Why a product hierarchy is critical to defining a value prop

Jameelah Calhoun is the Global Head of Product Marketing at Eventbrite. At the time of this presentation for the Masters of Product Marketing in October 2021, she was the Head of Consumer Product Marketing at Audible. Catch up on the presentations from this event using our OnDemand service.

My name is Jameelah Calhoun. I currently serve as the Head of Consumer Product Marketing at Audible. In this article, I wanted to share some key strategies for establishing your product hierarchy. A product hierarchy is critical to defining your value proposition and delivering powerful messaging to your customers.

My goal here is not only to define this particular framework but really to leave you with some key tips that’ll ultimately impact your business and your customers.

Main talking points:

But before we get into the main topic of this article, I wanted to share a little bit of background on myself and my journey into product marketing.

About me

Well, it was quite a winding path! I started my career in finance, where I really got the foundation of bringing analytical rigor and understanding trends in our data. I then applied that into strategy consulting in roles where I was able to create narratives and frameworks around how to understand the market.

As a general manager, I was responsible for driving the bottom line of a business, was a part of the business development efforts, and was lucky enough to be on the frontline of pitching to clients.

An image of Jameela, which states her job, and it is titled "my product marketing journey", with an image of a road which leads from Finance, to Strategy Consulting, to General Manager, to Product Marketing, to Product, then back to Product Marketing.

That led me to a role that centered around product marketing in a B2B environment where I was tasked with translating customer needs, from the frontline sales team to the product management team.

I was excited to try product management myself. It was a really great way to learn on the ground floor about what it really takes to ship different features. I hope that these learnings that I'm sharing in this article will be helpful to some of you who are just starting on your product marketing journey.

What is a product hierarchy?

The product hierarchy is a framework to organizae the components of your product's value from the fundamental market need down to specific SKUs. The top of the hierarchy is "Product Need" or "Job to be done" which in McDonald's case is "food". Next is Product Family, or Service to hire, which is Fast food, then it's Product Class, or FUnctional Use Case, which is Breakfast for McDonalds, then Product Line, or Business Unit, which is McCafe, then Product Type, or Variety, which is Bakery, and then finally Item or SKUs which is Apple Fritters.

In short, a product hierarchy is a framework that helps you to organize the different components of your products to market. It starts at the very top, with the fundamental needs that customers may be looking to serve when leveraging your product or interacting with your company more holistically.

This can simply be referred to as a "job to be done". And it goes down all the way to the specific SKUs and items that you put on the shelf for customers.

This is organized as an inverted pyramid, with the product need being the broadest category. And so I've used a company that we should all be fairly familiar with, McDonald's, just to illustrate this.

Product need

Here we’re looking at that fundamental market need and job to be done that we’re serving. In the case of McDonald's, the job to be done is really feeding yourself. In the case of feeding yourself, there are multiple options: you could buy groceries, you can go to fine dining, but in the case of McDonald's, they're really servicing the fast-food category.

Product family & product class

This is really focused on the functional use case. So, when and why do you have the need to hire this particular service? I need to feed myself, and I decided that I need something quick. And so the way that I'm going to do that in the product family is through fast food. The specific use case I'm trying to serve is breakfast.

Product line & Product type

Now we're getting more into the organizing units within your company. This is really a way of organizing different categories of service within that functional use case. And so, of course, McDonald's has many different breakfast options.

They've established another product line and business unit around the McCafe. This really leans into super quick service grab foods, as well as beverages. In this case, I've pulled out the bakery as the example to build down into.

Items

This is essentially your menu. This is what you see when you walk into any McDonald's cafe storefront. On that menu, one of the items is apple fritters. They also have glazed doughnuts, and I'm sure many other delicious things.

But again, this is just meant to be an example to show what the product hierarchy is. It’s intended to help you organize not only what the different areas of your industry are, but also what the different types of services you provide are.

Why does it matter?

1. Clarifies the primary customer job to be done for your company

The point of this analogy is to clarify the primary customer job to be done for your company. This is a combination of not only that very top-level product need, but also the next service we’re trying to hire for and the functional use case.

In the case of Mcdonald’s, we want to help people get food quickly for breakfast. That very simple statement really helps to hone in specifically on what the customer needs are.

2. Prioritizes your competitive landscape

I don't know about you, but for so many companies that I have entered into, one of the key questions that first comes up is, who are we going to benchmark ourselves against? What often happens is, if you ask any two executives within the business, you'll probably get two different sets of competitors that they're thinking about seeing today.

In establishing the primary job to be done for this company, you can make your use-case quite clear. It’s really helpful to ensure that there's specificity in the competitive landscape that you're developing a competitive intelligence program that can be put together.

3. Organizes the levels of customer awareness

This awareness is required to motivate behavior and help customers select which service they want from your company. In fact, you need to first establish the specific need to be addressed in the customers' minds. Before you get into all the bells and whistles that any product or service offers, that fundamental purpose must be established.

It really starts to organize a different way of thinking about how to educate the customer by ensuring there's an association between your company and all of those different layers within that hierarchy.

Shouldn’t this be obvious?

With some companies in the technology field, that serve a more complex stratum of customers, there can actually be quite a few different hierarchies existing within the same business. Here, I’ve used the example of Instagram...

It’s really crucial to ensure clarity of mission between business units and clarity of messaging between different product schemas. And this example really illuminates how it can be clarified.

So, as anybody who has interacted with Instagram probably knows, there are multiple different services and jobs to be done occurring within the social media landscape today.

We can lean towards things like entertainment, just being able to share digital photos and assets. But there are also a couple of other things happening within social media. Retail is becoming a very important job to be done within, especially within the Instagram ecosystem.

