The Design and Distribution Obligations (DDO) legislation was passed on April 2019 in Australia to improve consumer protection in relation to financial and credit products that are issued and distributed to retail customers. If you are designing and/or issuing financial products, you are now required to have an appropriate product governance framework to ensure that you are targeting the right people.
What is a target market determination?
A significant design obligation from the DDO requires product issuers to make a target market determination in relation to each of their products. The product designer essentially needs to make a judgment about product suitability for the intended retail customers and also the appropriate sales channel. You can find more detail in this free Masterclass on Setting Best-practice Target Market Determinations. MasterClass
What are your customer needs? What are their challenges and pain points? In this short video we highlight the top challenges we are seeing and how to resolve them. TMD Best-practice for Product Managers. Answering these questions early on can help you ensure that you are providing fair value to your customer. Early on, decide on a product review process, determine how you will handle customer complaints, changes in sales patterns and optimise your product strategy.
Key points
- How to set a target market determination?
- What are 5 components of a clever target market determination
- Use our checklist to get started
- What tools can I use to save time on my TMD monitoring and product reviews?
How to set a target market determination
As explained by ASIC, industry must design fit-for-purpose products that meet consumer needs. They will also need to take steps to ensure their products are reaching the right consumers. Quality framing of your segmentation and target market not only improves your product marketing to differentiate your product but it now also serves to meet your overall regulatory obligations in your design and distribution.
The components to cover in TMD:
Product managers are very familiar with the importance of assessing their target market and understanding what problem or customer pain point you are solving for. In ASICs DDO you are required to set a target market for your product strategy – both new products and existing products - ideally at the planning stage and put it in writing. The financial product must be consistent with the likely objectives, financial situation and needs of the people in the target market.
A Target Market Determination describes who a product is appropriate for (target market) and any conditions around how the product can be distributed to customers (such as a condition that a customer must have received personal advice about a product before they acquire it. The following diagram shows the key components:
It also describes the events or circumstances where we may need to review the Target Market Determination for a financial product. These are your review triggers.
Skyjed has created a check-list to help you get started on your target market determination so you can institute a review process that doesn't slow you down:
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Put these things in target market determination |
What this means |
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Describe class of consumer for the product |
The class of retail customers the product is designed for so you can ensure the product features fit with objectives, financial situation and needs of the target customer. A useful starting point is to complete a Lean Canvas for your product and this can also be completed in a workshop with your marketing team. Its ideal step before you start completing the detailed aspect if the TMD. For your market what are the sub-segments. Define your customer personas - pain-points, preferences and critical unmet needs. What is the knowledge and experience of your target persona in relation to your product? What are your customer objectives and needs when buying your product? What is their financial situation and risk profile eg define risk areas customer must be made aware of to make an informed choice about your product. What is their ability to bear losses? |
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Specify the distribution conditions and restrictions |
Distribution conditions and restrictions on the sale of your product in all channels. Product managers with their marketing and sales teams write up the distribution conditions and restrictions to ensure that the sale of the product in channels is to the intended target market. This applies to existing products and the development of new products. |
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Set product review triggers and thresholds. |
A trigger is best used as an early warning signal.Triggers can be an event and /or circumstances that would signal that the target market determination requires review and changes. In Skyjed, we have developed a workflow tool for review triggers and thresholds for example 100 customer complaints. The triggers are set for each product and it takes around 5 minutes to set them in your product monitoring workspace. The great feature is that you get notification when you hit a trigger threshold. This is an opportunity to adjust your product strategy and tackle new challenges. |
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Schedule a review cadence – first review start date |
