You sell what you are good at. The market has taught you what is attractive, and what is not. So you should gear up production and sell like crazy, right? Well, no. The product marketing strategy you have now will not be the right strategy for the next phase of the market.
It is rare that a product marketing strategy deliberately only solves a half of the client’s problem. But accidentally solving only half of their problem, or meeting only 50% of their need, is 100% wrong 20% of the time. There are five phases in any market, and you need a complete solution for one of those phases, and an incomplete solution for another. Pricing, bundling, and service strategies are all factors in your product marketing strategy, and all change as the market matures.
In this week’s blog we will explore what the right strategy is for each phase.
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You make or you deliver what you’re really good at. The market has taught you what’s attractive and what’s not, and you’ve kind of worked all that out. So is now the time to gear up production and build lots and ship lots? No, it’s not. The product strategy that makes sense for you now won’t make sense for the next phase in the market.
It’s kind of rare that somebody, a vendor, accidentally only solves half of the problem or meets half of the need. Accidentally only solving half of the problem or meeting half of the need is 100% wrong, but only 20% of the time. There are five phases in the market, and in each phase your market needs you to be selling in a very different way. Not just the market, that’s what we spoke about in last week’s show, but actually your product strategy needs to change each phase in the market. Your pricing, your bundling, all that needs to change. What we’ll look at in this week’s blog is how to determine what your market needs and what your product strategy should be at each phase.
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As we talked about in last week’s show, your buyers change. In the very beginning in a market, the early adopter has just fundamentally different needs from a buyer who’s willing to buy at a later stage in the market. Your product strategy really does need to change. Think about all the elements of an offer that make it attractive to you. What’s attractive to you is different to what’s attractive to me. You might be willing to buy before me or perhaps after me.
Fundamentally understanding what or where your buyers are up to in the maturity, therefore what they need, and therefore what your solution should be is clearly critical. All of the elements—pricing, bundling, unbundling, packaging—these are all important characteristics and what we need to do is understand where most of our market is. Therefore what they need, and therefore what we should sell. Let’s unpack that a bit.
Think about the early adopter in any market. He or she’s willing to take risk in order to get some advantage or some preferential return for the market. That’s their habit. That’s their mode. That’s okay, but therefore what kind of solution do they want from you? Do they want it to be complete? No, absolutely not. They want to collaborate with you. They want to shape the product. They want to be in on the act quite early.
Your product strategy should be, for the early market, to have an incomplete product and a lot of flexibility, including services wrapped around that product so you can bend it to make their unique needs. Who knows, the needs that they have might be quite different from what you thought the market was going to need. You’re learning too, right? An incomplete strategy or incomplete product is the right strategy early on.
The next group of buyers who are a bit more pragmatic, what do they want? They’re not the risk-takers, so they need the product to be complete. The good news is that it only needs to be complete for that niche, not for all possible use cases, not yet. Just for them.
Once the market has matured a bit, and we’re in the hyper-growth period of the market, everybody’s going to buy. It’s a question of who’s going to buy. Suddenly your product fundamentals really, really matter. So your product now needs to be complete but for all possible use cases. It needs to just work out of the box.
When the market really maxes out, it reaches its peak, it’s a happy time. The market is maturing and the buyer’s quite savvy. They’ll actually say, “I love how you bundle all this stuff together, but actually, I don’t want that. I don’t want all those add-ons. I want to be able to buy this piece from you and that piece from this other guy and this other piece from somebody else.” They’re a savvy buyer now and they’ll insist on those differences.
Then when the market’s in decline, if you’ve been successful in navigating that maturing market, and you’re the gorilla, you’ll probably want to slow the decline down as best you can. What does your product strategy look like? You’re actually looking for new uses and new users, people who haven’t yet bought. For those new uses and new users, they’re going to behave like any other new market. In other words, they want incomplete, flexible again.
Fundamentally your product strategy has changed. How about pricing? In the early days, should you have penetration pricing to get some quick wins? Not on your life. Price is not the issue in the early market. Value is the issue. They’re looking to get some advantage. The advantage comes from them being the first to use your clever, new thing. In the early days, not only do you not penetrate your pricing, you actually value price.
As the market matures, you can still hang on to value pricing for a while until it really starts to get busy in the tornado phase, and that’s when you need to meet the market price. If you’re the gorilla, you might even consider going below market price to hurt the smaller competitors. We’ll save that for another day.
When the market maxes out, you now need to be much closer cost price. Your cost plus and modest margin is about all the market is going to afford you at that stage.
