fulfill their job responsibilities
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Jeffrey Strieter,Ashok K. Gupta, S.P. Raj andDavid WilemonProduct management and themarketing of financialservices
International Journal of BankMarketing17/7 [1999] 342±354
adequately. Surprisingly, only 18 percent of
the product managers exercised any direct
authority over other bank marketing per-
sonnel. The marketing personnel who did
report to the product managers typically
included personnel with sales and marketing
research responsibilities. Several of the pro-
duct managers expressed concern about the
lack of direct authority over those supporting
organizational functions they considered
important to their success.
Resource availability/managementattentionApproximately 45 percent of the product
managers felt they usually had sufficient
information to perform their jobs effectively.
When asked to indicate how often they found
themselves concerned with obtaining the
necessary financial resources, 21 percent
indicated that their level of concern was mid-
way between `̀ rarely'' and `̀ always'' on a five-
point scale and 17 percent indicated that they
sometimes could obtain adequate assistance.
Many of the product managers in our study
also expressed concern about obtaining suffi-
cient senior management attention. A total of
12 percent stated that they rarely received the
required attention. Less than 4 percent
indicated that they always received sufficient
senior management support. One-half of the
group (51 percent) ranked senior management
attention between `̀ rarely sufficient'' and
`̀ sometimes sufficient'' on a five-point scale.
Departments which utilize the productmanager systemProduct managers were asked to indicate
which departments within their banks
employed the product management system
and how long each had utilized the system.
Several of the banks introduced product
management in the mid-1970s, but most of the
respondents indicated that this system has
been used within their banks since the early
to mid-1980s. Some banks implemented pro-
duct management in one department as an
`̀ experiment''. Other banks adopted product
management concurrently across several
different banking departments. We found
that product management was used in most
major bank departments, including interna-
tional, retail, financial analysis, trust ser-
vices, cash management, and corporate.
Status of product managers in banksIn order to assess the general acceptance of
product managers in banking, we asked
product managers to indicate their percep-
tion of their status in the bank relative to
other managers. Of the product managers, 41
percent felt they possessed at least an aver-
age amount of status compared with other
managers of similar responsibility within the
bank, and one-third (32 percent) rated their
status more than average. A total of 14
percent stated that they enjoyed a great deal
of status compared with other managers
within the bank, while 12 percent indicated
they had less than an average amount of
status.
Factors that enhance productmanagement performance in banksTo examine more closely the perceived
requirements for effective product manage-
ment in banks, we asked product managers to
list the `̀ conditions'' they would recommend
that a colleague investigate before accepting
a position as a product manager with another
bank. Several of the responses indicated that
potential applicants should investigate the
availability of the necessary resources to
accomplish their responsibilities. It was
suggested that an ideal situation was one in
which the product management group had its
own marketing research and marketing
communications staff. Many also suggested
the resources necessary to develop and
market banking products and services suc-
cessfully should be available within a pro-
duct management group.
Our respondents also noted the importance
of both clearly-defined product performance
objectives from senior management and a
regular process for reviewing and revising
goals with senior management. Many noted
that, if senior management does not explicitly
state what a product manager is to accom-
plish, product managers should make certain
that they have the flexibility and autonomy
needed to define their own roles. Some
individuals will find such a situation unac-
ceptable and one to avoid since they must
cope with an unstructured job environment
with little formal authority. This can lead to
stress, uncertainty and dissatisfaction. For
example, one study of product managers
found job satisfaction was inversely related to
role ambiguity (Cummings et al., 1989).
Management's commitment to a product
management system is indicated by a will-
ingness actively to specify the roles, respon-
sibilities, and accountabilities of product
managers. PMs should have clearly-defined
performance objectives from senior manage-
ment, and a regular process for reviewing
and revising new and existing goals with
their managers. Several product managers
also expressed a need for a compensation
system which rewards high performance.
One product manager expressed concern
about the potential negative impact of inac-
curate cost allocation on performance mea-
sures in his bank.
