Blue Mine Group

Importance of product market strategy

“Which products should we offer to which markets?”

This simple question is one of the most important and far-reaching in business. The answer to this question is your product market strategy – the set of products and services you decide to offer, and the set of markets you decide to serve.

In many ways, your product market strategy determines what it is you do as a company. Your product market strategy is probably the greatest driver of your financial performance and company value. Offering a very good solution to a large market with urgent, unmet needs is incomparably more valuable than pursuing a mature, competitive market with a mediocre solution. It sounds obvious, but it never ceases to amaze us how many companies we meet that talk about doing the former, but are actually doing the latter.   

In addition, your product market strategy drives most of the key activities in your business, including engineering, operations, marketing, sales and service. It basically dictates what most of your people do every day, how easy or difficult it is for them to succeed, and how much all of that costs you.   

For all these reasons, thinking through your product market strategy, and continuously evolving it in light of changing circumstances is a critical, central component of your overall company strategy and business model. Done correctly, your product market strategy will enable your company to maximize its potential. 

Account development

Account development is the second element focused on identifying sales opportunities. The focus here is on expanding your relationships within existing customers to identify new sales opportunities in both the same and in other areas within the customer organization.

Account development begins with reviewing your current customers and prioritizing these for focus. Not all customers are equal in terms of value and potential. You should evaluate your existing customers using a simple but disciplined opportunity matrix and triage them into A, B and possibly C target accounts. Your primary focus and most in-depth effort will be your A accounts. B and C accounts can use a limited version of your account development process.

For each target account, you should identify the account team and have the team prepare a written account plan. Such a plan should include a summary of key business trends in the account, identification of known or possible issues you can address, identification of current and desired contact relationships, and a clear action plan with tasks, timing and responsibilities.

The action plan can be similar to many of the tactics used for prospecting, including both relationship marketing and personal relationship development components. With your A accounts, it is frequently possible and powerful to create and convene educational / problem solving sessions with a number of contacts from the account around specific issues or topics. Such sessions can be followed up with summary memos defining the issues to be addressed, and recommending possible solutions to explore. In this way, you can raise awareness and organizational interest around the issues that will lead to sales opportunities.

Prospecting

Prospecting is the first of two elements where the primary goal is to identify sales opportunities. This element refers to identifying new prospective customers who have a need that you can address.

The process begins with summarizing from your strategy and market analysis activities your target markets and customers. In B2B sales, this normally means defining target organizations by specific criteria such as size, industry sector and / or geography, as well as target contacts within these organizations by job function.

Once your target prospects are identified, you need to define and test a process for initiating contact to introduce your company and products, and to invite prospects to begin a relationship with your company. It is rare for a prospect to express their real needs and concerns in the initial introduction. It is better to focus initially on learning about the prospect company and contacts, providing value of interest to them, and making it easy for them to become part of your relationship development program.

A relationship development program should have two components. One is managed by your marketing communications team and comprises newsletters, webinar, seminar invitations, and other methods of touching contacts regularly. 
The second is managed by the sales team members and comprises calls, emails, visits, birthday cards, meal invitations and other personal relationship building tactics.

To record and manage your prospecting and all other sales activities, you must implement a customer relationship management (CRM) system, such as Salesforce or SalesLogix.

Talking to customers

While you can gather some information on customer needs from online research, nothing beats talking directly to prospective customers. This should be one of the earliest market development activities a new venture undertakes, and it should never end.

The fundamental requirement for winning customers is to talk to them on an ongoing basis, and to continuously refine every aspect of your market development model until you have perfected the formula for unleashing the market’s potential.

The rise of social media offers a powerful new option for companies to understand customers and their needs. Paying attention to, and participating in, the ongoing conversations online about your market and product category enables you to get the pulse of your target customers quickly. 

Positioning and messaging

Once you have clarity on who your customer is, and how your offering meets customer needs better than all options, you need to develop an effective way of communicating this to your target customers. This is accomplished through branding and messaging, which includes every way in which you identify and communicate your company and its solutions.

Ultimately the goal of the communication process is to effectively position your company and products in your customer’s mind. The normal way we learn is to compare new things to those we already know and understand. So any new innovation we learn about, we position in our minds relative to something we already know.

Your aim is to ensure you direct and influence this positioning. The ideal is that when people think of your company and products, they think of you as a unique solution to a specific problem, and they call you when facing that problem. 

Many new ventures struggle with their core messaging – and as a result fail to get their message out to the market. To win customers, the way you talk about your products and services is just as important as the products and services themselves.

It is critical that your branding and messaging communicates:

·         Clearly, in a way that even non-technical people can readily understand

·         Concisely, as people do not have time to digest long communications

·         Consistently, so that whether customers visit your website, speak to a salesperson or read an interview with one of your executives, the message is the same.

Customer research

Having identified your best target customer segment, you need to develop an in-depth understanding of these target customers, their needs and options.

The first step is clarifying exactly who is the customer. For consumer and small ticket business purchases, this is normally fairly easy to identify and define. For high-ticket business purchases, frequently a number of people are involved playing different roles, such as champion, recommender, decision maker, and approver. In all cases, you need to identify the typical profile and motivations of these different players, so you can tailor your marketing and sales approach accordingly.

Next, you must develop a deep understanding of the needs you address. Customer needs can be analyzed in two primary categories:

·         Core needs – these are the functional needs customers have that you address, normally driven by increasing revenue, reducing costs and / or managing risks.

·         Buying needs – these needs are to do with the customer’s ability to buy - what must happen from both a process and budget point of view to get to a purchase commitment.

Both these sets of needs must be clearly understood and addressed in order to secure a purchase order from the customer!

Market opportunity assessment

A market opportunity assessment is a summary overview of the size and nature of demand in a potential market, as well as the vendor ecosystem (competitors and channel participants) that exists to serve that market.  The goal is to develop a clear understanding of the “big picture” - how the industry is operating, and what are the key trends.

You can gather most of the information you need for this analysis through online research. Supplementing and sense-checking this research with conversations with industry insiders will pay big dividends. Industry insiders include leading customers, vendors, trade association executives, journalists and research analysts.

Your market opportunity assessment should include:   

·         a definition of what is and what is not included in the market

·         market size and growth rate

·         primary customer segments and a short profile on each

·         overview of the vendor eco-system (the key players at each stage of the supply chain) with a short profile on each vendor category

·         a summary of your:

o        best target customer segment/s

o        likely competitor categories

o        possible channel partner categories.

Market and product definition

The strategy development exercise discussed over the past few days should define in overall terms the market you want to pursue and your offering to that market. Within those guidelines, almost all new innovations need sharp focus through clear product and market definition in order to be successful.

Market definition enables you to focus on a clearly defined set of customers with an urgently felt need that is not currently being satisfied. Product definition enables you to provide an offering that meets your target customers’ needs better than all other options.  These are accomplished through a specific set of analyses, the results of which are summarized in a product market document.

Note that ideally a new venture should complete at least a reasonable level of market and product definition before beginning to design and build the product. The results of the analyses should define and guide product development. While this seems obvious, in practice many product innovations are developed based on the product developer’s personal experience and preferences, and in advance of systematic market and product definition. In these situations, product and market definition should be completed as soon as possible, preferably in parallel with product development.