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Writer's pictureClaude Schiltz

Product-centric and customer-centric business plans—and the real-world outcomes of each.

What Is a Product-Centric Business Plan?

A product-based business plan starts with design and development of the product or service to market feeling or any internal vision. In line with an entrepreneurial/team perspective product development is aimed at creating a product that the teams believe will succeed in the market, with a focus on functionality, design, and innovative features. Although such an approach usually involves some customer research, the analysis of the customer needs is frequently superficial, based only on subjective feelings and intuition of the market's preference. These personal assumptions unfortunately tend to be somewhat over-optimistic.

 

Key elements of a product-centric plan include:

  • Focusing on the technical sides and product functionality.

  • Evaluations by competitors in order to find a way to differentiate the product.

  • Investment in production and development without substantial customer testing.

  • Advantages of Product-Centric Plans

 

Though product-based plans are potentially risky, they do also offer some advantages over customer-based business plans:.

 

1. Time Efficiency

Product-focused plans can save time by concentrating on development instead of repeatedly implementing iterative feedback loops. This method is advantageous when time-to-market is essential, for example in competitive sectors or in situations involving fast innovation cycles.

 

2. Encourages Innovation

Attention to product functionality and aesthetics stimulates innovation and technological inventions. Most especially, it works well in "surprise" industries, like consumer electronics, pharmaceuticals, or luxury goods.

 

3. Clarity in Development

By a clear design of the product, work teams can focus effectively toward a shared objective, in spite of distractions that are prone to occur when market information is overanalyzed or when customer needs vary from one another.

 

4. Appealing to Early Adopters

Product-driven approaches may appeal to niche markets or technology enthusiasts who place a premium on innovation and technical edge, rather than customization.

 

 

What are the main challenges of Product-Centric Plans

When product development depends on assumptions rather than being extensively informed users, this might result in some problems emerging:.

 

  • Misaligned Products: Products can contain features that customers don't necessarily care for or do not address important pain points.

  • Lost Opportunities: Major market requirements may be missed without input from intended users.

  • Not in line with budgets: Many innovative products still faiul because they do not align with customers budgets.

 

Without these product-centric approaches, the world would have missed out on a couple of revolutions. There are several well-known examples of products that are not very customer-focused but have nevertheless changed the market, such as social media (facebook as the front rider), streaming (Netflix), electric vehicles  (Tesla), smartphones (iPhone) and GoPro. These items, likely, would have never been produced on the basis of customer-research, since almost nobody could have dreamt them up.

 

Although product-focused approaches can inspire disruptive innovations, there are significant risks associated with them. Many revolutionary products have become a failure because they ignored market demand and customer pain points. Below are some examples of these problems.

 

Google Glass

Google Glass was marketed as a breakthrough in wearable technology, but failed to establish a successful market. Due to its orientation on innovation and user design flaws, ignoring concerns on privacy and cost, it has failed.

 

Segway

Originally marketed as a revolutionary mode of transport, the Segway failed by striving in an unrealized mass market. Years later, companies like Bird and Lime found success with electric scooters, using a customer-centric approach focused on affordability and accessibility.


Microsoft Zune

Microsoft launched the Zune to compete with Apple’s iPod but focused too much on features and design without addressing customer preferences for a seamless ecosystem (e.g., iTunes). Its lack of unique value and a poorly executed launch strategy doomed it in the face of Apple’s customer-focused approach.

 

Pepsi AM

During the 1980s, Pepsi branded a morning version of the soda in place of coffee. Though nicely phrased, it was not a hit because Pepsi did not know how customer prefer, and people generally side with coffee, its warmth and its scent, over plain, carbonated drink in the morning hours.

 

Amazon Fire Phone

Amazon entered the smartphone market with the Fire Phone, but it lacked the key features customers were looking for, such as app variety and user-friendly design. On the contrary, it was obsessed with special but unworkable, such as the 3D graphics, and it did not meet the actual customer needs.

 

What Is a Customer-Centric Business Plan?

Customer-business plans are based on the question: "What do our customers need"? This approach is rooted in thorough customer research and direct feedback, ensuring the product or service solves real problems and resonates with its intended audience.

 

Key elements of a customer-centric plan include:

  • Deep customer research to identify pain points, needs, and behavior.

