The Product/Market Matrix is the key planning tool for managers of Strategic Business Units (SBU’s). The most critical decision facing every business unit manager is where to invest available resources for the greatest return. Making that decision will require a focus on the two things that make the organization money: the products or services the organization provides, and the markets or market segments that buy them.
Although many organizations profess to analyze products and markets in this way, our experience has been that few organizations do so effectively. Product lines are often defined on the basis of internal accounting systems, rather than on market perspectives. Markets and market segments are frequently classified on the basis of some attitudinal criteria that make intuitive sense, but are managerially useless because they are unreachable. The effective construction of a competitive marketing strategy matrix for each business unit is the first step in achieving strategic focus.
Achieving strategic focus requires the evaluation of specific criteria, applied uniformly across the matrix. Such criteria might include:
- Product/Market Size
- Product/Market growth rates
- Market Share
- Profitability
- Cross-sales opportunity
- Others
This evaluation will direct attention and resources to the product/markets that have the greatest likelihood of providing an outstanding return on future investments. The first of these investments will be in the market research necessary to understand your organization’s current value propositions. A comprehensive and step-by-step description of this process will be found in Dominating Markets with Value: Advances in Customer Value Management.
