Product Management and Value Chain Analysis

Product managers who analyse the value chain aid in increasing their company’s profitability and therefore return on investment (ROI).

Michael Porter’s value chain analysis is usually applied to the processes that would occur in a typical manufacturing company. Porter views a company as a system, made up of subsystems each with inputs, transformation processes and outputs.

In a typical electronic hardware manufacturing environment the input, transformation process and output would involve the acquisition and consumption of tangibles such as raw material, electronic components and equipment.

How value chain activities are carried out determines costs and affects profits for the company. This article applies the value chain analysis to an online publishing environment and how Product Managers can add value to the business processes in order to increase value and therefore increase return on investment (ROI).

The primary value chain online activities are as follows:
Inbound Logistics: Data feeds (RSS, XML, CSV…), ad slots, business pain, keyword research, availability of community tools (e.g. Forums), data capture, lead generation.
Operations: Bulk uploading of jobs and articles, syndication of 3rd party content, targeting ads writing articles and data storage.
Outbound Logistics: Publishing to web both editorial staff and user generated content, fulfilling customers' requests (emailing newletters etc.. or access to secure areas of website) audience attention.
Marketing and Sales: SEO/SEM, Selling website space (jobs, ads, sponsorship…), offering ‘must have’ information (news letters, white papers, case studies...).
Service: Help desk and technical support.

The primary activities mentioned above are all possible due to the implementation of technology. Technical Product Managers working in the online arena will either be:

  • Supporting the tools and technologies that enable the above activities.
  • Discussing with business stakeholders and developers about enhancements to the above mentioned tools and technologies.
  • Managing replacement of these tools and technologies.

The company’s competitive edge will often depend on its ability to carry out the primary activities in an efficient and effective way. At no point in time can an online company afford to be stagnant. One of the roles of the online Product Manager is to be constantly examining the value chain to ensure that the current tools and technologies being used are enabling peak performance and to be examining the market place and be in constant discussion with the development teams to see how enhancements and replacements tools and technologies could enable further improvements and therefore increase margins and ROI. Well embedded Product Management not only adds value but also increases the companies revenue.

See also The innovation value chain and Product Management


  1. Interesting analogy. Personally I've never felt the Value Chain model was particularly useful to me (but then, I never found "five forces" particularly compelling, either)but I concede that it often helps to have a model in mind...

  2. These are useful references for marketing students:

    Value Chain Analysis

    Porter's Five Forces