It is unfortunate that there are those who dismiss the differences between having a product-driven business and a customer-driven business. This is somewhat understandable as many tend to reason that businesses operate for the sole purpose of growth and profitability.
However, there truly is a significant distinction between the two concepts, and that difference could also spell a significant difference on how managers should run their business, directly affecting their decisions.
A product-driven environment involves the business developing a product first, then searching for a market for it. It operates under the assumption that a great product will naturally attract great customers; in turn bringing in the profit and revenue.
The functions of the company is completely dedicated towards the product; from its design, features, capabilities, and its subsequent design and manufacture. All other departments play the support role in order to uplift the final product. The marketing and sales team will be responsible for taking the product and introducing it to the market.
This kind of product will often be managed as though they are independent businesses. High profile brand ambassadors will usually be associated with the product and the company’s resources will be dedicated to ensuring the product’s success. Apple is one such company with a more product-driven business, especially when Steve Jobs was the face that was leading the charge.
Some common strategies employed by a product-driven business includes:
- Mass marketing to reach as large an audience as possible.
- Create unique products to entice customers with the exclusivity.
- Focus of positioning in order to manoeuvre around competition and ensure the most favourable reception.
On the other hand, when a business goes out and gets information on its customers, and subsequently develops a product based on the information gathered, then it falls under the customer-driven category. Every part of said business is dedicated to understanding what the customer wants, and providing products and services that meets those wants and beyond.
This type of business, which is also often referred to as a market-driven business, operates under the assumption that it can only survive if the customers are satisfied. This incentivises the delivering of high-quality products and services, coupled with exceptional customer service and support.
Product development in this setting will usually rely on what customers want. Extensive market research is conducted, putting emphasis on the needs and preferences of customers. Generally, there will be less marketing for this kind of product because said product was custom-tailored for a specific market in the first place. Samsung is a great example of a customer-driven business and contrasts nicely with Apple’s business strategy.
Common strategies employed by a customer-driven business includes:
- Emphasise speed in order to outpace the fierce competition.
- Prioritise flexibility and convenience in order to personalise products to fit customer expectations.
- Maximise customer contact in order to understand what the customer wants, and tailor products to meet those wants.
- Practice consistency in service standards in order to build a relationship with the customer and instil loyalty.
In summary, a product-driven approach, development of visions start from the internal process within the company; in the customer-driven approach, visions start from outside the company, particularly in the marketplace where the customers are. Both strategies are very different but are equally valid. Businesses must make it clear which direction they are taking or risk implementing initiatives that may get them nowhere.