Market-driven strategy vs Product-driven strategy PDF

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PRODUCT-DRIVEN BUSINESS VS. MARKET-DRIVEN BUSINESS

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SAN ANDRES, CELINE H. 1:00-2:00 M 1270

Every company today claims to deliver value to its customers, establish leadership, be unique and profitable in its core market (Infoclutch, 2017). In this highly competitive world, it is imperative for marketers to look at every aspect of their business. It is important to note that whilst profitability is an important goal, it is not the only goal a business should keep in mind (P. Miles, 2018). In addition to the questions of whether a business will generate money or achieve a return on investment, there are major questions to be considered around a business’ operations. This is where it is fundamental to identify whether a business is a product-driven or market-driven. Understanding the nature of the business plays an important role on achieving the success of an entity. Identifying which approach to use, whether focusing on the product or focusing on the market, will help the company have a clear picture of the direction it wants to take. That distinction could also spell a significant difference on how managers should run businesses, directly affecting each decisions they make. Therefore, it’s important to have people within a business that are able to identify the core differences between each approach.

Product-driven Business Approach A product-driven business involves the developing a product first, then searching a market for it (P. Miles, 2018). It operates under the assumption that with great products come great customers which, in turn, bring profit and revenue. A business with a product orientation directs its energy toward creating and marketing the highest-quality offerings. It focuses its efforts on products as its strength. Such company makes the assumption that the sales and marketing parts of the process will take care of themselves if the product is of high enough quality. A business with a product orientation will devote considerable resources toward research and development rather than on a business strategy such as sales or production. In other words, all the functions of the company are focused on the product – its design, features, capabilities, and its subsequent design and manufacture. All the other departments act as support for the product. Small businesses tend to use the product-oriented business model because of its focus on quality and design. ADVANTAGES One advantage of a product-oriented model is that it allows the business to focus on product quality. According to Jennifer F. Bender, Focusing on products first allows companies to hyper-focus their efforts on creating some of the best products in their space. Another advantage is it allows for a technology to be developed which can then be used for a wider range of products. Product-driven cultures control the narrative and shift the position based on discovered uses of the products. A third advantage to the product-focused business model is that economies of scale can progress more easily for this business method by reducing the cost of producing an item as the number of items produced increases (J. Bender). Consequently, this will lead to another cost-saving advantage which is outsourcing; the company may look for another factory that can produce a product at a mass level

DISADVANTAGES Smaller companies will have a tough time disrupting the market unless their products are truly outstanding. A study showed that Brand recognition was more important than any other promotions. Therefore, in order to have a breakthrough with product orientation, the business must be recognized by its superior products or service. Although, sometimes the public do not always get the best product options, and as a product-focused business, this will result to missed opportunities of getting the product known. Product-driven businesses can face obsolescence if a well enough image that will make the customers engage in the product is not provided. A new competitor, change in technology or other market factor that devalues the current product’s selling point can put the business into extinction (S. Ashe-Edmund). Also, if a clear message and/or image of the brand is not developed, the company might be limited as to what line of products it can sell.

Market-driven Business Approach A market-driven business looks outside the company for the input and data necessary to make strategic and tactical decisions (K. Cook, 2013). In short, the focus is on the customer– their opinions and information. This type of business, which is also often referred to as a customer-driven business, operates under the assumption that it can only survive if the customers are satisfied. Thus, the focus of a customer-driven business is to understand consistently how to make the customer happy, what more can be done to address their expectations and needs, and how to constantly delight them. Market-focused means knowing the overall dynamics and forces in the marketplace, and understanding how those forces might impact the business (K. Cook, 2013). Product development in this setting is largely based on what the customers want. Market research is conducted focusing on the needs and preferences of customers. Therefore, marketing the product on a product-driven business is not greatly invested anymore. ADVANTAGES One advantage of market-driven business is it can allow companies to recognize and take advantage of opportunities for growth (G. Hamel), such as unfulfilled customer needs. Another benefit of this approach is that it can increase customer satisfaction. Running a customer-focused business helps organizations build a loyal customer base (M. Brookins, 2019). Customers are more willing to purchase from companies that they feel consider their needs when they create products and services. Consumers have many choices of where to buy goods, so creating a unique, high-quality shopping experience can be just as important for getting customers to come back. Customer service becomes a part of the company's brand when a market-oriented business is used. Having a first-class customer assistance can lead to higher market share and higher profit....