Product strategy is an essential part of building a product from start to finish.
This article examines what product strategy is, why it’s important, and how you can use it for your business.
What Is Product Strategy?
The product strategy is a detailed plan that lays out the goals your organization wishes to accomplish and how it plans to achieve them. This plan acts as a map to develop your product and its features.
Since it is detailed, businesses use it as a reference point to make crucial decisions and make sure everything gets done correctly on time.
Some of the key questions that the product strategy answers are:
How will they benefit?
What are the company’s objectives throughout the product life cycle?
The product strategy also outlines how the product will help the business grow. It explains the user problem that the product will solve and maps the impact that it will make on the customer as well as the company.
Once the product strategy is clear, product definition can be made out of this to know what needs to be developed and when.
The product strategy acts as a basis to understand the product’s success before, during, and after its development.
What Are the Indicators of an Effective Product Strategy?
There’s not much we can do about bad product strategies because they fail to work. However, the good ones have something in common and those factors are listed as follows:
1. There is a strong sense of purpose.
If you are building a product without a product strategy and rather just for the sake of it, it’s a wasted effort.
Just like humans need a sense of purpose to survive, products should also have a reason to live. That reason can be to serve the good.
This is the first step where the purpose of the product is reflected on.
2. Understand customer needs and how they change.
All products are made for customers. Ultimately, it’s the end-users that make the company and the product successful.
Product strategy should be based on making the customers happy with their purchases by satisfying their needs.
Often, customers don’t know exactly what they need. In such cases, product strategy should facilitate a bridge between what customers say and what they actually need.
Remember that your customer’s needs are dynamic in nature and it is important to keep updating your product strategy.
3. Understand how you add value.
Products and users are interdependent on each other. They exist in a budding ecosystem, not in a vacuum.
Just like every organism serves a purpose and adds value to the ecosystem cycle, every product has its own value and purpose.
Of course, some conflict exists. It is important to keep updating the product’s role as and when the ecosystem changes.
4. Being prepared for change.
Though we cannot predict the future, it is important to stay informed and be vigilant about relevant events. Crises or disrupting troubles can be anticipated.
The change isn’t always negative. It could also be an opportunity to expand and grow your business. Agile business models are recommended to be flexible rather than rigid towards change.
5. Action for change.
As mentioned in the previous point, being prepared for change is important. However, that doesn’t suffice if you don’t have an action plan.
For instance, if there is an earthquake but never told your staff to use stairs instead of the elevator, your preparedness doesn’t suffice.
When a crisis hits, your team should be ready to implement a strategy that can make the best use out of the situation.
Delivery companies like Amazon introduced safety measures such as no-contact delivery. They gained brand loyalty, which eventually benefited their business.
6. Measure success.
If you implement a product strategy but never measure what kind of impact it brings to the company, you may never understand if what you are doing is the right thing.
This is why it is important to measure every product strategy you implement.
It is important to keep track of the product strategy’s progress. Key performance indicators (KPI) highlight progress and warn about potential dangers.
What Are the Types of Product Strategies?
The Cost Product Strategy
When your organization aims to create the best product at a less than average price, your company is implementing the cost product strategy.
It analyzes at which stages money can be saved and resources can be used to their full potential.
Low-effort product companies such as toys and house cleaning items find the price product strategy beneficial. They’re markets where customers have very little brand loyalty towards any specific company. The product that is priced the cheapest immediately becomes the customer’s favorite.
The Differentiation Product Strategy
For instance, it could be a luxury product made with the best raw materials available. Or it could be a natural beauty product with absolutely no chemicals.
Your product itself can be unique or it could have a feature that is unique.
The distinction product strategy highlights the uniqueness of your product to enhance the user experience and make it memorable for them.
The Focus Product Strategy
This strategy is applicable when your organization has a large customer base that needs to be divided down even further. You want to know which buyer persona is the most relevant to your product.
The focus product strategy helps personalize solutions for particular buyer personas. This creates brand loyalty during market penetration and acquires new customers.
The Quality Product Strategy
This product strategy acquires customers who are looking to shop for high-quality products in the market.
