The Product and Market Diagram Tool should be used for Strategic Planning when your product isn’t quite ready and you need to develop and communicate a roadmap for market entry. It will help you to think about your product releases as a logical progression to secure new markets as you move forward. You can use it to help personalize your investor pitch as well.
Jumping into a business with only one product or service and no strategy for how to build out that business is a recipe for failure. You should think through how you can evolve your products and services over time to be strategically smart. This picture may change over time, but filling out a market strategy can help you do just that.
One approach is to consider the “platform” aspect of your product or business. In other words, what are the core elements that you have created, or built, that you can leverage across other products or services? Usually there is one sub-product or service that differentiates you from all the rest and is embedded in your other offerings.
Think of the first product or service that you will be able to “get paid for”. This becomes your first building block and your version 1.0. Now with that in mind, think about when it was (or when it will be) available? That becomes the launch date on the horizontal axis. Now, who needs it? In other words, who is your initial target customer? That becomes the first horizontal “band” in your diagram.
Next you need to determine who else your product can serve if you add something to it or make it a little different. What if you could get it to work with someone else’s product?
You need to enhance and/or add to your product for two fundamental reasons: (1) If you want to upsell/keep the customers you have, add a 1.1 block to indicate the better version that your same customers will want to buy and (2) if you can access a new customer base, add a 2.0 block to indicate the adaptation of the product even if branding is the only thing different for those new customers.
Follow this pattern so that you can reflect your product roadmap over the next 18 months or more to show the next significant offering change. Projecting less than 18 months isn’t forward thinking enough, and projecting beyond 3 years is probably not viable unless you have a significant amount of data to validate your strategy.
Now using the above points, work through the Product and Market diagram template. The first sheet is a case Study for TowerCare Technologies that you can review and get a basic understanding on how they did their diagram. The second sheet is blank for you to draft your strategy.