Operations & Sourcing method guide
Product / Market Groups
Product / Market Groups defines the distinct segments in which success must be understood.
Beginner-friendly guide · 4 min read
What Product / Market Groups does
Product / Market Groups defines the distinct segments in which success must be understood.
Product-market grouping divides a diverse business into combinations that face meaningfully different customers, competitors and success requirements. It creates a stable commercial unit of analysis for later portfolio, capability and sourcing work.
Groups should be distinct enough to support different decisions without becoming a separate category for every minor variation. Define products, services, markets, customers and geography explicitly.
In the Cambridge make-or-buy sequence, product-market groups provide the commercial unit of analysis from which key success factors and important activities are derived.[1][2]
Each occupied cell can become a product-market group when its success logic is genuinely different.
Markets or customer groups
Products or services
InnovationFlow explanatory schematic, synthesised from the method sources[1][2].
Understand the method
The parts in plain language
When to use it
- When sourcing or capability analysis is too generic across a diverse business.
- Before defining key success factors.
A practical workflow
- 1
List products, services, markets and customer groups.
- 2
Combine them into strategically coherent segments.
- 3
Record scope, evidence, attractiveness and distinctions between groups.
- 4
Pass the groups into success-factor and portfolio analysis.
Fictional worked example
Example: segmenting an industrial service portfolio
This example is illustrative rather than a reported case. A manufacturer separates offerings before defining key success factors.
Observation:Data access is built in and buyers expect digital features.
Implication:Integration and lifecycle value shape success.
Observation:Installed systems vary and disruption is costly.
Implication:Adaptability and field execution matter more.
Observation:Assurance and traceability dominate buying criteria.
Implication:Treat them separately from price-led general industry.
From analysis to decision
How to interpret the result
- 1Check whether groups face distinct success factors.
- 2Keep data definitions comparable across groups.
- 3Use the groups consistently in portfolio and sourcing analysis.
The interpretation guidance is an InnovationFlow synthesis of[1][2].
What a useful output looks like
Common pitfalls
- Avoid segments so broad that their success factors become generic.
- Do not create a separate group for every minor variation.
References and method basis
- [1]Probert, D. (1997). Developing a Make or Buy Strategy for Manufacturing Business. Institution of Electrical Engineers. Source ↗Original method source
- [2]Canez, L.E., Platts, K.W. and Probert, D.R. (2000). Developing a framework for make-or-buy decisions. International Journal of Operations & Production Management, 20(11), 1313-1330. Source ↗Peer-reviewed research
This guide synthesises the named sources into practical questions for strategy and innovation work. It does not claim that using a tool by itself produces a successful decision.