Since marketers first entered the boardroom as CMOs, companies have recognized the strategic value of marketing. Often, sadly, that recognition has not been translated into quantifiable business success.
But there is a way to magnify the strategic value of marketing and simplify marketers' jobs in the process. All it requires is that marketing take an early and active role in defining the company's product portfolio.
If your company doesn't include marketing in the strategic activity of determining what products the company chooses to develop, then at best it's missing a big opportunity, and at worst it's setting itself up for failure.
One of marketing's major responsibilities ought to be applying its skills in customer research to help define the value space where R&D invests resources. When marketing isn't involved—when product portfolio decisions happen in a vacuum or are based on financial analysts' guesses about what will make money—it's more likely that a product will fail.
Why products fail
The primary reason new products fail is that they fall short of fulfilling customer needs. Judging from the startling failure rate of newly introduced products (52 percent, according to a 2005 study by AMR Research), far too many new products result from a decision-making process disconnected from strategy and without the relevant customer-based metrics that marketing can supply.
Ill-considered and poorly defined products also vastly complicate your life as a marketer. While the product gasps and struggles for life, you face the task of creating programs and campaigns for an essentially unmarketable product. Whether you want to increase the strategic value of your marketing organization or simply want to avoid the distasteful job of trying to sell something customers don't really want, you should expand your role in product portfolio decisions.
Ordinary customer research methods are not adequate
Sheila Mello is managing partner of Product Development Consulting, Inc. and coauthor, with PDC principals Wayne Mackey, Ronald Lasser, and Richard Tait, of Value Innovation Portfolio Management: Achieving Double-Digit Growth Through Customer Value (October 2006, J. Ross Publishing). Contact Sheila at email@example.com.