Developing market-driven product strategies

Successful companies encounter unique competitive challenges. However, there are several product strategy initiatives that are relevant to all organizations seeking to develop market-driven strategies. Key initiatives include the leveraging the business design, recognizing the growth mandate, developing market vision, achieving a capabilities/value match, exploring strategic relationships, building strong brands, brand leveraging, and recognizing the advantages of proactive cannibalization. We propose a product strategy agenda for review by executives in identifying which initiatives should be assessed relative to the needs of their organization. Notwithstanding the topical importance of relationship marketing processes, customer satisfaction management and supply chain collaborations to control logistics, it is apparent that many companies build strategies around pivotal products. Companies such as Coca-Cola and Intel formulate their strategies around key products in their portfolio. Recently, several important trends have emerged in the marketplace such as the blurring of market boundaries, escalating customer diversity, and increasing global competitive threats. These trends create an impetus for executives to develop and adopt marketdriven product strategies, which are integrated with relationship and supply chain strategies, to deliver superior customer value. Dell Computer's direct to the customer, build-to-order business design demonstrates the positive impact of product strategy on corporate performance. This successful strategy highlights the critical need to identify and examine the strategic initiatives that may impact product strategies. Dell pursues a growth strategy by offering customers next generation products faster than the competition. The company's growth since its launch in 1984 has been impressive. 1999 sales were over $25 billion. Management understands computer buyers through Dell's very effective market-sensing processes. Strategic relationships with suppliers and customers offer flexibility in responding to competitive pressures and leveraging partners' distinctive capabilities. Dell positions these capabilities to meet customers' value requirements. The power of the Dell business model was underlined early in 1999, when IBM agreed to a $15 billion technology collaboration rather than to continue to compete head-on with Dell. Building strong brand equity and facilitating strategic brand management are important corporate priorities. Although successful companies face unique competitive challenges, there are several important strategic dimensions that all executives need to assess The current issue and full text archive of this journal is available at http://www.emerald-library.com Strategies built around pivotal products JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 9 NO. 6 2000, pp. 369-388, # MCB UNIVERSITY PRESS, 1061-0421 369 An executive summary for managers and executive readers can be found at the end of this article in developing and managing effective market-driven product strategies. Our objective is to develop an action agenda consisting of the eight strategic dimensions shown in Figure 1. Executives can use this template to examine their organizations' product strategies critically. All of the dimensions may not apply to every organization, yet many are applicable to a wide range of industries and individual companies. We examine each dimension indicating the relevant strategic issues and offer several examples of the positive and negative impacts of the eight influences on product strategy. The intent is not to provide a comprehensive analysis of each strategic dimension. Instead, we propose an agenda for review by executives, which enables them to focus on the dimensions that should be assessed in more detail relative to the needs of their firm. These product strategy dimensions have proven to be critical in a broad cross-section of competitive situations. The business design, the roadmap for an organization, is the starting point in examining seven other key dimensions of product strategy (Figure 1). Technology versus business design Mounting evidence from business practice points to the pivotal role of a robust business design in gaining and sustaining a competitive edge (Porter, 1996; Slywotzky, 1996; Day, 1994). Xerox's management recognized the mandate to incorporate digital technology into its copying processes, but the company's business design was essential in achieving the transition to the digital era. Organizations' processes for finding, developing, and commercializing new products are necessary in applying technologies needed to exploit market opportunities. Leveraging the business design to innovate The business design consists of the organization's customer focus, value proposition and processes that deliver superior customer value and generate profits (Slywotzky, 1996, p. 4). Products and technology are integrated into the design through the network of activities and relationships that comprise the organization. Dell Computer offers new products and employs advanced technology, but the direct, build-to-order business design is the fundamental driver of the company's innovation process. Amazon.com's spectacular and innovative use of Internet-based selling of books, music and video products is underlined by a novel business design that exploits technology to build communities of customers to which wide ranges of products can be sold. Imbedded in the business designs of successful firms are effective new product development processes. Hewlett-Packard's process for developing Figure 1. Market-driven product strategy Agenda for review