Beyond Selling Widgets in Widgetville: Product Strategy to Market Strategy

February, 2014
I’ve been asked several times whether there’s a logical progression in business strategy as a company ages. I’m talking about a company’s global strategy, the aligned set of actions to create a competitive advantage.
I have no hard evidence that a sequential strategy shift is anywhere near universal, but I can tell you that I’ve helped several mature organizations move from a product-driven strategy to a market-driven strategy to find more growth. I also noticed recently that there were several good examples of this in the news, so I thought we might explore it. By “explore it,” I mean that you should attempt to read the below few paragraphs and stay awake. We’re talking about strategy here, not Miley Cyrus twerking or American Idol, but I’ll do my best to keep you interested.
Product-driven strategy is built around a core product. Harley-Davidson, Coca-Cola and Ford are good examples. Does Harley-Davidson sell some leather jackets and helmets? Sure, but motorcycles are the driving force of its business strategy. Does Ford make lots of money through its credit organization? Yes, but everything is driven (so to speak) by cars. The next dollar these organizations invest will likely be in enhancing their core product.Market-driven strategy, on the other hand, means that an organization identifies an addressable market and tries extremely hard to meet the most urgent needs of that market. AARP tries to meet seniors’ needs. Its website features insurance, brain health, travel discounts and job search for seniors, along with a wonderful swimsuit photo of Christie Brinkley at 60 (I’m just reporting here, not voting on anything). Likewise, REI focuses on the outdoor-enthusiast market. Does it sell products? Of course, but the senior executives likely wake up in the morning, put on their Birkenstocks, button up their flannel and wonder, “What else do those granola-heads in Boulder, Colorado need for their next outdoor adventure?”

CVS dropped cigarette sales from its stores recently and is trying to reposition itself as a “healthcare” company. This shift from selling drugs (product-driven) to a broad healthcare market (market-driven) might offer the company some significant growth opportunity in the future. This is an extremely significant strategic shift if I’m reading it correctly.

If you’re a CEO, you might never have to recraft your business strategy. Sure you’ll do some planning, likely introduce new products and tweak (hopefully not twerk) your strategy, but if you’re selling something such as Wrigley gum, you might get through your whole career without taking a strategic hard right. (“Should we put silver or bronze foil on the gum next year?”)

On the other hand, if you’re like some of my clients, what got you to first or second base won’t get you home. You’ll need to do some reinvention. If you’re a product- or service-driven company, you might need to stop asking, “How can we sell more widgets?” and start asking, “What do all the Widgeteers in Widgetville really want besides widgets?” The implications of changing the core question driving your business are significant.

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