Product School

Enterprise vs Consumer Product Management

Sid Nasnodkar

Author: Sid Nasnodkar

January 9, 2023 - 8 min read

Updated: January 24, 2024 - 8 min read

The profession of Product Management is one that is always evolving. Because of the rapid pace at which new technologies are developed and put into use, consumers can always look forward to purchasing something fresh and exciting. This results in an increased level of complexity for Product Management experts in terms of bringing their products to market and optimizing them for the end customer. 

Product Managers need to take a number of things into account while creating new products. Most people have always considered two distinct target markets when developing new products: individual consumers and business customers. This is a nice place to start, but the reality is far more complex than that.

In this article, we will discuss the many customers who would buy your product, how to understand their requirements, and to develop a product that is beneficial to all parties involved.

Who Are You Building For: Businesses or Individuals? (Enterprise vs. Consumers)

group of lego characters on a couch, next to one lego person in a chair

The most straightforward approach to understanding your customers is to classify them as one of two main categories: consumers or businesses. It is considered a product geared at consumers if it is sold directly to the end user. It’s considered an enterprise-focused product if you’re going to be selling it to a business or an institution.

This gives a fair overall insight into product purchasers, but it doesn’t cover the whole picture by any means. It is helpful to consider the three different client roles that are involved in Product Development, which are as follows:

  • Buyers are customers who purchase your product. These customers can be individuals, businesses, or institutions.

  • Builders are customers who buy your product and then build on top of it to create something new, unusual, or personalized.

  • Users are defined as customers who engage with the finished result of your product.

There are occasions when these three responsibilities can be fulfilled by the same entity. Other times, the chain of hands that a product will pass through can be created by a number of different entities and stakeholders. 

It is possible for the chain of stakeholders to become lengthy and convoluted, with numerous layers of intermediaries standing between the product and the final consumer. The further away the end user is from the product, the more complicated it is, and the more Product Management professionals need to know how to handle it.

Consider the simple example of website builder software. If you are a Product Manager of company A creating a website builder, you might sell it to company B that develops websites. Company B might use your product to create a website for company C, that is a travel company. And finally, there will be travelers who will do their bookings on the website. If travelers do not enjoy the experience of booking through that website, it is detrimental to the businesses of company C, company B, and company A. Thus, for success in this segment, the website builder software would necessarily have to support use cases relevant to traveling.

And this leads us to the fact that Product Managers are responsible for remembering the cardinal rule of Product Development: always keep the end user in mind. End customers are extremely important, regardless of how many entities or steps are involved in the production process. They are the reason your product even exists. In light of this, it is essential to keep the following rules in mind:

  • Construct a product with the end user in mind.

  • Make it simple for developers to also concentrate on the end users.

  • Leverage marketing and other techniques to educate builders and end users.

What are you creating for your buyers?

multicolored lego building blocks

The question of “what are you building?” arises once you have a knowledge of “who” you are developing for, whether it be a buyer, a builder, or a user. In order to provide the services that your consumers require, you must first have an understanding of their individual roles and requirements. 

The difference between enterprise versus consumer usage becomes essential at this point, as consumer users behave in a different manner than enterprise users do. 

In general, consumer users are price sensitive, meaning one might expect product economics to deviate significantly based on variations in price. They are also typically adaptable in the sense that they will use a product that meets most of their requirements, even if not all of them. On the other hand, Enterprise users are highly sensitive to quality. They would typically be willing to pay a little more as long as the product can meet all of their business needs.

The number of individuals who are involved is the primary factor that differentiates enterprise users from regular consumers in such a major way. Businesses focus on serving their own specific clientele, market, and stakeholder group. They have precise requirements, and they want something that can be customized to meet those requirements exactly. Because of this, Product Managers need to devote some of their time to learning about the requirements of the end users of their enterprise buyers and then tailor the product so that it can fulfill those requirements.

The process of gathering information on the requirements of enterprise users as opposed to consumer users is also distinct. For consumers, Product Managers must rely on data about the typical user and make data-driven judgments. Enterprise clients, however, are all unique. Conversations tailored to the individual and one-on-one relationships are the most effective means of gaining an understanding of the customer’s requirements. Product Managers are able to have a better understanding of the customer’s individual requirements and ensure that their products meet those requirements by using this method.

There is diversity among the requirements of different clients. Take into account the following factors when comparing enterprise users to consumer users:

  • Leverage the information provided by users of consumer products to drive decision-making.

  • When attempting to gain an understanding of corporate customers, qualitative detail should be used. Learn users’ individual demands, and then meet those needs.

  • Make use of subject matter experts (SMEs) to conduct in-depth research into precisely what it is that customers want from a product.

How are you building to meet the needs of businesses as opposed to individual customers?

Figuring out who you’re designing for requires first having a knowledge of the various responsibilities and stakeholders. Because of what you’re developing, you cannot always cater to the unique requirements of each individual customer although you have a thorough understanding of those requirements. But importantly, how do you plan to construct your product? 

The complexity of the product itself, as well as the complexity of the stakeholders, are two elements that impact how the product will be brought to market:

  • The complexity of the product itself: the complexity of hardware is more than that of software, and this complexity grows proportionally with the increasing needs of the end user. 

  • The complexity of stakeholders: measured by the number of entities that are involved in the process. The more stakeholders there are, the more complicated the situation is. The degree to which your product is complicated will also be strongly influenced by whether the stakeholders are internal or external.

In “typical” cases, the level of complexity of the stakeholders is at its lowest when you are developing a product for an external consumer user, and the highest when you are catering to address the business needs of internal teams. This is because internal stakeholders have better access to your teams and roadmaps, and hence can cast influence over your decisions. 

The level of complexity will have a direct influence on the velocity of delivery, which refers to how quickly a product can be delivered. Because of the increased difficulty, it will, of course, take longer. This is an expected outcome, as well as a method to guarantee that you are carrying out the tasks in a cautious manner. A slower velocity creates opportunity for more in-depth user testing or a more methodical introduction of new features. You are able to follow along with each stakeholder to ensure that their requirements are being satisfied at each step of the process. Since hardware has the highest level of complexity, its delivery speed will be the slowest of all Product categories.

In summary, it’s not as simple as debating whether it’s harder to build for enterprise or consumers. In actuality, there are three distinct consumer roles at play here: purchasers, builders, and users. The most important thing to take away from this is that everyone is working toward the advantage of the end user; regardless of whether you’re building an enterprise or consumer product, keep the end user at the forefront of your thoughts as you navigate through various stakeholders.

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Updated: January 24, 2024

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