Chapter 10 Developing Your Market Strategy Product Management

IN THIS CHAPTER

• Understanding why you need market strategy in the first place
• Equipping yourself with the best market strategy tools
• Harnessing the power of segmentation, targeting, positioning, and so on
• Creating your market strategy document

Market strategy . Two words and a world of work and thinking behind each of them.
Strategy in this scenario means creating a high-level plan to achieve goals under
conditions of uncertainty . And the word market gives some context to the word strategy . In creating your market strategy , you’re going to create a high-level, market-oriented plan under uncertain conditions. This task may sound hard, and doing it well certainly is
challenging. In this chapter , we break down the components that create a great market
strategy . Taking the results from the work in the later section “Grasping the Importance of a Market Strategy ” creates a really compelling and comprehensive plan for your product as it comes into the market.

If you have no background in marketing, this chapter (along with Chapter 15 ) is
for you. In Chapter 5 , we discuss different customer-oriented concepts such as
personas. This chapter shows you how to take these concepts to the next level as your
customer interacts (psychologically speaking) with your product. You’re answering
these key questions:

• Which customers are most interested in my product?
• What do I want them to believe about my product?
• Are there any other partners in this process of communicating with my customer that I need to bring on board and how am I going to do that?

Three bullet points. Sounds easy . To really understand this process, you need to dig deep into other people’s thought processes and actions. And then decide how best to influence their actions so that they choose to buy or help you sell your product.

Grasping the Importance of a Market
Strategy

In our practice, the 280 Group consults with many organizations. Most of them wait too
long to develop their market strategy; the strategy is an afterthought either as the product is heading off to be developed or , worse, just as it’s being completed. Developing your market strategy early in the product life cycle at the plan stage can dramatically increase your product’s chances of success. See Chapter 3 for a review of the product life cycle.

If your organization splits the role of product management and product marketing
management, the market strategy often is the responsibility of the product marketing
manager . If you don’t have direct responsibility for developing the market strategy ,
you’ll still be a key contributor to the contents. So, keep reading.
Developing a market strategy involves a few components:

• What is your plan of action to bring your product to market, and why will it result in your beating the other competitors in the market?
• What is the entire product that you’re offering, including service and support?
• Which market segments are possible for you to reach and which target markets are you going after?
• What is your positioning? See the later section “Positioning ” for more information on this topic .
• How is your positioning supported in your messaging? What are the messages for each target market?
• At a high level, what will it take to launch this product? Check out Chapters 13 and 14 for more information on launching.
• How much money (rough estimate) will be necessary for your product to build enough initial awareness and then to continue to grow sales and revenues?

Setting Yourself Straight on Strategy
Tools

Marketing strategy involves a lot of moving parts, but with the right tools, you can
navigate the process with confidence. The following sections show you the importance of ago-to-market strategy and give you a variety of options for determining your strategic
market position.

Go-to-market strategy

Developing a coherent go-to-market strategy is a critical success factor for your product.
Take a close look at Figure 10-1 , starting over on the left-hand side with your market
analysis. A core role of a product manager is to define customer needs and analyze the
market topics which are covered in many earlier Chapters like 4 , 5 , and 6 . The business case (which we discuss in Chapter 9 ) outlines your company’s capabilities; Chapter 6 covers competition. Chapter 15 has info on collaborators and partners, marketing mix,customer acquisition, and distribution

Go-to-market strategy is the approach and plan you use to succeed in the market
and ensure your product is as successful as possible both short term and long term.
Think of the go-to-market strategy as the marketing perspective you need to support
your product throughout the seven-phase product life cycle (Chapter 3 ). From a
marketing perspective, it involves addressing each of the four parts of Figure 10-1 .
Much of this book is written so that you can complete your market analysis, make
choices on which markets you choose, and clarify what your message to these
markets is. This chapter focuses primarily on the market selection process. In Chapter
15 , the focus is on marketing mix and customer acquisition.

Strategy models

Determining your strategic position in the market is much easier when you use a few
strategy models. The tools in this section help you identify your situation with respect to
each model. The strength of using these models or strategy tools is that the analysis and
conclusions take so many possibilities off the table. Then you can focus on the best
opportunities given your strategic context.

Boston Consulting Group (BCG) matrix

The Boston Consulting Group developed the matrix shown in Figure 10-2 in the 1970s to analyze different business units and make decisions about strategy and investment. It’s also a tool to evaluate different product lines. T o use it, you take a product line — for
example, incandescent lightbulbs — and determine where it fits into the matrix given its
growth rate and market share.

Incandescent lightbulbs (the old type of lightbulbs that give off a lot of heat and are
banned in many places) have a low market growth rate (in fact, it’s negative). Following
the axes in Figure 10-2 , if you’re a market share leader (have high market share), this
business is considered a cash cow . If you have low market share, you categorize your
product in the dog quadrant. On the other hand, LED lightbulbs, which are replacing
incandescent bulbs, have a high growth rate; depending on your market share, you can
classify your product line as a star (high market share) or a question mark (low market
share). Y our quadrant determines your strategy and tactics. You decide to invest more or less in the product’s success. The best way to understand how to use the BCG matrix is to apply it to your own products. Classify each product according to their market share and the growth rate and then put the product into the correct quadrant in Figure 10-2 .
We cover the BCG matrix in this book because as a product manager , you need to know
what quadrant your product is in. The BCG matrix is a good, simple tool to use as the basis for your strategy .

