Product development can make a significant contribution to business growth if such initiatives are correctly focused on the needs of various market segments that create economic value and competitive advantages. The analytic framework described in this paper for developing market-driven product development strategies yields tremendous payoffs by enabling achievement of superior alignment between markets and product development management. The framework developed in this paper shows how each of the dimensions of major product development strategy can be addressed in accordance with the factors that are critical to success in the corresponding business environment. Several case studies are provided showing the linkage between characteristics of the market environment and decisions on product development priorities.