There are three key elements to developing the concept of a successful product. If these three are followed, then there is a high chance that your new venture will be a success; skip or gloss-over any of them and your products will most likely fail. The elements are:
- Company fit
- Portfolio fit
- Market fit
Fit into Company Strategy
It is important that the product you are developing fits within the strategy of your firm in order for it to gain full acceptance by your customers and sales team. This is a concept that is easy to overlook for a variety of reasons. Some of the reasons I’ve witnessed are:
- The product manager is too focused on her product niche.
- This creates a myopic view of the market and the feeling that if a great product is created, sales will grow.
- Sales growth seldom happens to a line that does not fit the ability of the organization to sell the product.
- The product lines are in silos – the product lines are too loosely connected both technically and managerially.
- Product managers tend to “silo” around their narrow product lines and therefore fall prey to the vulgarities of silo’d thinking.
- This causes products similar in nature, but managed by different people, to behave very differently for the customer when in reality they should perform very similarly.
- The company is failing to adjust to changes in the industry.
- Sometimes the failure is at the company level and not the product level.
- This is prevalent in less nimble companies in fast-turning markets.
- Product management can help lead the firm out of the doldrums with outstanding market analysis and bold new products and services.
Portfolio Fit
The new item must have a logical place in the current product line or business unit. Without its place, the sales force and customer base may wonder about your company’s strategy and how this apparent change will impact them.
A more likely scenario is that it will take more time to be successful because the marketing and sales impact will be diminished if the new product appears to be a departure from current strategy.
A low risk path is the extension of an existing product line. This is a good option if the existing product line is not as comprehensive as competitors’ lines and if your customers are looking for ways to purchase more product from you.
It is also a good idea to discuss your product line and plans with current suppliers whom you trust. Their broader industry knowledge (they may sell to you and your competitors) will help you determine what products to add.
Lastly, your customer base can give you additional insight into the market. The data will come from a broader source, which makes it more beneficial. The downside is that you could be tipping your hand to the market, including your competitors.
Fit in the Market
Your current customer base offers the best chance for a rapid ROI from the new product. The buying habits, delivery preferences, and cost models of these customers are known and should be addressed when developing a new product and program.
Buying habits are composed of what, when, and how your customers buy, and how much they will pay in relationship to the market as a whole. The goal is to match your program to customers’ habits and patterns as closely as possible. By matching your program to their business needs, you make it easier for the customer to spend their money on your products.
To deepen your connection with customers, create programs that help your customers make money, and not just save money. The program could address the following:
- Assisting the customer in growing his market share.
- Grow your market share in a region where your products are under-represented by engaging current or new partners.
- Improve the scope of your services support to better support national or global customers.
To help illustrate this, I want you to think of purchases you make for your company. Your company most likely has a rigorous process for approving purchases with decisions based on the business case that is best for your company.
Now, turn this around and think of your customer. They will use the same rigor in their buying decisions as you do in yours.
Your offering must provide them sufficient return on investment and be compelling enough to purchase now rather than later. Helping them make money, instead of just saving it, strengthens their business case, and your position.
Conclusion
Many proclaim that customer and market are the first thing to consider when developing new products and concepts. I agree that customers and markets are important but first, the product must fit into company strategy and then fill a logical spot in the product portfolio.
Only then does meeting market need begin to matter. If a company does not have the structure to take a product to its customers, then having a product customers want is irrelevant.