The BCG matrix has a downside and isn’t always very helpful. Why? Product lines
can be successful because of reasons other than growth rate and market share. If you
have a niche product that is critical in a particular industry where you have a low
overall market share and the growth rate is low (a product in the dog quadrant), you
may have customers that are loyal to your product and brand. You may still be able to
continue developing, marketing, and selling the product very profitably . The key
question is whether you should do so at the expense of other products that may be in
the star quadrant with high market share and growth rates.

Product life cycle chart

The product life cycle is how a product goes from “I think I have an idea” to an actual
product (see Chapter 3 for details on the entire product life cycle). There are two kinds of product life cycles:

• Life cycles for products from the time they’re an idea until they no longer exist (that is, the seven phases in the Optimal Product Process we describe in Chapter 3 ).
• Life cycles for the overall market after the public is allowed to know about the product.These phases are the introduction, growth, maturity , and decline phases. This life cycle is also known as a product life cycle or sometimes as an industry life cycle.

When you work on your market strategy , one great tool for the product/industry life cycle (PLC) is the product life cycle chart shown in Figure 10-3 . Using the chart, you combine knowledge of where you are in the product/industry life cycle with what should be happening in your market and what actions you should take. A good example is the
smartphone market. In most parts of the world, the smartphone market is considered
mature. Read down from the word Maturity into the figure. With respect to the marketing
objective, market leaders in this field want to keep you loyal to their brand. There is a lot
of competition and a very full product lineup. Companies with good market share, such as Apple and Samsung, defend the market through promotions and by encouraging you to switch to their models and brands. The promotions don’t involve a lot of explaining what a smartphone is; instead, the ads remind you that your favorite brand is still around and you can buy the products anywhere. This scenario is a far cry from the early days, when the smartphone market was in the introduction and growth phases. At that time, the idea of a smartphone and why people needed one required a lot of explanation.

A useful exercise is to figure out where all your products are on the basis of the criteria in
Figure 10-3 . Are they in the introduction phase, growth phase, maturity phase, or simply
in decline? If you have a lot of products in mature markets, the PLC shows that you are
profitable. However , if you don’t have any products in the introduction or growth phases,
your company may not be investing enough in upcoming products that provide the next
wave of revenue growth.

One great benefit of having a successful product in the market is that your customers are
already familiar with it and (hopefully) loyal to your version of the product. In many
industries, such as food, sales really only grow with population. In the United States,
population growth is minimal. T o take advantage of known brands and products, packaged goods companies like Proctor & Gamble, Nestle, and Unilever develop a slightly different version of a successful product. They re-segment their markets so that they can more finely address a customer’s needs with a slightly different version of a successful product.
This is called creating a product line extension and the effect is to increase product line
revenue and extend the length of time that a product remains in the maturity stage.

One example is salad dressing. The customer already buys ranch dressing, so the product line extension may be a variation on salad dressing, such as blue cheese, or bottles of ranch dressing in different sizes: large for large families, smaller for individuals and couples. The possibilities are endless. You may decide you want to pursue this strategy for your products.

Chasm model

The chasm model, as shown in Figure 10-4 , shows how different types of customers adopt a product over time. The chasm model is shown in the shape of a bell curve and is built from two theories:

• Adoption of new ideas and technology: This concept came out of work done in the 1930s when U .S. agronomists tried to get farmers in the Dust Bowl to change their farming habits and reduce topsoil loss. A few farmers took to the new ideas readily , but most farmers needed to see how it worked elsewhere. They were the pragmatists . The agronomists classified people according to their willingness to adopt new ideas; the most willing were innovators, followed by early adopters, pragmatists, conservatives, and then laggards who had to adopt new technology because the old stuff wasn’t around anymore.
• Geoffrey Moore’s work in the book Crossing the Chasm (HarperBusiness), which deals with today’s issues in technology adoption: The first two categories of customers adopt new ideas and technologies almost solely because it’s a “cool” new idea,technology , or product. However , to gain real market acceptance, achieve longer-term profitability , and reach the pragmatists, the new technology must deliver real customer value. This concept drives much of product management today . It’s why the mantra of listening to your customer as you move from innovators and early adopters to pragmatists is so critical. Without delivering real customer-focused value, products won’t be able to cross the chasm and reach wider customer acceptance — and longer-term viability and profitability . To cross the chasm, marketing messages change from a focus on product technology to a focus on what problems the product solves for the customer .

As a product manager , you have to answer four questions, then:

• Do you understand the different needs of each of these kinds of customers?
• How are you communicating with each of these customer types?
• Which primary customer type (innovator , early adopters…) are you communicating with at this point time?
• Has your product delivered real customer value over and above the cool technology solution so that you can cross the chasm?

Ansoff ’s opportunity matrix

Another way to look at the opportunity that you’re working on is to use Ansoff ’s
opportunity matrix, shown in Figure 10-5 . The matrix is both simple and powerful. The
basic concept behind it is that you can choose to address either existing or new markets,
and you can address your chosen market with either existing products or new products.