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Jeffrey Strieter,Ashok K. Gupta, S.P. Raj andDavid WilemonProduct management and themarketing of financialservices
International Journal of BankMarketing17/7 [1999] 342±354
Organizational culture
Sathe (1985) defines culture as `̀ the set of
important assumptions (often unstated) that
members of a community share in common''.
Organizations accomplish those goals and
objectives which the organizational culture
sanctions. Organizations often find they can
devise new strategies that make sense from a
financial or marketing point of view, yet they
cannot implement their strategies because
they require assumptions, values, and ways
of working that are too far out of line with the
organization's prior assumptions (Franwick
et al., 1994; Schein, 1985). In order better to
understand the cultural environment in
which bank product managers function, we
asked managers to express the degree of
competition that exists among product man-
agers within their departments. Only 2
percent indicated that the competition was
`̀ very intense'', while 44 percent stated that
competition between product managers did
not exist within their departments.
Several product managers expressed a
concern that the very close personal rela-
tionships which banks develop with some of
their key customers can act as a barrier to
the successful implementation of a bank-wide
product manager system. For example, one
customer may get certain service charges
waived without requesting this be done,
while other customers may not enjoy the
same privilege in spite of their requests for
such waivers. In a similar vein, a line officer
might not offer a product that is being
promoted by a product manager because the
line officer fears the offered product may
damage the ongoing relationship with a
customer. Such behavior can create man-
agement and profit/loss problems for product
managers because it can directly affect the
relationship with a customer. In many
instances, the bank-customer relationship
involves multiple products. When this is the
case, specific product profitability (and cost-
ing) becomes increasingly difficult to mea-
sure.
Power/conflict issuesProduct management can offer commercial
banks many opportunities for product
growth and development. Although many
banks have made progress in implementing
product management in recent years, others
have not been able to realize the potential
product management offers. Wichman (1989)
states that, in order to be effective, product
managers must be able to cross organiza-
tional lines informally and operate in areas
beyond their immediate responsibilities.
This can result in task-related conflicts
between different functional groups and sub-
cultures within an organization (Sathe, 1985).
To examine these issues, we asked product
managers to tell us about the power and
conflict issues they encountered when they
performed their responsibilities. Based on
their responses, we were able to identify a
number of different conflicts which develop
between the product management groups and
other departments or staff groups within the
bank who support the PMs' product lines
(Brown, 1983). Frequently, the conflicts
involved issues of responsibility and author-
ity as well as various interdepartmental
conflicts. Disagreements also arise over task
priorities and resource allocations. Schedul-
ing and quality control conflicts develop
when there is no clear agreement within the
bank's department concerning these issues.
One product manager expressed the problem
this way:We have all of the usual responsibilities ofproduct managers, but have little or noresponsibility over operations, marketing,account officers, or other staff groups. Whatmight be a high priority to the productmanager, based on market need, may be oflittle consequence to others. Thus the productmanager is forced to spend an inordinateamount of time convincing others of themerits of the product. The smallest projectfrequently takes an inordinate amount oftime to complete.
Obtaining sufficient resources and organiza-
tional commitment is another source of
conflict identified in this study. We found
that some banks attempted to operate with
their current level of resources rather than
provide the additional resources needed by
their PMs. In such cases, PMs find it
necessary to obtain the needed resources,
such as a management information system,
by `̀ fighting'' and/or reallocating resources
from existing product lines. Inadequate pro-
duct information and incomplete analysis
can lead to other problems, including poor
pricing decisions, establishing inaccurate
sales targets, poor scheduling, and other
operating problems. Several of our respon-
dents suggested that product managers
should have cross-divisional responsibility
for the products and services they support.
This, in turn, can reduce the conflict and
power struggles encountered by PMs.
