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How to Identify Strategically Relevant Product VarietiesThe goal of this exercise is to list the industry's strategically relevant product varieties that will be used as input for developing the industry segmentation matrix. Given that most industries include hundreds or thousands of slightly different product and service variations, the task requires grouping the continuum of product varieties into a limited set of strategically relevant groupings. In practice, it is often best to start by listing your discrete products and services; then add products your competitors offer which your company does not (including products of non-traditional competitors); and then add products that could potentially be provided by future competitors. If your list includes fewer than three product varieties, take a closer look. If your list includes more than fifteen product varieties, there's a good chance some of the distinctions are not strategically different enough and should be combined (even though marketing needs to understand all differences between product varieties offered by all competitors). The big picture to remember with this exercise is that the information is used (along with buyer types) to construct an industry segmentation matrix. The matrix is a tool. To divide the industry into 6 segments (3x2) is only slightly useful. To divide the industry into 360 segments (18x20) is difficult to deal with. In practice, a one page (7x7 or 8x7) industry matrix is very manageable; although a two-page (7x14) matrix is often appropriate for industries with many channels and many end-users. |
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