This matrix leads to the four corresponding growth strategies:

• Market penetration: Following a market penetration strategy means your goal is to sell more of your existing products to your existing markets, which is generally less risky than the other strategies.
• Product development: In pursuing a product development opportunity , you create new products for the markets you already know how to address. In many cases, this approach means your sales force and channels can stay in place and you simply add more products to the portfolio of things they can sell. This method has more risk than a market penetration strategy . Operating in the product development quadrant may cost more and take more time than market penetration, but many companies successfully use this strategy .
• Market development: With this growth strategy , you decide to bring your existing products to new markets. For example, you may have a database product that you currently sell into a healthcare market. Now your company extends the use of this product into financial services markets. The new market may also be a new geography or country . In market development, the product doesn’t change (much), but the sales force and channels may have to change. Depending on how you proceed, your risk is about the same as with a product development strategy .
• Diversification: In diversification you’re changing both the market and the product focus at the same time. Y our chances for mistakes are much higher . Some companies, like conglomerates, make this strategy work because they don’t care very much what business they’re in. They operate a very closely controlled profit model and let the individual companies they own take care of the rest. The individual companies owned by the conglomerate don’t diversify; the diversification takes place at a higher corporate level where day-to-day usual modes of operation aren’t as critical to success.

Proceeding without understanding which quadrant you’re choosing in the Ansoff
matrix may expose you to significantly more risk than you realize you’re taking on.
This is often the case with start-up companies that have a product that looks
revolutionary and requires simultaneously developing both a new market and a new
type of product.

Porter ’s five forces in competition

Porter’s five forces is another strategic tool that allows you to evaluate where your risks
are. (Flip to Chapter 6 for a full description of this tool.) Using Porter’s five forces is
critical for understanding how vulnerable you are to the competition, your buyers, and
your suppliers — and from what direction the challenge will come. Fill in the five cells in
Table 10-1 under “Porter’s five forces” with the answers to the questions you developed in Chapter 6 . Then you can plan how to counteract these threats.

TABLE 10-1 Strategy Modeling Results Table

Strategic Model	Sub-classification within strategic model	Your placement/opportunities/challenges
Ansoff ’s matrix
BCG matrix
Product life cycle
	Marketing objective
	Competition
	Product
	Price
	Promotion
	Place (Distribution)
Chasm model
Porter’s five forces
	Bargaining power of customers
	Bargaining power of suppliers
	Threat of substitutes
	Threat of new entrants
	Intensity of competitive rivalry

Collecting all strategy information in one place

When all the strategic analysis is in place, gather all the information into Table 10-1 filling in the placement, opportunities and challenges column on the right-hand side. This information is important as you plan and document your market strategy . Read what you have written when you are done and look for common threads, areas to avoid competing, areas where you have more strengths and opportunities. Discuss your findings with your boss or mentor to see what additional insights they have. This exercise provides you with the strategic thinking and background to make great decisions. It also positions you as the internal expert on the market and strategy for your product or product line with your team.

Considering Other Components of
Marketing Strategy

Many factors go into your market strategy , from what you call the product to how you price it and beyond. The following sections cover important marketing strategy concepts that you should be aware of .

Whole product offering

Chapter 1 discusses the whole product offering, a concept is built around the idea that
customers buy your product not only because of its intrinsic features and their associated customer benefits but also because of the augmented product features like service, support, and financing. As a product manager you own the overall success of your product and are most likely the only one looking at the whole product offer to make sure it fits with your customer strategy , and your product and brand promise. Your responsibility is to influence all parties in your company to ensure the whole product offer is compelling and consistent with your strategy .

Brand promise

A brand is a promise of benefits. It may consist of word(s), image, and supporting tagline. Try this. Close your eyes and think of Nike. What image comes to mind? What is the tagline? What emotions does it elicit? Now try the same thing with Coca-Cola, Apple, and Tesla.
In each case, you register a core promise that you believe the products sold by these
companies would deliver if you used them. That is the power of brand. Now close your eyes again. Say your company name. What image, thought, belief , and feelings come to mind? Is that what your customers think about your company? Is that what you want them to think about your company?
A product promise is the implicit assurance that you’re making to your customers about
the experience and benefits they’ll gain from purchasing or using your product. If your
promise is ease of use and your whole product offering fails to deliver it, whether your
product has the right features won’t matter . Your customer may be very unhappy .

Later in this chapter , we also discuss positioning. The relationship between a
brand and positioning depends on whether a product falls under a known brand or is
defining or redefining the brand.

• Known brand: The Coke brand defines the positioning for Diet Coke. It’s Coke without the sugar . The Coke brand speeds up the customer’s understanding of the Diet Coke positioning.
• Undefined/redefined brand: A few years ago, the Tesla brand was unknown. Now , with more electric cars on the road and people’s increasing familiarity with Tesla, the positioning of Tesla as a provider of advanced electric cars has created brand awareness the company now uses to offer new products such as solar batteries for industrial and home use.