Product managers were asked about the
methods they perceived as most important in
obtaining assistance from other areas within
the bank that supported their product lines
(see Figure 3). Generally, these supporting
areas included key interfaces (functional
areas) not under the direct control of the
product management group. Of the man-
agers, 86 percent strongly expressed that the
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Jeffrey Strieter,Ashok K. Gupta, S.P. Raj andDavid WilemonProduct management and themarketing of financialservices
International Journal of BankMarketing17/7 [1999] 342±354
personality of the product manager (inter-
personal skills) was important in developing
support for the product manager. A total of 78
percent of the managers strongly agreed that
the expertise (defined as marketing and
management skills) of the product manager
and how it is respected by the interfaces was
important in garnering support. While 50
percent of the group strongly agreed that
perceived authority (the authority that
others believe the product manager pos-
sesses) was important in gaining support
from key interfaces, only 24 percent strongly
agreed that the formal authority (the
authority a product manager actually pos-
sesses) was important in gaining support
from major interfaces. These results are
shown in Figure 3.
Individual performanceIn the preceding section, we examined the
major job responsibilities identified by pro-
duct managers. In addition to delineating
their major responsibilities, product man-
agers also were asked to evaluate their
performance for those areas considered part
of their product management responsibil-
ities. (A complete listing of the responsibil-
ities and the product managers' self-
evaluations is shown in Table I.) Of the
product managers, 42 percent rated their own
performance as superior in integrating func-
tional and staff groups who supported their
product line, 26 percent rated their perfor-
mance as superior in developing new pro-
ducts and 22 percent rated themselves
superior in both market testing new products
and scanning the environment for new
opportunities.
Product managers noted, however, that
their performance could be improved in the
areas of `̀ eliminating unprofitable products''
and `̀ determining actual product costs''. PMs
also expressed concern about the scarcity of
adequate information which would enable
them to make pricing decisions, being
excluded from pricing decisions, and not
having sufficient authority to implement
product marketing actions. Such circum-
stances make it difficult to obtain accurate
product cost information, and make product
elimination decisions more difficult.
Product manager system performanceWe also asked the product managers to rate
the success of the overall product manage-
ment system in their departments. A total of
25 percent of the product managers rated the
PM system as `̀ very successful,'' 35 percent
rated their system `̀ successful'' and 35 per-
cent rated the system `̀ somewhat successful,''
and 5 percent stated that product manage-
ment has met with `̀ very limited success''.
None of the respondents indicated that pro-
duct management had not been successful.
These results are summarized in Figure 4.
Of the surveyed banks, 21 percent had a
centralized product management group. This
centralized group helps facilitate the inter-
departmental coordination of bank products
and services and is seldom associated with
any specific banking department. On a scale
of 1 (not effective) to 10 (extremely effective),
over 75 percent indicated that, with varying
degrees of success, their centralized product
management group was effective. Less than
25 percent of the product managers indicated
that their banks' centralized product man-
agement was, to some degree, not effective.
None indicated that centralized product
management was not at all effective. These
results are shown in Figure 5.
Product managers were asked to state the
disadvantages of using the product manage-
ment system. Listed below are several direct
responses to this question:. We have no line authority, but we still get
stuck with the responsibility of getting
things done.. With complex products and with product
managers who lack experience, the sys-
tem lacks credibility.. In my bank, the lack of clear senior
management direction for the product
manager can be very demoralizing.. Product managers have no authority. We
must compete for resources.
Figure 3Major methods for gaining product line support
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Jeffrey Strieter,Ashok K. Gupta, S.P. Raj andDavid WilemonProduct management and themarketing of financialservices
International Journal of BankMarketing17/7 [1999] 342±354
. Conflicts occur between operations and
product management. This results in a
counter-productive environment.. Product management is evolving into a
`̀ fire-fighting'' role.. Potential for abdication of defined
responsibilities by other related depart-
ments (such as marketing) to product
managers.. Unless product managers have strong, top-
down support and are highly capable, they
may have difficulty in marshaling the
resources of other units in the bank to
achieve their objectives.. Product managers lack the authority to
enforce their strategy in our bank.