Review frequency is an important aspect of TMD and product governance. The regular and consistent review of a TMD and product should be set in TMD. Set a product governance calendar with your product review dates. In Skyjed this sits in our Product Design Workspace and is used to monitor your TMD. Skyjed has a ready to use product governance calendar where you can create events and get reminders. Setting your initial and ongoing reviews of the TMD takes less 10 minutes. You can get notifications when the review is due for your product. Ideal for busy product managers. |
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Schedule an ongoing review cadence – ongoing review schedule |
Set a review cadence in your product event calendar for ongoing reviews. Review high value, risky or new products with shorter cadence. Map your product across the portfolio and schedule the review throughout the year. Some products may need a review monthly or every 90 days others annually. |
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Interpret reporting – status of TMD and review triggers |
Skyjed has automated the reports you require to make data driven decisions about your TMD and product health status. This saves time to update management, risk teams and compliance. The insights are real-time to enable you to monitor and refine your target market .The reports are for sharing across your stakeholders and for regulatory reporting. Our top reports in use for DDO include customer complaints, review triggers and status of TMD. |
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Sharing information between the product designer (issuer) and channel (distribution) |
Your product is likely to be marketed and sold through different ‘distribution or channels’. All the distribution points need to be reviewed in your product monitoring. Skyjed offers 3 simple options to share information to your distribution channel using a digital tool. All options reduce manual entry and enable product managers to share TMD with distributors and get information 'loop' back to product manager in the Issuer. |
| Keep Records |
Keeping records about TMD and decisions make is important aspect of product governance. Skyjed has two workspaces - design workspace for setting and publishing TMD - second workspace is monitoring workspace. The entire records and report history is on demand at the click of a button. This means all the product lifecycle data is in one place so you can keep version control and audit trail for each product. |
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Leadership of Product Risk Profiles |
Tracking risks in your product strategy including target market determination makes a lot of sense. Skyjed also includes automated product risk reports. These are ideal for product leaders to save time on preparation for your product governance forum meetings |
The benefits of setting and reviewing your target market in digital tool like Skyjed
- Save time spent in PowerPoint and email by using digital design workspace to set TMD.
- Version control for TMD and audit trail that saves time chasing down shared drives
- All your DDO and TMD information in one workspace means you can transform from spreadsheets and Powerpoint to be more efficient and effective.
How Skyjed helps with setting and monitoring a target market.
You can build specific, ready to go driver templates for DDO monitoring, product reviews, growth, and sunsetting.
This is what a TMD looks like in Skyjed product design workspace:
How Skyjed helps:
- Setting and publishing a of target market: 2-4 hours
Skyjed's design workspace can be set up in less than 1 day. Typically it takes our customers 2-4 hours to complete a TMD and get approval to publish the TMD. Degree difficulty is low. if you have already drafted your TMD in a word document we can easily upload them into the Skyjed design workspace. For example we uploaded 60 TMD's from word document in less than 2 hours for financial services customer.
- Identification of review triggers: 10 minutes
The Skyjed product governance helps you to collaboratively identify and share triggers in simple workflow tool. No coding required and product managers typically set 3-4 triggers per product in less than 10 minutes.
This is an example of setting review triggers using Skyjed workflow tool.
- Record keeping: filter, search and export in minutes
Skyjed’s sophisticated reporting system allows you to save time with auto-generated regular reports on the state of your product strategy, triggers, health and customer complaints. - Trigger monitoring: set review trigger in less 4 minutes
Skyjed’s product monitoring and reviews include a feature where you can set triggers and get notifications when a trigger event occurs. This saves time and means right people can be informed to take action. - Scheduling initial and ongoing product reviews. The Event scheduler can be set up in less 4 minutes and provides great feature to get notifications when event is coming up, due or over-due.
The Skyjed product lifecycle management and governance platform provides organisations with cost effective automated tool to set TMD, monitor, report and keep records. Save time on reporting so you can get back to what you love - product strategy and innovation for growth. Request a proposal or demo that takes 15 minutes and you could be up and running for DDO efficiently and effectively.
About Skyjed
Skyjed is product lifecycle and governance platform. Skyjed’s Ai-powered end-to-end product platform bring together every data point across the entire product portfolio into a single source of product truth. Skyjed was founded in 2017 and is headquartered in Sydney, Australia. For more information visit Skyjed
