No product that makes a breakthrough and conquers the market appears just out of nowhere. Behind every successful product, there’s a strong product strategy that guides its development and ensures that it will bring value to both the business and customers.
A solid product strategy is essential for any company that wants to grow and thrive in the marketplace. If properly designed and implemented, it can bring in more loyal customers, increase revenue, and finally help build a better overall business. Plus, it eases and simplifies decision-making when it comes to product features, pricing, marketing, and everything else concerning product development and launch.
Without a solid product strategy in place, the company will likely struggle to develop and succeed. Failing to properly define product strategy and align it with the overall vision and goals of the company may cause serious issues for the product team as it tries to keep up with constantly changing requirements and objectives.
Ultimately, a poor product strategy will cause the company to fail in accomplishing its business goals. The business will spend more money and waste more time on a product that doesn’t meet user needs and doesn’t generate customers’ interest. Therefore, no matter if it’s just starting or is already established, every business needs a reliable product strategy if it wants to thrive in today’s market.
Table of Contents
The Definition of Product Strategy
So what is a product strategy? In its essence, the product strategy is a detailed high-level plan used to develop a product. It determines product goals throughout its life cycle, its value proposition, and its target audience. So, it defines both the product vision and establishes the ways in which that vision will be realised.
The product strategy deals with the “big picture,” as it helps the organisation justify the very existence of the product and identifies how the potential users will benefit from it.
Product strategy, therefore, serves as a critical connection that ties the user needs with the organisational goals so the true purpose of the product can be easily communicated. When it’s fine-tuned and well-coordinated, product strategy makes sure that everyone involved is working in sync to reach a common high-level goal – a successful product. It’s a necessary stage in turning the product vision into action and developing the actual product.
It’s important to understand that the product strategy is not created in a vacuum. A strong product strategy is not possible without understanding the market context and the environment the organisation operates in. It’s important to appreciate the challenges the customers face, have familiarity with other solutions and options currently present on the market, and be capable of showing why a particular product may be superior to others.
It’s not rare that a product strategy goes through several iterations before assuming its final form. This is particularly the case in the early process stages. Because of this, the strategy must have a certain flexibility, so it can adapt to changing market conditions and user needs as more information become available through product feedback and testing of product-market fit. However, once determined, the product strategy should serve as a stable and solid touchpoint in alignment with the organisation’s core vision.
What are the Key Elements of Product Strategy?
Different companies may have different product strategies, but each successful strategy features three major components – vision, initiatives, and goals.
Vision
Product vision is commonly a static, concise, and aspirational statement that determines the product’s long-term mission. It articulates what the company is trying to achieve with a particular product. More precisely, product vision
identifies the potential users of the product and what that opportunity may mean for the organisation as a whole. Besides target customers, a good product vision considers how the company will position the product and how it will measure against other similar products in the same category.
Developing and launching a successful product without a strong product vision can be extremely challenging. So, it’s essential that the vision is explained to all involved teams and stakeholders. As product vision will serve as a go-to market strategy, it should provide an understanding of customer’s needs and identify a way for the company to deliver a competitive offer.
It’s important that everyone in the company clearly understands the product vision as it explains the reason behind the development of the product everyone is involved in. Only when everyone shares and understands the same vision the implementation of the product strategy can run smoothly.
Goals
When properly defined, product vision should lead to high-level goals. Product goals then play a role in prioritising certain items on the product roadmap. To be able to work like this, product goals need to feature measurable end results and precisely defined timeframes for achieving those results.
For example, a product goal should state that a certain result such as increased revenue by a set percentage, gaining a particular number of new customers, or improving average customer rating should be accomplished in a precisely set amount of time.
Basically, goals should serve the organisation to highlight what it wants to accomplish with the launch of a certain product. Product goals are often used to explain bolder and broader goals and serve as stepping stones for faster company growth.
Besides defining the wanted results, goals also play an important role in guiding the development team and as benchmarks for measuring success once the product is launched. Plus, the time-based nature of product goals creates a sense of urgency and improves the focus of everyone involved. The set time constraint adds even more importance to the very process of product development.
Initiatives
The crucial work that needs to be done to achieve product goals is specified in product initiatives. They’re more conceptual than product goals and more focused on the “big picture” trends and ideas that a company may influence as a result of a new product release. Each initiative represents a complex and important objective that is then broken down by the development team into actionable tasks.
Product initiatives should be defined in a way that aligns them with the core vision and strategy of the organisation. This way, senior leadership and all the significant stakeholders can understand how the project that’s being developed is going to accomplish the right goals for both the company and users. To better understand the role and importance of product initiatives and their place within a product strategy, here are some of the more common examples:
- Performance improvement
- Customer satisfaction improvement
- UI improvements
- Upselling new services
- Better reporting
- Increasing lifetime customer value
- Expanding into new geographical areas
- Language localisation
Notice how, unlike product goals, product initiatives don’t feature measurable end results and defined timeframes, but set the objectives at a higher level.