Several respondents stated that product
managers often lacked credibility and access
to organizational resources. They went on to
state that, in order to achieve effective
performance, product management groups
should report to senior management in the
same manner as operating and line manage-
ment.
Product managers' job satisfactionOur study included three questions designed
to indicate whether individuals presently
employed as product managers in banks were
satisfied with their positions. As an indicator
of overall individual satisfaction, product
managers were asked, `̀ How well do you like
this kind of work?'' and 90 percent expressed
a high degree of satisfaction with their jobs.
None stated that they `̀ disliked it very
much''. A summary of the responses to this
question appears in Figure 6.
We also asked, `̀ How far does your job give
you the opportunity to do the things you are
best at?'' to which 38 percent stated that the
job offered a `̀ very good opportunity'', and 48
percent stated the job offered a `̀ fairly good
opportunity'' to do the things managers do
best. A summary of the responses to this
question appears in Figure 7.
The third question read, `̀ How often during
a typical day is your work fairly routine and
how often is it a real challenge to your
ability?'' None found their job to be `̀ almost
always routine''. Approximately two-thirds of
the product managers indicated that their
work day was either `̀ almost always chal-
lenging'' or `̀ usually challenging''. These
responses are summarized in Figure 8.
Summary and implications
This study first reviewed the appropriate
literature and identified four factors which
can have a significant influence on the role of
product management in the marketing of
products and services in large commercial
banks (see Figure 1): Task responsibility;
organizational support; organizational cul-
ture; and power/conflict issues. A total of 58
product managers from large commercial
banks answered a semi-structured question-
naire, which enabled us to examine the
influence these factors have on individual
product managers and their job environ-
ment. These factors were also found to
influence individual performance, satisfac-
tion, and system performance. The following
is a summary of the findings of this study,
which should be useful to those banks
currently using product management and to
banks contemplating initiating such systems.
Table ISelf-assessment of product managers' performance in accomplishing theirresponsibilities
Responsibility
Aboveaverage
%Average
%
Belowaverage
%
Improve/enhance performance 88 10 2Integrate functional/staff groupsto support product lines 88 12 0
Price products 80 16 4Environmental scanning 78 16 6Develop new products 71 23 6Define market needs 68 28 4Profits 62 38 0Develop annual marketing plans 59 37 4Strategic planning 59 37 4Determine product costs 49 35 16Develop budgets 46 50 4Eliminate unprofitable products 45 43 12Market research 43 34 23Test-market products 42 42 16Forecast product sales 40 56 4Reposition products 38 54 8Define advertising objectives 30 50 20
Note: All percentages rounded
Figure 4Evaluation of product management system effectiveness
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Task responsibilitiesLike their package-goods counterparts, pro-
duct managers in large commercial banks
have significant new product development
and product improvement responsibilities.
When asked to indicate major responsibil-
ities, 91 percent identified improving pro-
ducts, 80 percent identified new product
development, and 75 percent identified defin-
ing market needs as major responsibilities.
Once again, managers indicated there was too
little formal marketing research conducted
for developing new banking services or
improving existing ones. A great deal of
concern was expressed about the problem of
communicating marketing objectives for new
or modified services to branch locations and
affiliate offices. This problem is likely to be
exacerbated as banks become larger via
mergers and undergo global expansion.
Product managers indicated pricing was a
significant job responsibility in the product
management system that did not receive
commensurate organizational support, and
90 percent of the respondents indicated pri-
cing was a major job responsibility. Product
managers expressed a critical need for both
increased market research to guide pricing
decisions, and to elevate pricing to a more
prominent position in the competitive mar-
keting mix of banks. Managers indicated that
frequently pricing decisions were simply in
response to competitive price offerings
rather than a part of a deliberate, planned
marketing strategy.
Organizational supportThe product managers in our study often
expressed a significant concern about the lack
of organizational support for product man-
agement within their own organizations. Of
the product managers, 14 percent, however,
felt that they enjoyed an average amount of
status in comparison with other bank man-
agers. A lack of support was often cited as
affecting product support, new product devel-
opment, pricing decisions, and the availability
of adequate market research. Indicative of a
lack of authority and/or support within their
organizations, only 18 percent of the product
managers exercised `̀ formal authority'' over
other marketing personnel.