Pricing

The most important factor in setting your price is determining how it fits into your overall
strategy . Are you a luxury brand, in which case you may want to set your price very high to convey the fact that your brand is very exclusive and that not everyone can afford it? Are you a low-cost brand like Walmart, in which case, you want to keep your price low and sell on volume?
Pricing is a critical success factor for your product. Set your price too high, and you may
stall or kill initial sales and create a perception in the market that your product is
overpriced. On the flip side, if you set your price too low , you may be leaving profits on the table, and your product may be perceived as inferior because the price is so low compared to some competitors.
You can approach pricing in two primary ways:

• Cost plus: What a product costs, plus a markup. This internal method of focusing on pricing doesn’t really take into account what the value is to the customer , but it’s a way to ensure the profit that you desire for each unit of the product that is sold.
• Value-based: What is the product worth to customers? Are you solving a big problem that they have or providing them with something that they really want? How can you tell? How much is it worth to the customer independent of the cost to provide the service? Determining value-based pricing is very complex. For the rest of this section, we will give examples of scenarios that help you analyze your own situation. A general rule is that you break down each piece of the additional value that you provide over and above today’s solutions and then calculate what the total adds up to. Then you test it with various audiences to see what happens when customers are faced with a buying decision at that price. Another great piece of advice is to bring in a pricing expert.

Here’s a simple value pricing example. Y ou take a small child to a petting zoo, and she
wants to feed the goats. Y ou put a quarter in the goat food dispenser . From a pricing
perspective, there is the cost of the goat food — about two cents. Then there is the
amazing value you get from watching your child grinning as she feeds the goats. You take pictures. It’s so cute. Okay , what was that worth? $5? $10? You’re going to show this picture at her wedding reception 20 years from now , right? $100? The petting zoo charges you 25 cents. It’s a deal. The petting zoo is most likely using cost-plus based pricing, when it could charge a much higher amount because the value of that particular moment is very high for parents.
Now , think of your product and the problem it solves or what it provides to the customer
Does the customer get to go home earlier at night? Does she not worry about her work so much? If you sell security software to an IT manager who is then able to manage the
software more easily and work shorter hours, then the value to her may be very high. What value does your product provide? It isn’t in a list of features; it’s in the benefits (often defined in emotional terms) that your product provides to your customers. How much is each benefit worth compared to what the customer does now?

Pricing based on market position

The fundamentals of pricing are based in how your product is perceived in the market. Are you a market leader with a differentiated product? If so, your price most likely sets the benchmark for the market. All other products will be valued against yours. If you have a less dominant position, you may find that lowering the price below that of the market leader is the only way to compete. If you have a specialized niche, you may be able to charge even more than the usual rate because the value is so much more. For example, think of products for the military . If your company builds products that can handle harsh conditions such as extreme heat and sandy environments and there aren’t that many specialized suppliers of the product, the military is going to be willing to pay you a higher price.

Pricing based on quality

In Figure 10-6 , Kotler’s pricing strategy model offers another way to look at your pricing
choices by comparing the quality of your product offering and its price. Each of these may be low , medium, or high. If you have a high-quality product and offer it at a medium price, then you have a high-value strategy . Your customers will feel great because they have a great product at a reasonable price; this situation may lead to a longer-term relationship with them. However , if you charge a lot and the quality of your offering is low , you’re using what’s called a rip-off strategy . If you’re selling low-quality products in an airport with lots of transient tourists, chances are you’ll get away with it. If you want repeat customers, the rip-off isn’t a great long-term pricing strategy . Above all, understand where you want to be, be consistent with your pricing strategy in all that you do, and, if it isn’t working, deliberately and carefully move to another position in the pricing strategy table.

Which price and where?

When you create a product, you’re often not the one selling it directly to customers.
Customers are often getting it from resellers who buy from distributors. Each step along
the chain between the producer and the consumer takes a cut of the money that eventually comes from the customer . Table 10-2 shows you what this pricing stack looks like for a 25-pound bag of goat food.

TABLE 10-2 Pricing Stack through Distribution

Goat Food Distribution Chain	Margin = (Selling Price – Cost)/Selling Price
Goat food manufacturer manufactures for $2.00.
Manufacturer sells it to goat food distributor for $4.00.	100% for manufacturer
Distributor sells it to local agricultural reseller for $4.80.	20% for distributor
Reseller sells it to customer for $10.00.	52% for reseller

The numbers in the table may be overly generous (margins are dependent on the specific market and type of products), but they make it easier to see where the profits go. In reality , the following is true for our goat food example:

• Manufacturers: Goat food is a commodity . You get low margins on commodity products because a competitor can offer the same thing at a lower price. In the end, each manufacturer just scrapes by .
• Distributors: Distributors typically make about 10 percent margin. They operate efficient transport centers and try to hold onto any product in their centers for as little time as possible. They may even have terms and conditions that ensure any unsold product can be sold back to the manufacturer for slightly less than they paid for it.
• Resellers: Resellers often do mark up prices quite a bit (in T able 10-2 , the reseller markup ((selling price-cost)/cost) is over 100 percent). They have to pay for the product up front and then may hold onto it for some time before a customer buys it. They have costs for their storefront, employees, and so on. Sometimes they have to write off damaged products that can’t be sold at a loss. Another factor to keep in mind: Customers who buy a lot of a product will ask for a discount. The reseller needs to keep enough margin in reserve to make the end customer feel good with a 25 percent discount and still make money .

As a product manager , you need to understand not only your price but also the price up
and down the line of your distribution channel — and in some detail. What margins can
each channel partner accept and still have a viable business? If you don’t know it today , go and do this research. You’ll need it soon enough.

