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

You, the marketer, are in the driver's seat here because marketing already operates in the realm of the customer. But business-as-usual methods of customer research are not sufficient to propel your marketing organization into the realm of strategy. Nor will they transform the marketing organization into a crucial player in your company's ability to create market-winning, high-demand products.

It's possible, for example, that your company has a customer relationship management system in place. Perhaps you conduct regular focus groups on customer needs or talk with customers in more casual ways. Maybe you brief senior execs before major tradeshows and debrief them afterwards about what they learned over lunch with key accounts. Maybe you monitor customer response to new products or potential new products through online surveys.

While these least-common-denominator activities are necessary, they're not sufficient for answering the deceptively simple questions that lead to creating winning products: What drives potential customers crazy? What irritates them—not only about existing products but, in a larger context, about their work or personal lives? What problem do they have to which your product is the answer?

Answering these questions demands that you conduct a kind of research that fundamentally changes the way you talk to customers.

A different kind of research yields actionable data about what customers value

You and your colleagues will need to brush up on statistics and research methods and adopt research tools such as ethnographic software and the Kano method of questioning for validating and prioritizing customer requirements. You'll have to re-engineer your marketing or customer research department to conduct market research that is...

  • Open-ended
  • Ethnographic (observational, occurring where customers live and work)
  • Interview-focused
  • Rigorous
  • Quantifiable
  • Repeatable
  • Objectively derived (unfiltered)

You're not the solo hero in this endeavor. To shift a company's portfolio decision-making approach from one based on financial metrics to one based on customer value requires that marketers work with innovators and product developers at the very earliest stages of product conception.

The hard customer research done at this stage yields useful metrics for evaluating a potential product portfolio.

Create the CEO's dream world—and make yourself indispensable

In a CEO's dream world, designers come up with brilliant new product ideas that undergo a foolproof market pass/fail test before a single penny is invested in developing them. There are no more hard-to-sell products, because each is the perfect solution to a burning market need that no other company has yet addressed. Although that seems a fantasy, companies can move toward making it a reality by changing their new-product-evaluation yardsticks from the current standard of financial analysis to customer value.

Your part in this as a marketer is to understand customers at such a deep level that you know, before development begins, which products and services they will value highly. If your marketing organization learns to do the kind of research that yields this information, and translates it into clear requirements, you become a hugely valuable asset not only to the product development organization but also to your company as a whole.

Moreover, you'll also have the framework for all the marketing and public relations activities that will follow the launch. They will grow organically from your deep understanding of the customer, instead of being bolted-on afterthoughts.

Your products may not walk or talk, but they just may be a step closer to selling themselves.

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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