Organizational cultureNearly one-half of the surveyed managers
indicated that competition between product
managers within the product-management
function was nonexistent. There were other
indications, however, that many banks and/
or banking departments did not wholeheart-
edly embrace product management. For
example, several product managers ex-
pressed concern that preferential treatment
was frequently offered (by traditional bank-
ing departments) to major customers with
established relationships with the bank, and
this, in turn, could potentially interfere with
the successful implementation of product
management within the bank.
Power/conflict issuesSeveral themes emerged when product man-
agers were queried about power and conflict
Figure 5Effectiveness of centralized product management group
Figure 6Product managers' overall job satisfaction
Figure 7How far does your job give you the opportunity to do the things you arebest at?
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International Journal of BankMarketing17/7 [1999] 342±354
issues in their organizations. Product man-
agers stated that difficulties frequently arose
between product management groups and
other bank departments over goals, organi-
zational priorities, resource allocations,
various `̀ turf'' issues, scheduling and inade-
quate product market information. Many
times, these conflicts resulted in pitting
individual product managers or a product
management group against others in the
organization. Approximately 86 percent
strongly agreed that the interpersonal skills
of the product manager was important in
soliciting support and maintaining effective
working relations with other groups. Over
three-quarters (78 percent) stated that the
expertise of the product manager was im-
portant in resolving conflicts, establishing
goals and objectives, and in carrying out a
wide range of product manager responsibil-
ities. One half (50 percent) stated that
perceived authority was important as a
means of gaining support when product
managers interacted with other members of
his/her own organization, and 24 percent
stated formal authority was important under
these circumstances.
Individual performanceProduct managers were asked to identify
specific changes needed in their organization
to improve their individual performance.
PMs often responded that they needed more
information and increased authority to
implement specific product management ob-
jectives. Product managers further indicated
that improvements in the areas of product
cost determination and product elimination
decisions offered the potential significantly
to impact individual product manager per-
formance and enhance the overall effective-
ness of the product management system in
banks.
Product management system performanceOverall, product managers stated the effec-
tiveness of the product management system
was positive, with a range of 25 percent
rating it `̀ very successful'' to 5 percent rating
it a `̀ limited success''. While product man-
agers may enjoy organizational support and
individual success, overall the product man-
agement system in many large commercial
banks needs further refinement and
improvement. When asked to compare the
centralized product management group with
the individual application of product man-
agement systems within the bank, managers
indicated the centralized product manage-
ment function was rated less effective.
Individual satisfaction and performanceThe overall reactions to questions concern-
ing job satisfaction, job challenges and
opportunities were positive, ranging from 50
percent liking their job `̀ very much'' to 2
percent `̀ not liking'' their job. Most product
managers found their jobs both challenging
and rewarding.
Product managers emphatically stated that
their performance could be improved by
eliminating wasteful, time-consuming activ-
ities and by having more accurate account-
ing systems in place to aid in determining
actual product/service costs. Product man-
agers also expressed the need for market
research and communications support at the
product management group level. A strong
need was expressed for clearly defined per-
formance objectives and a regular process for
reviewing and revising performance goals
and objectives.
Managerial implications andrecommendations
The study of product management in banking
reveals several important considerations.
Major findings include:
1 Banks and other financial services orga-
nizations considering product manage-
ment need to study carefully the
implications for senior managers, bank
functional managers, and the product
managers before implementing such sys-
tems. Our study suggests that many banks
first adopt product management and then
attempt to work out the details as the
system is implemented. This approach can
result in many serious problems and may
affect the ultimate success of product
management. For most banks, the adop-
tion of product management requires
changing the way banks `̀ do business''.
Considerable thought and preparation
Figure 8How often is your work fairly routine and how often is it a real challenge toyour ability?