And of course, for many people, we also use Instagram purely for communications. For business owners, it's essentially a calling card where you can give someone your handle instead of a phone number, and use that to facilitate getting in touch.

I'm going to be looking at two different areas against the product hierarchy: Retail and communications.

Retail

So in the retail space, there are multiple different ways for retailers to sell their products through Instagram.

Services to hire: e-commerce

For Instagram, we're really looking into e-commerce rather than physical storefronts.

Here we're really thinking about social discovery facilitated retail and E-Commerce. Essentially, it’s being able to provide recommendations through a social network.

The business unit: the feed

For Instagram, this is really the feed. Of course, there are other places and services where e-commerce is happening within Instagram, such as within stories and other touchpoints that customers can have, but within the feed, there are multiple different types of products to facilitate e-commerce.

Variety: influencer

Products can be found in the influencer posts themselves, where they're posting particular great products that they enjoy. But then there's also the ad side within the feed, where particular companies will advertise their products or services.

SKUs: shop this post feature

So within the influencer side, there are lots of different product features that are meant to serve this use case. And so one of the features that I have used is ‘shop this post’. They'll have little pins within the photo that link out to particular products within that post on the communication side.

Communications

People use this app now as their calling card, an easy way for them to text and get in touch.

There are lots of ways to be in touch with people, whether with phones or carrier pigeons. But in this case, the service to hire is really around texting, and digital interactions, the functional use cases of social media, and social communications.

Business unit and variety: direct messaging and group messaging

The business unit within Instagram here is instant messaging. There are multiple different ways to communicate through the platform, but direct messaging is really the organizing case that we'll talk about here. Within that there are multiple different ways to get in touch, you can do a one-to-one message or you can do a group message.

SKUs: Name your groups

Lastly, the actual feature, like an item on the shelf, could be naming your groups. This could be a particular feature that's available to people looking to send group messages.

I hope this example goes to show how within one business there can be multiple product hierarchies at work, and why sometimes it can get a little bit confusing for companies to really clarify and align what exactly the use case is.

Why your product hierarchy may not be obvious

1. Technology blurs the lines of what constitutes a “product.”

We use product in the case of product management, but in the technology industry, it refers to different technology features.

We also can use the word product to refer to experiences and physical goods. And so many times for different types of companies, you'll have all three of those types of products operating within your ecosystem.

I think of Rent the Runway, another great company that I've interacted with quite a bit. They have products in terms of the actual clothing, but they also have the product in terms of their application. They also have the service that they provide in terms of shipping and being able to provide the grand total of different clubs.

Within each of those different areas of product, it's important to define your hierarchy for each.

2. Two-sided networks have distinct hierarchies for B2B vs B2C

There are multiple different hierarchies at work, whether you're talking about B2B hierarchy or B2C. In the retail space for Instagram, that's primarily a B2B use case. And then there's a ton of B2C hierarchies for platforms as well.

At times, this can be really helpful to clarify the different sides of your business and the value propositions for the different communities that you serve within your product suite.

3. Developing marketing entry strategy in early-stage or expansions

A great time to go back and clarify your product hierarchy is when you're developing a market entry strategy. This can be either in the early stage of your company or when you're doing a really large transformation or expansion into new areas of your customer base.

This is really a time when it's important to think about how we want to enter the market and clarify those higher-level jobs to be done. These really help ensure that you have a very strong, clear mission about how you're going to achieve success.

How does your product hierarchy shape messaging?

Product marketers always want to think about messaging and developing value propositions. Along the journey of your company and its maturation through different stages, it'll be important to communicate different levels of your product hierarchy at different times

Customers will need to understand that hierarchy of needs before they can really make the choice to hire your company for their job to be done. Let’s go back to McDonald's, for example...

At the early stage, messaging is crucial

There was a time when McDonald's didn’t serve breakfast. And so there had to be a few campaigns to help educate customers that McDonald's was now available to serve the functional use case of breakfast. That was a key prerequisite before they were able to bridge into talking about the McCafe.

When you are at an early stage of a company, or again, you need to establish in people's minds that your company is available to serve that particular use case and need, it's important to establish messaging and campaigns that create awareness of that.

At the top levels, there’s a lot of brand messaging, and also a lot of early-stage establishment of your brand. In later phases, you have more flexibility. There's a general awareness of your brand and a general awareness that your brand sits within a particular product that needs family or class. At that point, you have more flexibility to start talking about specific product items as a way to essentially establish your product value proposition and its brand.

How we do it at Audible

With my company, Audible, we're in the digital audio space. We really serve the needs of customers for entertainment, self-development content, around podcasts and audiobooks. Once that's established in people's minds, we can start talking about the great titles themselves.

You'll see wonderful commercials and posts and samples of various audio titles that essentially give people an opportunity to really see what's in our ecosystem, and what great content they can find.

If you think about Netflix, for example, they had to establish it as a great platform to find movies of all kinds with convenience, right? But now a lot of Netflix's media communications are really about the content titles themselves.

They’re now about the TV shows and movies that they have on their platform. Once you have that kind of baseline understanding of your products within customers' minds, you can do a lot more to leverage the particular SKUs and items in your product schema. This'll establish more and more clarity around your value proposition.

Key takeaways

1. A product hierarchy really helps clarify the needs that you meet and service for customers.

2. It clarifies your competitive landscape and ensures that you can disaggregate the components of your product value.

3. It's also an important tool that becomes essential anytime you're entering a new market or targeting a new customer base.

4. Product hierarchies can help inform different levels of messaging and awareness as your company matures.

I'm so excited that I was able to share my insight with all of you. I hope you can effectively integrate it within your own organization.

Why establishing your product hierarchy is critical to defining a value prop