Maximising the value of your product function: Part Three – Unlocking effective collaboration between product and marketing

In the final chapter of our series focused on enhancing the value of your product function, we delve into the crucial relationship between product and marketing.

After examining the synergies between product teams and tech teams, as well as their alignment with overarching business goals and the office of the CEO, our attention now shifts to a pivotal alliance. The interplay between product and marketing is not just cooperative; it is a strategic confluence where two distinct disciplines merge to create something greater than their individual contributions.

The dual magic of Product Market Fit and Product Channel Fit

For a business to thrive and conquer market challenges, two types of magic are essential: Product Market Fit (PMF) and Product Channel Fit (PCF). These concepts are the bedrock of a product’s success from its inception to its dominance in the market.

PMF is about creating a product that addresses a significant, existing problem in the market. It’s about the resonance of a product with its intended audience, ensuring that it’s not merely a novelty but a necessity. For example, consider the emerging market of environmentally conscious travellers. A hypothetical hotel booking site tailored specifically for travellers with electric cars (charger please!) caters to this niche, addressing a distinct need and demonstrating PMF.

PCF is about making sure the right people know about the product. It involves identifying and utilising the most effective channels to reach potential customers. This is where the challenge of competing with established players becomes apparent. For our hypothetical electric car traveller’s hotel booking site, traditional channels like Google AdWords might be prohibitively competitive. This necessitates creative and alternative marketing strategies to achieve optimal PCF.

Introducing the Ansoff Matrix: A strategic framework for collaboration

As we delve deeper into the dynamics of product and marketing collaboration, it’s crucial to introduce a strategic model that can guide our understanding: the Ansoff Matrix. Developed by H. Igor Ansoff, this matrix is a pivotal tool in strategic planning, offering a clear framework for evaluating and planning business growth strategies.

The Ansoff Matrix becomes particularly instrumental when we consider the states of Product Market Fit (PMF) and Product Channel Fit (PCF). This matrix helps us map out the relationship between product and marketing strategies based on the maturity and market presence of a product.

1. Existing Product/Market (Market Penetration):

Here, PMF and PCF are already established. Teams should aim to operate as independently as possible, focusing on optimising what works. Booking.com’s approach in this quadrant is instructive. The company has a deep understanding of necessary optimizations (like conversion rates) and a well-established channel (Google AdWords) for customer acquisition. This independent but coordinated approach allows for swift and efficient operations.

2. Existing Product/New Market (Market Development):

This quadrant involves established PMF but not PCF. For Booking.com, entering the Chinese market exemplified this. While their product was already successful, the absence of Google as a marketing channel in China meant investing in alternative customer acquisition channels. This scenario requires more interdependence between product and marketing teams.

3. New Product/Existing Market (Product Development):

Here, PCF exists, but PMF is yet to be established. Booking.com’s ‘The Connected Trip’ initiative represents this quadrant well. Initially relying on cross-selling to their existing market, the product’s evolution necessitated closer collaboration with marketing to attract customers for new offerings like flights and rental cars, often booked before hotels.

4. New Product/New Market (Diversification):

The most challenging yet potentially rewarding quadrant, it involves developing a new product for a new market. This quadrant requires product and marketing to work in lockstep, constantly iterating to find both PMF and PCF. An illustrative example is Amazon’s venture with AWS, a leap from their established online retail marketplace into a completely new domain of cloud computing services.

Evolving collaboration as you scale

Interestingly, in the startup days of a business, the collaboration between product and marketing is naturally close due to the limited size of the business. This initial phase is characterised by a seamless interplay where each function complements the other in pursuit of shared goals. However, as companies mature and organisational siloing occurs to enhance efficiency and improve market penetration, this close collaboration often diminishes. When venturing into new territories, either without PMF or PCF, or either, product and marketing teams tend to remain within their established silos. This organisational shift can sometimes lead to a collective amnesia, forgetting the intrinsic interdependency that once drove the company’s initial success. Recognizing this, it becomes imperative for mature companies to consciously rekindle this collaborative spirit, especially when exploring new products or markets.

In summary, the collaboration between product and marketing teams is an essential component for any business’s success. The Ansoff Matrix provides a strategic framework, guiding these teams on how to effectively work together at different stages of a product’s life cycle and market development. Whether it’s refining existing products for market penetration or innovating for new markets, the matrix highlights the importance of a strongly coordinated approach.