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Jeffrey Strieter,Ashok K. Gupta, S.P. Raj andDavid WilemonProduct management and themarketing of financialservices
International Journal of BankMarketing17/7 [1999] 342±354
need to be given to what specific respon-
sibilities product managers will have, how
the inevitable conflicts that arise can best
be managed, and how product managers
and functional managers will be recog-
nized and rewarded for their collaborative
efforts. Thus, a considerable amount of
`̀ up front'' work needs to be done to
implement a product management system
successfully. Not to attend to these issues
is likely to result in poor performance,
frustration and even failure.
2 Training issues also need to be addressed
in order to implement product manage-
ment effectively. Much of the general
knowledge about product management is
based on package goods. Frequently,
banking product managers are hired from
package goods companies. Other product
managers may be selected from within the
bank for their knowledge of the product
and bank operations and not for their
marketing expertise or experience with
product management. Product managers
from other environments must be made
aware of the banking environment and
the marketing of financial services. We
found few banks which undertake con-
centrated educational programs for their
product managers. Similarly, those man-
agers and staff specialists who interact
with product managers need instruction
on how best to interact with and support
product managers. Again, if such training
is not offered, serious conflicts and power
struggles may evolve resulting in poor
performance. Team building, marketing
and communication courses can be parti-
cularly useful. Training courses also can
be designed to give senior managers an
understanding of their responsibilities in
support of a product management system.
3 Product managers are frequently held
directly responsible for the success of the
products which they manage. We identi-
fied two issues which need to be dealt with
in order to maximize the effectiveness of
product management:
First, implicit with success is profitabil-
ity. In many instances, product managers
indicated that they lacked the information
required efficiently to measure profitabil-
ity. Product managers also indicated a lack
of control over other cost-related factors
which directly affected profitability.
Second, for a particular product to be
successful, a product manager may need
to assume more responsibility for the
product. To give product managers `̀ com-
plete control and authority'' over each of
their products could be chaotic and lead to
excessive duplication of efforts, and could
ultimately result in self-sustaining auton-
omous units. On the other hand, it is
difficult for a product manager (who
depends on the work of others not under
his/her direct control) to be solely
responsible for the success of a product.
As noted, the organizational environ-
ment must be carefully managed in order
to maximize the effectiveness of product
management. Product managers must be
provided with both the information
needed to maximize the success of their
products and the ability to monitor and
coordinate those aspects of the business
which are not directly under their control
but which affect the overall success of
their products.
In some cases, banks may not be using
`̀ real'' product management even though
they use the term `̀ product manager''.
Because product management is new and
many managers lack significant experi-
ence with the system, these managers may
erroneously assume that a particular
product manager has the necessary sup-
port and resources within the organiza-
tion to accomplish the desired objectives.
In order to realize the full benefit of
product management, senior bank man-
agement must create an organizational
system which supports the application of
product management. The following are
desirable characteristics of the product
manager in banks (Wixon, 1986):. They give full-time attention to their
product-market activities.. They are marketing specialists whose
most valuable qualification is their
marketing experience and insight.. They consider and plan for all of the
activities within the organization
which will affect their products.. They coordinate the many different
functional activities throughout the
banking organization by acting as a
resource to the department heads who
actually implement the plans of the
product management group.
4 For those banks which are not presently
using product management but do wish to
implement such a system, we recommend
beginning with one banking department
and using these experiences as key learn-
ings for implementing the system else-
where. For example, a bank may start
product management in its retail group
then migrate the concept to trust services
or to their corporate banking department.
5 In addition to profitability, product man-
agers indicated a need for other measures
of the performance of the product
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Jeffrey Strieter,Ashok K. Gupta, S.P. Raj andDavid WilemonProduct management and themarketing of financialservices
International Journal of BankMarketing17/7 [1999] 342±354
management system. Examples of mea-
sures which should be considered include:. Profits.. Market share/sales.. Product/service line profits.. New customers gained.. Number of new financial services of-
fered.. Customer satisfaction.. Service management efficiency.
