Business Unit Planning: The Product/Market Matrix

Planning at the level of a Strategic Business Unit (SBU) requires an answer to the question, “Where do we choose to compete?” Put another way, the question becomes, “Where shall we focus limited resources in order to compete most effectively?” The most systematic way to answer those questions is through the development and evaluation of aProduct/Market Matrix.

The purpose and process of planning at the business unit level is one of the most misunderstood and under-utilized functions in many business organizations. It is at this level that the lines between Corporate Planning and Product/Market Planningtypically become blurred. Business unit managers are often challenged by corporate managers to address the corporate growth question, but most want to get directly into competitive planning without first identifying strategic priorities. As a result, competitive planning is often unfocused, and scarce resources are often wasted on products and markets that are relatively unimportant.

MVS recommends a full-day, on-site workshop with senior management to (a) identify and select relevant business units, and (b) develop and evaluate Product/Market Matrices for each. This should occur before any time or resources are invested inCustomer Value Measurement or in Product/Market Planning in order to maximize the return on investments in those activities. Models of Customer Value will be different from one product/market to another, because different markets define value differently for different product lines. “Averaging” value models across products and markets will result in internal perspectives on value that are managerially useless. Moreover, the nature of competition changes from one product/market to another, which means that your organization’s competitive value proposition will also differ from one product/market to another. Effective competitive marketing plans are dependent upon the precision that can only be provided by a focus on key product/markets.