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. 

Product development

Developing the right products and services is central to the successful commercialization of innovation. The goal must be to ensure your products and services truly meet customer needs, are superior to alternatives, and are optimized to capture value for your company.   

In evaluating and working with your product and service portfolio, we begin by categorizing them into three groups: current products and services, new product and services to be launched in the short to medium term, and long term future products and services. Each of these categories typically faces different types of challenges, and should be approached accordingly.

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.