  • Applying customer insights in the creation of products, price, and launch plans.

  • Establishing early relationships with potential customers in order to build trust and loyalty.


The major advantages of Customer-Centric Business plans are:

 

Refined Offerings

Direct customer input allows you to identify their real needs first hand, and eventually adapt your product to be in line with exactly these needs. It furthermore allows you to identify where your competitors do miss out on their expectations, opening opportunities to sit in these niches and. On the other hand, you will understand where they are overperforming, allowing you to tailor your offerings to exactly what's needed

 

Informed Pricing Strategies

If you carry out your analysis well enough, you will not only learn your competitors pain points but also their budget. Combining the knowledge of pricing with their pain points allows you to offer competitive prices in line with their needs and budget.

 

Early Trust Building

Early interactions lead to the creation of relationships that can convert future clients into advocates. These are major advantages to your go-to-market strategy, since you already know the areas where you will establish your beachhead.

 

De-Risked Launches

Through all these elements, customer research does in the end lead to an important reduction of the risk, building trust by investors.

 

On the downside, the level of innovation might be lower, as your brilliant ideas could remain intangible or misunderstood by potential customers. Still, some companies have successfully turned their innovative visions into groundbreaking products by combining creativity with intensive market research, ensuring their ideas resonated with customer needs and expectations. Here are some examples:

 

Airbnb

AirBnB's goal was to offer affordable lodging during sold-out events. By continuous customer inputs, they improved the design of the user experience and created a world-wide brand built around customer-driven innovation.

 

Slack

Initially an internal communication tool, Slack became a market leader after its founders conducted extensive user research. Through the ability to alleviate customer problems such as email overload, and even unfiltered chat behaviour of team members, they developed a product with a tenable fit across the working day.

 

Spotify

Spotify transformed the music business by introducing a subscription-based model to music streaming. While the concept of streaming music wasn’t entirely new, Spotify conducted extensive market research to understand user frustrations with existing options like illegal downloads and limited digital purchases. By prioritizing features like playlist creation, offline access, and affordable pricing, Spotify addressed customer pain points and became the go-to platform for music lovers worldwide.

 

Peloton

Using cutting-edge exercise equipment in combination with interactive content, Peloton made home fitness a global craze. The company looked at customer behaviour and found an increasing need for home fitness products with a community element. Peloton launched an incredibly appealing product for busy professionals and into fitness audiences, allowing them to take live and on-demand classes on its connected bikes and treadmills.

 

What are the Key Differences Between Product-Centric and Customer-Centric Plans?

Aspect

Product-Centric

Customer-Centric

Focus

Product-features and innovation

Customer needs and relationship building

Market Research

Limited and surface-level

In-depth

Development

Driven by internal ideas

Refined by customer feedback

Marketing

Broad campaigns

Personalised messaging

Time

Faster through minimal feedback

Slower, but more aligned with customer needs

Why Both Approaches Need Customer Insights

Regardless of whether your business plan is product-focused or customer-driven, success ultimately depends on meeting the needs of your customers. Even product-centric strategies require some level of customer insight to avoid costly mistakes. Relying solely on market intuition without understanding customer preferences can lead to missteps. Striking the right balance between innovation and customer understanding is essential to creating products that resonate with the market and drive success.


Conclusion

Both product-focused and customer-focused business plans offer unique strengths and challenges. Product-based strategies excel in driving innovation and creating groundbreaking solutions, often reshaping industries. However, without a connection to real customer needs, they risk misalignment with the market. On the other hand, customer-based plans prioritize solving real problems and building loyalty but can sometimes limit the bold, disruptive innovation that comes from a product-first approach.


The key to success lies in finding the right balance. Whether you lean toward a product- or customer-centric approach, incorporating elements of both ensures your business plan is both innovative and relevant. By aligning your vision with customer insights, you can create a roadmap that drives growth and builds long-term value.

 

Make your vision a reality

Are you ready to take your vision to the next level by creating a business plan that resonates with customers and generates value? I am an independent consultant working on bridging the gap between imagination and practical steps, to put together tailor-made business plans that work for you. Whether you're exploring a product-centric or customer-centric approach, I’ll help you uncover insights that make your plan stand out.

 

Let's work together to develop an action plan that not only addresses your requirements but also the key to future sustainability. Get in touch today to start the conversation!

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