6 Product Strategies to Accelerate Business Growth Today

I want to devote this blog post to discuss alternative product strategies to accelerate business growth. Specifically, the 6 key product strategies we used to grow the business while I was at HP. A couple of key considerations are 1) that all of these product strategies approach new business growth in a different way. In HP, we had a healthy paranoia about the competition. As a result, we had no qualms about cannibalizing our own business if we felt that 2) it would help us grow the size of the available market, our market share, or help defend us from current or anticipated competitive moves.

The 6 key product strategies are:

New-to-World Products: These are inventions and discoveries like desktop laser and inkjet printers, iPad, CAT/MRI scanning devices, etc. This product strategy can be extremely disruptive in the market and game changing for customers and vendors. Often times, the disruption comes from lower pricing or smaller physical size. Other ‘new to world’ products are created from categories that already exist; however, new products redefine the categories by using innovative or alternative technology. Examples that come to mind are electric cars, Elliptigo bikes, digital cameras, and Swiffer mops. In some cases, the technology has been around a long time (electric car technology was first used in 1897). Until recently, nobody was able to scale the required battery technology in a way that provided a viable, cost-effective alternative to internal combustion engines. Of course, this is changing rapidly. Creating a completely new product for a completely new market is the most difficult of all the product strategies to execute. In most cases, even the most innovative of new products have some lineage to a previously known technology or application. This is the least used strategy because of its complexity.

New Category Products: These are products that are not new to the world, but new to the company. For example, Apple introduced the iPhone, Mercedes introduced the M Series SUV, Vizio introduced a product line of televisions. In some cases, these new products served adjacent markets/customers using existing channels. In others, it was more risky because the companies did not have an established market presence in the markets they launched their new products in. When companies fail here, often times they are high profile failures. For example, Microsoft’s Zune or Apple’s Newton to go after the emerging PDA market led by Palm at the time.

Additions to Product Lines: These are product line extensions to the company’s existing product line and brand like Diet Coke. HP developed the PhotoSmart printer to go after the market of printing photos at home. In many cases, these are adjacent market opportunities that require more marketing innovation as opposed to technology innovation. Another example of a brand extension is Jello-gelatin creating Jello Pudding Pops and pudding. The line extensions increased awareness of the brand name and increased profitability by providing offerings in more than one product category. According to Wikipedia, A brand’s “extendibility” depends on how strong consumer’s associations are to the brand’s values and goals. “Ralph Lauren’s Polo brand successfully extended from clothing to home furnishings such as bedding and towels. Both clothing and bedding are made of linenand fulfill a similar consumer function of comfort and hominess. Arm & Hammer leveraged its brand equity from basic baking soda into the oral care and laundry care categories. By emphasizing its key attributes, the cleaning and deodorizing properties of its core product, Arm & Hammer was able to leverage those attributes into new categories with success. Another example is Virgin Group, which was initially a record label that has extended its brand successfully many times; from transportation (airplanes, trains) to games stores and video stores such a Virgin Megastores.”

Product Improvements: Are improvements to existing products that are used to grow market share and revenues. For example, Michelin continuously re-launches their successful X One tire series. WD40 re-launched the venerable WD40 lubricant with a ‘Smart Straw’ which resolved customer satisfaction issues of losing the tiny red straw taped to the side of the can. And let’s not forget Microsoft. They introduced Windows 7 as a replacement for Vista.  Some companies have used nostalgia to create retro products with strong lineages to the past like the HP 12C Classic calculator, creating the paradox that ‘old’ is ‘new’. This is the most frequently used product strategy.

Repositioning Existing Products: These are products that are re-targeted for new use models. For example, using baking soda as a deodorant (and 14 other uses). Another example, Lucozadewas first marketed for sick children and then rebranded to target athletes. Merck introduced Propecia, which is essentially a lower dosage version of their popular prostate drug Proscar, when they found the side effect of drug reduced the effects of male pattern baldness.

Cost Reductions: In this strategy, new products replace existing ones, with a lower cost structure. As a result, the new products that result from this approach drive different pricing options and therefore, bigger market opportunities. Some brands, like Ajax, are becoming dollar store brands. In March 1984, the LaserJet(subsequently called the LaserJet Classic) was introduced. It was a 300-dpi, 8 ppm printer that sold for $2,995 with a remarkable desktop design. This product was highly disrupted when compared to the large line and laser printers found in glass rooms of that era. By 2008, HP had introduced $99 laser printers that were 2X faster, smaller, had better print quality, and were 96% lower in price! What started as an expensive device for large enterprises was able to serve additional markets (like small business and consumer) as price points, image quality, performance, and size were improved upon. Finally, Southwest Airlines was able to capture significant market share from established airline companies by offering a no frills, low price alternative flights on popular, domestic routes.

It is important to note that product growth strategies can also be combined. When HP decided to go after the copier market, we took an existing LaserJet platform and added multifunction capability – scan, copy, additional software, and new paper handling capability. In some ways, it was an addition to our existing product line because not all use models were based on the copier market (but some were). It was certainly new to hp, but it also had elements of ‘new to world’ and ‘cost reductions’ because we were building it on a printer platform, which had lower cost and better reliability than a copier. This allowed us to offer a compelling value proposition and take market share away from entrenched competitors.

Business models are also an important consideration. How do you maximize revenues and profits over the life of the product? At HP, we had a razor-razor blade business model (for printers) that was very profitable. Gillette, Keurig, and Swiffer all have similar business models based on this concept. In addition, the concept of ‘lifetime value of the customer’ becomes important here. Even if you do not have a razor-razor blade business model, you can consider other ways to derive accessories, support, or services revenue and profits over the life of your product. This is not only important financially, but can also help improve the overall customer experience and satisfaction of your products by end user customers by meeting a broader set of needs.

The key point here is that all of these strategies require a robust, new product pipeline in order to continue to grow revenues, unit volumes, and market share. Each one of these strategies can be slotted by 1) the level of technology newness and 2) the level of newness the product is to the market and 3) the current level the company participates in these or adjacent markets. The more ‘new’ the product is on these vectors, the higher the risk and potential return. There is an interesting chart that illustrates this concept that can be found here.

Additional Resources:

1000Ventures.com

Product-Market Growth Matrix

Align Product Strategy