In the world of product management, there are a few “classic questions”. We all need to be aware of these questions because they keep coming up over and over again during our careers. One such question has to do with what type of market you should plan on selling your product to: an existing market or a new one that you create all by yourself…
Say Hello To Mr. Porter
In the traditional world of product management, we expect to sell our product in a market that already exists. This means that as Mr. Porter told all of us back in school, there will be 5 forces at work in that market.
One of these forces will be competitors. This means that we’re going to have to spend some time coming up with a plan to make our product distinguish itself from the competition. All in all, this is what most product managers are trained to deal with.
Ready For A Blue Ocean Anyone?
In the past few years, a different approach to marketing has shown up. This was probably best captured in the book Blue Ocean Strategy. Effectively what this approach is all about is deciding not to compete with other firms and products and instead to go out and create your own market.
What makes this such a powerful approach is that by doing this, you basically don’t have to worry about any competition until other firms realize what you are up to and start to show up to compete against you. This isn’t easy to do, but if done correctly can be a powerful approach.
Which Approach Is Best?
So here’s the big question: which way is best for a product manager and your product? It turns out that we’re going to get some help here. Dr. Andrew Burke and a team of researchers have been looking into this very issue.
The question that they have been trying to answer is whether a competitive or an innovative strategy will result in the most successful product. Their thinking was that if you pursued a “Blue Ocean” type of strategy then you’d end up creating a new market. Naturally, this market would quickly attract other firms. If as this happened, your product’s profitability went down as more and more firms entered your market, then you’d know that the new opportunities for your product were probably limited over time.
What The Researchers Found
The researchers found that, not surprisingly, over time competition tends to erode the profits that a product manager may have been able to initially make from introducing an innovative product. If there is any good news in this, it’s that this erosion takes time. Specifically it takes about 15 years.
What this means for a product manager is that taking a blue ocean approach and creating new markets for your product may yield the best results. You can’t rest on those results because eventually the rest of the world will catch up with you, but you should have enough time to make generous profits.
The researchers suggest an even better approach. They recommend a two pronged approach: creating new markets while at the same time competing in existing markets. This will generate money from competitive markets that can then be used to find and enter more new blue ocean opportunities.
What All Of This Means For You
Product managers need to make important decisions as to what types of markets they want to introduce their products into. Two of the most obvious choices include entering competitive markets or creating new markets for your product.
Researchers have taken a look at the benefits and drawbacks of entering each of these markets. What they’ve found is that competition will eventually wear away at your product’s profits. This means that creating new markets for your products buys you the most time to make the most profit.
Every product manager will need to make the market entry decision that best meets the needs of his or her product and company. However, taking the time to find new untapped markets can yield the best long-term bottom-line results.
Question For You: How would go about finding a new market for your product?
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What We’ll Be Talking About Next Time
It turns out that a Product Manager really doesn’t do all that much. I mean, they don’t actually create the product and they don’t actually sell the thing now do they? Sorta makes you wonder just exactly they do do? It turns out that most of a Product Manager’s time is spent doing scary stuff, like managing people and getting them to work together in order to get a product created and out the door…