Additional pricing guidelines

Pricing is a very complicated topic, and entire books have been written about it. We are
only covering a small amount of what is a very important topic. There are a few additional considerations we recommend as you’re determining your price:

• Read additional For Dummies content about pricing in an article at http://www.dummies.com/business/start-a-business/business-models/ten-pricing-models-to-help-raise-margins/ .
• Remember that it’s virtually impossible to raise your price after the product has been released. The market will rarely accept it. The opposite, however , is true. You can always lower your price if need be.
• Most pricing decisions are made on a gut-feeling basis. By applying some strategic thinking you’ll be ahead of many companies as well as your competitors.

Segmentation

Segmenting your audience means you divide your customers into groups depending on the attributes (common needs, interests, and priorities) they collectively share. Chapter 5 provides more detail on segmentation. In developing your market strategy , your
segmentation provides a target for each positioning statement and the messaging platform top of the positioning. If you don’t know which segment you are speaking to, you can’t complete your market strategy — and get the targeted customer to purchase your product.

Positioning

A common positioning phrase is “My product’s position is X,” but positioning actually
refers to what the product means in the mind of the customer . For example, Heineken sells beer in the Netherlands (its home country) as well as in the United States. If you buy Heineken in the United States, you pay more for it because it’s positioned as a premium export beer . U .S. customers treat themselves to Heineken. In the Netherlands, Heineken is an everyday beer — much like Budweiser is in the States. Dutch customers don’t pay more for Heineken. The liquid in the bottle is the same in both places. The only difference is its worth in the mind of the U .S. versus Dutch consumer .
Positioning is a powerful tool. It’s the base on which all your product decisions — your
marketing, your development, your sales channels, all of it — will be based. Figure 10-7
shows that the positioning supports the key messages, which are then used to create all
the marketing and sales enablement material known as marketing artifacts . See the
sidebar on these particular marketing artifacts in this chapter . Chapter 15 covers
marketing artifacts or collateral in more detail.

If you don’t know the position that you want your product to occupy in your target
segment’s mind, you’re going to find it tough to create the messaging, proof points, and
then the marketing artifacts. Read on to find out how to decide on your product’s position.

Positioning format

For each segment of your market, you should develop a positioning statement. Here is the format to use:

• For [target customer] who [statement of the need or opportunity], the [product name] is a [product category] that [statement of key benefit/compelling reason to buy].
• Unlike [primary competitive alternative], our product [statement of primary differentiation].

A good positioning statement can take a lot of time and effort. Here is a positioning
statement example for a fictitious high-end department store named Grexper (short for
Great Experience).

• For trend-conscious, upper-middle class shoppers who are looking for high-end products, Grexper is a fashion-focused department store that provides a unique, comprehensive, and exciting shopping experience.
• Unlike other department stores, Grexper provides personalized service in a compelling shopping environment.”

Creating powerful positioning statements

Creating a positioning statement can more accurately be called crafting a positioning
statement because it’s usually a repetitive and creative process. You write one draft, edit it, and put it away for a day . You edit it again and then have someone look at it and discuss every point. Tweak it a bit. Then show it to a larger audience.
Here are a few questions to answer before you start creating a positioning statement:

• Who are you (as a company)?
• What business are you in?
• Who are your target customers?
• What are your target customers’ (key) needs?
• Who are your competitors?
• What unique benefit(s) do you offer compared with your competitor?

One useful tool is to compare your products to the competition on an x-y axis chart. Figure 10-8 shows a blank format for you to play with. It’s up to you to develop the names on each axis, but common choices include performance, functionality , and ease of use. The names should reflect the various axes on which customers decide between different products in your market.

Once your four quadrant positioning is complete, you can use the names of the axes and
the relative position of each of the companies or products to complete the competitive
comparison part at the end of the positioning statement. Using Figure 10-9 , a positioning statement draft would be

“For the value focused customer who is looking for a range of clothing and household
goods, Kohls provides … .
Unlike other full-range department stores, Kohls’ products have low prices every day .”

Avoid the following missteps while creating your positioning statement:

• Is it too vague?
• Is it focused on features rather than benefits? (This complaint is the number one item we hear in people’s first efforts.)
• Is it too narrow , such that few customers will identify with the product?
• Is it too broad; does it claim too many benefits?
• Is it difficult to believe?

And when you’re critically reviewing the positioning statement, see whether it satisfies the following criteria:

• It’s memorable, motivating, and focused on the target market.
• It’s believable to your target market coming from your company .
• Your brand can own it. You can develop a competitive advantage, which will help your company grow.
• Customers can decide to buy or not on the basis of the positioning.

Classical music buffs close their eyes to more deeply listen to the music. You can
do the same thing when you’re listening to a positioning statement. As someone else
reads it, listen for the benefits. Benefits “feel” different from features and answer the
question of “What’s in it for me?” If you have a feature-laden positioning statement,
the emotional sense will be the same as reading a phone book: nothing. If , however ,
you have benefits at the core of your positioning statement, they’ll resonate at some
emotional level.

Why is this so important? Because people don’t buy because of facts. Do you buy a car
because it has brakes, air bags, and a sun roof? No, you buy a car because you want your
family to be safe and have a fun driving experience. If you have the benefits in place, the
rest of the marketing communication naturally pulls these stories out and causes your
customers to want to buy your product.