What Makes a Good Product Strategy?
A successful product strategy can be developed in a number of different ways. There’s no single, surefire blueprint for product strategy as each company operates in a different environment.
So, the strategy should be tailored to specific market conditions and unique customer and organisational needs. However, most successful product strategies have some characteristics and features in common.
Vision and Strong Sense of Purpose
As mentioned above, a good product strategy needs to communicate the “why” behind product development. Building a project strategy just for the sake of it is destined to result in failure. Products need to have clearly stated reason for their existence.
This can be to solve a particular problem, offer a certain service, or service for the good of end users. When the vision and purpose of project development are clearly defined, it’s easier for everyone who takes part in the project to buy in and find the motivation to participate in the process.
To achieve this, the product strategy must feature a clear sense of purpose, which outlines how and for who will the product make the difference and what position will it assume in the market.
Understanding User Needs and How They Evolve
User needs are the basis of every successful product strategy. Rather than jumping straight to proposing solutions, a proper strategy should begin and end with understanding the requirements of potential customers.
Having a firm grasp of the underlying issues of your customer base is the starting point of creating an effective solution that will, ultimately, lead to an enjoyable user experience. After all, it’s those end users that will make or break the product launch and determine whether it will be successful.
However, it’s important to remember that customer needs are dynamic and that they’re often unsure of what they want. A strong product strategy should be able to bridge the gap between what users may say and what they may really need. Customer needs and requirements will change over time and the product must be capable of adapting and updating to match those changes.
Understanding How to Add Value and the Evolving of Value Chain
Products and customers are mutually co-depending and interconnected. They don’t exist each in their own separate environment but are, rather, a part of the same ever-evolving ecosystem. And, every part of that ecosystem serves a particular purpose and adds value to the whole. So, every product carries some inherent purpose and value that contributes to the greater good.
A properly defined product strategy must take this into account and determine how the product will fit into this larger ecosystem. identify how it will add value, and specify potential friction points. As the whole system changes, the product role may also evolve and adapt.
Predicting the Most Likely Changes
While we can’t predict the future, there are ways to anticipate potential changes. Staying informed and up-to-date with current events can go a long way in helping us predict potential crises and disruptive forces that may influence the opportunities for usage and growth.
Of course, the change doesn’t necessarily have to be negative and it can positively impact the product opportunities in the market. For this reason, it’s important to develop a flexible product strategy that can help anticipate potential issues and prepare for change.
Acting Against Changes
The preparation for potential changes also includes devising an action plan. Preparedness doesn’t mean much unless product strategy features clear pointers on what to do in creation situations when circumstances change.
So, a strong product strategy should provide stakeholders with the means to minimise the impact of potential disruptions or to seize positive opportunities. When set correctly, product strategy helps the organisation make the best out of any situation.
Measuring Product Success
As the product strategy is commonly a concise and efficient high-level plan, it rarely goes too deep into numbers and metrics. That part of more detailed planning is usually saved for product roadmaps, plans, and initiatives. However, the product strategy should still offer precise and measurable benchmarks that can be used to assess strategy implementation.
Without this, it may be impossible to understand how the strategy is progressing and if the project development is on the right track. Tracking the progress by using KPIs (Key Performance Indicators) or Objectives and Key Results (OKR) other specific metrics enables timely curse correction if the product isn’t meeting defined key goals.
What are Different Types of Product Strategies?
As there’s no single product strategy that can fit the goals of different companies, over time several models were developed to suit the requirements of particular organisations.
Below are some of the most commonly used types of product strategies.
Focus Strategy
In cases when the company has a very large customer base, it’s often helpful to create a product strategy that will cater to a single buyer persona or one specific user. This way the project in development can target a particular group of people and offer a solution tailored to their needs.
This type of product strategy has proven to be very successful in attracting new customers and building brand loyalty.
Cost Strategy
For many companies, the focus is on finding a cost-effective way to develop a product strategy, This type of strategy should provide a guideline for creating the best possible product with the least amount of money by assessing available resources and offering solutions for cutting costs during the production process.
However, it’s important to remember that this approach works only for uncertain industries, such as those that deal with low-effort purchases.
Differentiation Strategy
When the goal of the company is to stand out among its competitors, the differentiation product strategy offers a way to do it. A product can stand out in a variety of ways, including the use of rare and luxury materials or if it develops ground-breaking features.
Quality Strategy
Quality of the product is often the most effective way to be successful in the market. This type of strategy puts focus on the quality of the product which is the deciding factor for many potential customers. They can often go out of their way to acquire a product that offers more quality.