What Is Product Scope?
Your company’s strategy for success is evident in its product line and market presence. Failing to sell the right products or to target the right markets can doom your business, so research your options carefully. The key is to stick to your production strengths and then market your products as effectively as possible without overextending your resources.
Product-scope strategies are also called market-scope or product-market-scope strategies. Essentially, these strategies involve decisions about what types of products a company will offer and what markets the company plans to target with those products. Developing a product-scope strategy typically starts with analyzing your company’s resources. Narrow-scope strategies are suitable for small businesses with limited production and marketing resources. Bigger businesses, on the other hand, can fund large product lines and expansive marketing campaigns.
If a company produces only one type of product, it likely will choose a single market to target. This is called a narrow product-scope strategy. For example, a factory that produces after-market parts for a particular car model must target a specific subset of consumers: the owners of that type of car. Similarly, a producer of luxury products might bypass frugal buyers and instead market its brand solely to well-off consumers.
Another alternative is to target multiple markets with a single product. A pharmaceutical company, for example, might sell prescription and generic versions of a product. Also, some companies opt to target a single market with a wide range of products. For instance, a manufacturer of cleaning products might sell liquid soap, mops and sponges, aiming to create a complementary product line that customers trust.
Some companies produce many products and also target many markets. The ultimate goal of this strategy is to diversify risk by serving every segment of every market. Theoretically, at any given time, the company’s most profitable products will cover any losses due to poorly performing products, allowing for steady but slow aggregate growth. Typically, only the largest companies have the resources to produce and market numerous products, so this strategy isn't an option for most small-business owners.