Naming your product

Your product name needs to support your positioning and match your messaging (see the next section for more on messaging). Choosing a product name is one of the most critical success factors for your product. Finding a name that is available and meets all of the possible criteria is challenging, but a necessary task.
Following are the criteria you want to consider when choosing a name:

• Memorable.
• Easy to pronounce/not confusing.
• Available worldwide after doing full trademark search.
• Has website URL available.
• Is three syllables or fewer (otherwise, people will make up an acronym or shortened name of their own).
• Inoffensive and doesn’t convey negative aspects in foreign languages/countries that matter . The classic case is the car called the Chevrolet Nova; in Spanish, no va means “doesn’t go,” which doesn’t exactly inspire confidence in an automobile.
• Doesn’t confuse customers with a competitive product (otherwise, they may purchase the competitive offering).
• Clarifies things for the customer:

Describes what the product does.
Conveys a benefit.
Provides immediate and compelling reason to buy it.
Describes who should buy it.

• Creates both logical and emotional appeal.

Alternatively , you can use a name that is a unique word or concept unto itself and conveys some intrigue, emotional appeal, or logical connection. Examples here are Excel, iPod, Acrobat, Zune, Tivo, and Napster . However , this approach requires an immense amount of marketing and negates many of the benefits of the criteria listed previously .

Messaging

Positioning is the base of your marketing efforts. However , it’s too abstract to build
marketing artifacts on. And build you will. In Chapter 14 , your marketing programs and
the corresponding collateral, web content, and product demos take form on the basis of
your positioning and messaging as you present your product to the world.
At this point in time, you want to make sure that you have a customer-oriented story worth telling. The method for breaking the positioning statements into workable chunks it to create messaging statements . Each messaging statement will then have associated proof points . The proof points are where your customer case studies and features come into play .

Be prepared when someone — typically sales, marketing or anyone in management
— asks you for your “messaging.” As shown in Figure 10-7 , they mean your
messaging platform. A messaging platform is built on a base of your positioning
statements and then expanded with more detail with fully blown out messaging
statements and proof points for each of the messaging statements.

Unlike the positioning statement, messaging statements don’t have a particular format.
Here are a couple of examples from the Grexper positioning statement that may help you get started. The top level is a messaging statement and the bullets underneath each are proof points.

1. Grexper stores are exciting and different places to visit and shop.
   Pianos are playing.
   Clothes are laid out in a manner like designer clothes stores.
2. Shopping at Grexper means that we’ve done the hard work to make sure that
   you can find everything you want in one place.
   Grexper offers a wide selection of hard-to-find but unique merchandise.
   Grexper shoppers actively seek out up-and-coming designers as well as
   established middle-range designers.
   Each department ensures that the offerings are comprehensive in terms of
   a head-to-toe clothing offering and the equivalent in other departments.
3. Grexper ensures that each shopper feels special with his or her unique needs
   identified and catered to.
   The children’s shoe department has lots of highly experienced staff so that
   children don’t have to wait long to be served.
   Individual sales representatives have named business cards.

Now it’s your turn. Start with your positioning statement. Break it into individual, benefit-focused messaging statements.

You may find that you start listing features rather than benefits as your messaging
statements. Use the “which means that” trick. For example, “pianos are playing” is a
feature, not a benefit. To get to the benefit, add “which means that” and fill in the
answer:

Pianos are playing, which means that the stores are exciting and different places
to visit and shop.

Now you’ve got the first messaging statement from the example.
Experiment with a few messaging statements and list at least one or two proof points for
each one. Put this first draft away for a day or so. Come back to it with fresh eyes and start revising.
At the second check, answer the following questions: Do the benefit statements have an
emotional aspect that a customer can describe back to you? Are the proof points in the
right place? There are no rules, so you can put a given proof point under more than one
messaging statement if necessary , but keep this practice to an absolute minimum.

MARKETING ARTIF ACTS

Marketing artifacts are marketing pieces that tell the product or marketing or product story to a particular audience or in a particular circumstance. In Figure 10-7 , we mention five different marketing artifacts. These are by no means the only marketing artifacts. There are a lot more in Chapters 14 and 15 . Here is a description of each of the five:

• Tagline : This is a very brief and memorable statement of the product’s value for the customer . It should be just a few words that identify the product and a compelling reason to buy .
• Talk Track : An expanded version of an elevator pitch . An elevator pitch is your product story that can be told in the time it takes an elevator to travel ten stories. The talk track is the next part of the conversation in which a sales person breaks down each of the product benefits and then provides one to three proof points of each benefit.
• Product descriptions : Chapter 14 has more details on how to develop these 25-, 50-, 100-, 200-, and 250-word descriptions of your product.
• Frequently asked questions (FAQ) : Often made available to customers online so that the customer can answer their own questions without any personal involvement from the company . More about this in Chapter 14 .
• Unique selling proposition (USP) : This is a short description of what makes your company and/or product different from any other in the marketplace. Yes, any other company or product. If you don’t have a unique selling proposition, customers don’t know why they should choose you instead of your competitor .

Putting Your Market Strategy in
Writing

When you’ve collected the information in the earlier sections of this chapter , the next step is to document your market strategy so that you can get agreement from all parts of the organization. Table 10-3 lists the key elements of the market strategy document. In
addition to these sections, you also fill in the risks, assumptions, open issues, and, of
course, your conclusion and recommendations.