When the market is in decline, again, if you’re the gorilla and you’ve ridden that market really well, you’re back to value pricing for that new user. Everything changes. The consultant or the market or the sales guy, or the whomever, who says to you that you must have—insert your favorite expression here—bundle pricing, unbundle pricing, penetration pricing, skim pricing, value pricing, that you must have a complete or an incomplete solution. They’re wrong and they’re right, and they’re wrong and they’re right. What you need to know is how mature is your market, and therefore what are they ready for? Let the market dictate your product strategy, not the theorists.
Shortly, I’ll show you how to do this in Funnel Plan. But, before that, I’m going to do two things. I’m going to share with you my conclusions and I’ll invite you to receive other blogs like this. Let’s get to the conclusion first.
Let’s get quite prescriptive on what our product strategy needs to be. For the early market, the early adopter, it’s an incomplete product that’s value priced and you wrap a lot of services around the product so that you can flex it to meet their needs.
In the early majority, which is what Geoffrey Moore, the author of this model, calls the bowling alley, that’s where you focus on one niche and dominate that, and then a couple more, dominate those, and then a few more, dominate those, etc. At that stage, you want a complete product, but just for the niche that you’re serving. Still value priced.
In the tornado phase, demand is growing; you now need to meet the market price, and the product needs to be complete for everybody.
Main Street, what we’re looking for there is an unbundled product, or at least unbundlable. If you insist on taking the market, taking you solution to market as a complete product, be ready to unbundle it if that’s what the buyer wants. Remember, they’re a savvy buyer now.
Finally, once we’re in decline and we’re trying to extend the market, then what we’re looking for there is whatever that new market needs. Clue: it’s a new market; so again, we need incomplete value priced, flexible, lots of services. That’s the winning product strategy as the market matures. It changes.
If you enjoyed this blog, then likely you’ll enjoy others. If you haven’t already, can I invite you to subscribe to receive this blog? Go to align.me.com/Blog and either subscribe to the twice a week blog, or if you prefer, the once a month, which has a recap of all the key blogs for the month. Frankly, what most people do is subscribe to both, and you’re welcome to do that.
If you prefer, you can also subscribe to the YouTube channel here and can consume those blogs in that way. Now if you have already but you’ve got a colleague who hasn’t, then now would be a great time to invite them, and I’d be so grateful if you do that. Why don’t you do that now? Either subscribe or flick along to a friend. Come back and I’ll show you how we do that in Funnel Plan.
The Funnel Plan described your objectives, the problem that you’re solving for the market, your strategy, I’ll come back to that, the velocity that you need your tactics to deliver, and finally, tactics that you’re going to use end to end, to achieve that rate of velocity. Today we’re going to focus on strategy, and in particular, the product market. How do you determine the right product market? You’ve heard the theory, let’s now take a look at it in practice in the Funnel Plan.
Let’s choose the blogging video. In particular, we’re taking a look at the strategy, and within the strategy it’s the solution description. Before we do that, I want to go back briefly to the Funnel Plan to make a quick point about the analysis so far. I can actually show you in the software rather than the Funnel Plan itself. We take a look at the target market. We’ve got three target markets. Two of them are in bowling alley, which is where the early pragmatics exist, and one of them, just 20% of the market, is the early market. We clearly need a solution that’s going to appeal to our main market, which is the bowling alley. Let’s take a look at our product strategy, solution, if you like, to make sure it matches that maturity.
Our product strategy needs to be complete. Remember, the buyer who’s in the early majority, or what Moore calls the bowling alley, is after proof. They need some comfort before they’re willing to adopt. The solution needs to be complete. In this case, the solution is pretty complete. It begins with a benchmark, includes consulting to build the plan, training in best practice, then designing the solution, and then coaching to embed the change. For this particular vendor, it’s a complete solution to solve the problem.
Remember, it needs to be complete only the niche that you’ve chosen. It doesn’t need to be complete for all use cases yet because of the relative maturity. Whatever the case of your maturity, make sure that your solution description matches it. At any time, when you’re or determining and entering into your solution, you can check on Help Center, hover over the affected area and you’re going to get some great descriptions in the Help Center, and access to this video to help explain what your solution strategy should be. There’s always plenty of help there, should you need it.
In next week’s show, I’ll explain why the type of marketing that we do also changes as the market matures. How much emphasis do we give to branding? How much to demand? How much to channel readiness or sales enablement? All of that changes as the market changes. I’ll show you that next week. Until then, may your funnel be full and always flying.