Finally, as experience with the product
management system grows, it will become
easier to establish performance benchmarks
as well as specially designed training pro-
grams to enhance product management per-
formance. While banks have learned much
about the product management system, many
questions remain unanswered.
Future research opportunities
This study is by design exploratory. We
believe there are several questions which
warrant additional research. We propose the
following for future study:
1 Why are some banking product manager
systems implemented more quickly than
others? What factors facilitate and hinder
successful implementation?
2 Do large amounts of boundary-spanning
activities produce more stress for product
managers in banks?
3 What type of marketing support is most
needed by bank product managers? How
can it best be obtained?
4 What developments are occurring in how
product management systems are orga-
nized? Are there trends toward centra-
lized, decentralized, or other forms of
product management organizations?
5 How does experience in banking product
management affect a manager's career?
6 Is there an identifiable lifecycle of bank-
ing product management implementa-
tion? If so, are there specific stages within
the implementation cycle?
7 What structural changes, if any, do banks
need to make to accommodate product
management systems?
8 What challenges are faced by product
managers as their banks have moved into
global markets?
9 What has been the influence of total
quality management (TQM) initiatives on
the role of product managers and product
management in banking?
10 What mechanisms facilitate learning and
the cross-fertilization of ideas among
banking departments that employ product
managers?
Conclusions
When carefully implemented and managed,
the product management system can improve
the development and management of a wide
variety of financial services. There remains
much to learn about the system and how it
can be used most effectively. We hope that
more rigorous research and analysis will
follow this exploratory study.
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Appendix. MethodologyThis investigation focussed on large commer-
cial banks in the USA. Size of the banks was
determined by the total dollars on deposit in
the bank. A letter was sent to senior market-
ing officials in each of the 50 largest banks to
determine whether a product manager system
existed within their department or bank, and
if they would nominate product managers
who might participate in the study. In those
instances where it was not possible to obtain
the names of the senior marketing officers, a
letter was sent to the president of the bank,
asking him to suggest a knowledgeable official
in the bank who could assist us in the
identification of those managers with product
management responsibility. Approximately 25
percent of the banks contacted stated that they
did not have a product management system.
Another 25 percent indicated that they were in
the initial stages of implementing such a
system and did not have enough experience to
participate. Approximately 50 percent of the
banks contacted noted that they did have an
active product management system. From
those banks which utilized product manage-
ment, we obtained the names of 115 product
managers from 25 different banks. Question-
naires were sent to these product managers
along with a letter outlining the purpose of the
study, and 58 questionnaires were completed
and returned. The overall response rate was
approximately 50 percent.
We used a combination of approaches in
designing our research questionnaire. First,
we examined the writings and research on
product management in banking. Although
this is not a robust body of literature, we were
able to glean a number of important insights
into the problems and challenges product
managers often encounter in fulfilling their
tasks and responsibilities. Second, the litera-
ture on product management as practiced in
consumer and industrial product companies
was helpful in identifying potential similari-
ties and differences between product man-
agement in banking and its applications in
other industries. Third, we surveyed the
general management literature for factors
which shape and influence managerial roles,
particularly those roles which require con-
siderable integration and support of various
functional groups beyond the immediate
authority of the product manager. The general
management literature also helped identify
how the environment of managers, e.g. cul-
ture, values, and norms, can influence man-
agerial performance. Finally, one of the
authors had extensive experience in helping
implement a complex product management
system in one of the largest US full-service
commercial banks.
A semi-structured questionnaire was used
to collect the data. The instrument was
designed from data obtained from 15 pilot
interviews with managers responsible for
product management systems and product
managers in two large commercial banks. The
questionnaire contained 36 questions. The
questions included open-ended, yes-no, and
agree-disagree responses. Each product man-
ager who cooperated in the study was assured
complete anonymity. The sample included
product managers from various banking
departments such as retail, corporate, inter-
national, and trust services.
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