TABLE 10-3 Market Strategy Document Outline

Section	Description
Executive summary	A summary of the entire market strategy .
Whole product offer	What is the whole product offer? Which components of the actual product and augmented product are most critical?
Pricing	What is the proposed price of the product? What is the strategy and rationale for setting this price? If it’s too far in advance, do any pricing boundary conditions need to be met, such as margin or cost? What happens if these boundary conditions aren’t met?
Segmentation	Which are the target market segments that the product addresses? Why are these segments the best fit for your product or solution?
Positioning	What is the overall product positioning? Are there additional positions for channel partners?
Messaging	On the basis of the positioning, what are the key messages? If you don’t have all the proof points, put in what you have now and build on it in subsequent versions.
Strategy	What is your strategy for taking this product to market? In what way are you the leader? And how does this strategy align with your company’s overall strategy and market position?
Launch programs	What are your top-line launch programs and initiatives? What are the key launch milestones?
Budget	How much is the likely cost to successfully bring the product to market? This figure isn’t product development cost; it’s the marketing and sales costs.

The following sections cover just how to fill out each portion of Table 10-3 .

Part I: Executive summary

Complete this section after completing all other sections of your market strategy
document. This section should be brief — no more than one page. Y ou can treat it as a
stand-alone document. Explain the “why ,” “what,” “where,” “who,” and “when” of your
approach to the market for your product.
You should have separate paragraphs for the following topics:

• Overall strategy: Based on the current situation, objectives, and budget, what is the overall recommended strategy? What will generate the most demand? What will create the most value in the customer’s mind? What will differentiate the product from its competitors?
• Objectives: State the key objectives the market strategy plan will achieve. These should be in direct support of the product and/or company objectives and should contain some quantifiable metrics. One example is to achieve 10 percent market share and $100 million in revenue. Another example is to be perceived as the technological market leader .
• Risks: What are the risks with your chosen approach? Do you have resources missing,or are you stretching the company too thin among all the projects under consideration?
• Recommendation: What is your overall recommendation?

Part II: Whole product offer

Briefly describe the value the product brings to your customers as benefits of each of the
features. Add in the augmented features such as warranty , support programs, installation, standards, and any additional software and hardware. (Head to Chapter 1 for a more complete discussion of augmented features.)
List a few key features as they address the problems that your customers have. Refer to
Chapter 11 for more on both these concepts.

One of the biggest mistakes that product managers make is to describe the
features of the product but not convey why customers should care about them. For
example, most customers couldn’t care less that a product runs on the Linux
operating system. However , if you relate this feature to a benefit and state that the
product “runs on the Linux operating system so that you can be assured of a high
level of security ,” customers know what is in it for them and why it matters.

What is a key theme for this product? Security? Performance? And how is that valuable to the customer?

Often, the terms product and solution are used interchangeably . The reason is that
a product should provide a solution to a customer problem. Sometimes, the term
solution in fact refers to several products that together provide a more important and
valuable solution. Market strategy documents are often created to explain a solution
and the products that are needed to support that solution, and then each product is
defined in its own market needs and product description document (Chapter 11 ).
Common sense is needed to make sure that the right story is told at the right level.

Briefly describe how the product or solution identified aligns and supports the company’s vision, mission, and strategy . How does this whole product offering take advantage of the company’s core competencies to create a unique and sustainable competitive advantage?
Does this product release or version create an end-of -life decision for an older version of the product or for a different product? If so, a separate end-of -life plan needs to be written.
Chapter 16 has details on retiring products and end-of -life plans.

Part III: Pricing

Refer to the “Pricing ” section in this chapter to describe your pricing model and strategy
What are the parameters that impact price? List and briefly describe the assumptions
underlying the pricing targets. What are the objectives of your pricing strategy?
List all major product configurations to be offered. What is the manufacturer’s suggested
retail price (MSRP), also known as list price, and expected street price (actual price that
customers purchase a product for)? What are the channel discounts?

The trick with street price is actually determining how to calculate it. It can vary
by channel, region, and country . For example, the street price of gas is affected by
state and local taxes (which can vary dramatically), costs to get the gas to more
remote locations, and a host of other factors, so customers pay different street prices
in different locations. The simple workaround to get to a street price estimate is to
choose a typical discount off of MSRP . Depending on your industry , this default street
price may be 5 to 25 percent lower than an MSRP . In most places, the original
supplier of a product can’t fix the final price of a product to a customer without
serious legal problems. That’s called price fixing and carries stiff legal penalties.

WHAT ON EARTH IS A PORTFOLIO?

A portfolio of products is officially all the products that a company offers. For product managers, the most common use for a portfolio is to describe a set of products that are related to each other in some way — for example, low-end, mid-range, and high-end versions of the same product. There is a relationship among the three of them in terms of price and features. The following figure is an example of how portfolios are explained to customers.

Part IV : Segmentation

Segmentation (which we discuss in Chapter 5 ) is a critically important part of your market strategy . In this section, you describe the segmentation strategy for the company , and how it supports selling your product to your chosen market segments. By answering these questions, you clarify who you are selling to and how , very specifically , they buy your product. Use your segmentation information to answer the following questions:

• Does your product/solution target a niche, or does your solution provide coverage for everyone in the market? As an example, if you open a fast food restaurant, you could target a niche market with vegan food or provide coverage for almost anyone and anywhere the way McDonalds does. Does the company have a full portfolio of products the way a department store provides bedding products at a range of prices, or does it specialize in specific segments like high end bedding boutiques?
• What are the size and growth attributes of the given market segments?
• How does each target market segment buy? Do customers buy direct or through a channel? If so, which channel partners are best to reach your target markets?
• Is the buying cycle seasonal? If so, describe it. What is the average length of the sales cycle (more about this in Chapter 15 )? What are the key selection criteria for the sales decision? Are there any deal killers in being able to complete the sale?
• Is the buying decision made by a technical decision maker , a financial/ business decision maker , the channel representative, or outside consultants? Check out Chapters 5 and 11 for more information about defining different kinds of decision makers.

These are hard questions to answer well. When you do get answers, you may uncover a lot of problems in actually getting your product in the hands of customers. These issues are much easier to address the earlier you uncover them.

Part V : Positioning

Place your positioning statement in this section. Make sure you include information on

• Whether you’re leveraging off an existing brand or creating a brand with your offering
• Whether the company is going to be a product leader , a low-cost leader , or a customer-satisfaction leader

If this offering is part of a portfolio of products, describe how it will be positioned
relative to the portfolio.

Part VI: Messaging

Put the messaging that you developed earlier in this chapter here. Make sure your
messages clearly differentiate your product from competitors’ offerings and messages.
Make sure the messaging in this section covers all of your critical audiences, including
customers, the channel, and press and analysts.

• Customers : Include the messages that highlight the value proposition, positioning,features and benefits, and product differentiation.
• Channel partners : Include specific channel-oriented messages that articulate the value proposition and how your channel partners can be successful with their customers. Can they use your offering to differentiate themselves from their competitors?
• Press and analysts: List specific messages for the media. These external messages should be focused on differentiation and relevancy .

For each of your audiences, create a very brief statement about your offer . It needs to be clear , concise, and memorable. It should answer the following questions:

• What is your competitive advantage?
• Who is behind the company?
• What is your revenue model?
• What is your product or service?
• Who is your target market?
• Who is your competition?

Part VII: Strategy

Using the strategic tools in this chapter , you can explain why you’ve made certain choices and why you have made the product, segmentation, and messaging decision that you have.
Then fill in the details about how you’ll actually achieve what you’ve planned.

Marketing objectives

When you have the strategic context documented, describe your marketing objectives.
Marketing objectives should be high level (for example, “build awareness among X target audience,” “drive upgrades among loyal users,” and so on). They should contain at least one or two quantifiable metrics (such as “increase market awareness from X to Y percent” or “proliferate X trials/downloads worldwide”). Y our best bet is to keep the total number of objectives at three to five so that the direction is clear and not overly complicated.

Communications strategy

Briefly describe the communication strategies for all parties. Given your current situation, objectives, budget, and target audience, what is the overall recommended strategy? For example, if you have a limited budget, you may focus more on viral programs or online marketing versus expensive activities like trade shows or print advertising. If applicable, include the communications strategies of your channel and partners in your communication strategy .
If you already have a loyal customer base, you may focus on strong upgrade promotions or “tell a friend” campaigns. You can assign different approaches to different audience
segments if that’s helpful.

Sustainable leadership

Describe why your overall strategy will allow you to create a sustainable leadership
position in the market. This should be supported by the overall positioning and
development activities, and should be in line with the marketing objectives and strategy

Company performance claims

Describe the high-level corporate and product marketing objectives. How do objectives
map to high-level business goals? Describe the short- and long-term objectives. They
should be in direct support of the product/company objectives, which you can also state
here.

Barriers to entry

Describe the barriers to entry the company can create that work against competitive
forces. Identify barriers that are already in place to support the company’s competitive
position. Some typical barriers include high capital, marketing, and/or shipping costs; tariff barriers and quotas; brand recognition and consumer acceptance; and government
regulation and patents.

Part VIII: Launch programs and activities

Briefly summarize the anticipated launch activities (see Chapter 14 ) and programs
associated with this product. What are the main channels for marketing communications
(see Chapter 15 )? Some possibilities include the following:

• Blogs
• Press
• Advertising
• Direct mail and email blasts

Make sure to answer the question, “Why are we choosing these particular communication vehicles over other options?”
List both short-term (6-to-12-month) and long-term (12-to-18-month) marketing milestones such as retaining, acquiring and growing the customer base. Focus on marketing goals.
Describe how the effort aligns with the overall company’s marketing and business goals.

Part IX: Budget

List the overall budget for major programs and metrics. This figure will be used to validate estimates given in the business case in the sections on marketing and sales expenditures.
Take your budget estimates from your business plan in Chapter 9 .

Part X: Concluding sections

In this section, you provide a risk analysis, assumptions, open issues, and finally conclusion and recommendation sections.

• Risk analysis: Identify the key barriers that may impede the market strategy’s objectives and how likely they are (for example, low , medium, or high) to affect your company . How will you overcome these barriers? Keep your answers brief .
• Assumptions: List any assumptions made in this document.
• Open issues: Track any open issues during the creation of this document. When the issue is resolved, document it. Any unresolved issues should be assigned to a responsible party.
• Conclusion: State your conclusion and the justification of the recommendation. This section should include the likely effect of following your proposals.