The quality product strategy makes your product stand out from your competitors by heavily investing in the production process.
When this product strategy is implemented, the cost of production turns out to be higher which results in the price of the product. However, this doesn’t stop some customers who are looking for such a high-quality product.
If the product counts as a luxury item, many customers will be willing to pay you the price if they love the product.
The Service Product Strategy
Customers don’t just buy the product for its experience but also for their interaction with the company.
Many organizations use the latter to their advantage. If your company is selling mobile phones with a one-year guarantee and customer service after purchasing, it is likely that potential customers are willing to buy from you compared to your competitors.
Establishing strong customer-care support that promptly responds to queries and complaints, along with a convenient after-sales service, goes a long way in gaining the trust of your customers and building brand loyalty.
What Are the Elements of a Good Product Strategy?
This element has two subsections – product vision and market vision.
Product vision refers to the objective of your product that it wishes to serve over the long-term. SpaceX’s vision is to facilitate research in space while making other planets habitable. It is expected to be concise and static by nature.
On the other hand, market vision talks about your target customers who will be using your product and how that will benefit the business. Market vision is the gist of the market plan to make a competitive offer.
The vision of your company is followed by the mission statement. A mission is the action strategy for bringing the vision into reality. It is tactical and highly-detailed by nature.
Do not confuse the mission with business plans because the mission provides insights into how the vision unfolds in reality. Mission statements help create a strategy towards the organization’s vision.
The mission also explains what purpose the product serves and what can the team do to bring it about. The mission statement is written by conducting thorough user research and developing the persona.
Product strategy is incomplete without goals and objectives. These goals are specific to achieving points in the development process.
Goals in the product strategy prioritize tasks in product roadmaps. SMART goals are the best approach to go about with.
When setting goals, they need to be relevant, achievable, and time-bound so that there is a sense of urgency to achieve them.
Once the product vision and mission are defined, the next step is to plot the strategy you would like to implement. This step is an art because it involves finding leverages and exploiting them in a competitive manner to accomplish your vision and mission.
The product strategy needs to be very tactical with a sense of where the tasks are implementable and achievable.
A common mistake is when companies aim to be on top. However, remember that your strategy isn’t to become number one. If you have a tactical plan around this, then it becomes a strategy. Nevertheless, being number one is the content of vision or mission.
Initiatives are derived from product goals itself. However, they are more conceptual in nature.
Initiatives are a larger chunk of complex objectives that are broken down by your team to achieve them in small actionable tasks.
Examples of initiatives are improving customer satisfaction, upselling new services, and entering a new industrial territory.
Why Is Product Strategy Important?
Every team’s productivity increases when they have clarity over what they are supposed to do. Direction and communication are clearer with a well-drafted product strategy put in front of them.
Your development team will understand what kind of impact the parts that they develop are going to bring out. What kind of contribution they are making towards the larger strategic goal will be clearer to them.
It is possible that the team loses track due to the vastness of the project and gets caught up in complex details. At such times, product strategy clarifies and provides a clearer vision.
Your sales and marketing teams will be able to communicate the benefits of your product and its unique selling proposition. However, it becomes difficult when the strategy is not defined because it generates frustration and the loss of sales.
Moreover, the customer support team will be able to understand the product better. This results in providing better customer support which creates better customer satisfaction.
Enhancing Strategic Decision Making
The product strategy lays the foundation for the product roadmap because it can be translated into a detailed action plan. Skipping this step of drafting the strategy is a common mistake companies make.
What happens without a product strategy is the failure to guide decisions. It is possible that the team prioritizes the wrong items more than the right ones because there is an absence of strategy. This results in the misuse of limited time and resources at their disposal.
In contrast, when your product strategy comes before your product roadmap, you and your team have a clear picture of how to go about, what you need to accomplish, what tasks need to be prioritized. This makes your product roadmap more informed.
Prioritizing the Roadmap
Often, organizations don’t follow the exact roadmap that they drafted in the beginning to launch the product in the market. The product roadmap goes through constant tailoring, though not a complete change, over the course of time.
Thus, product managers should be prepared for these adjustments and modify their plans and priorities according to those changes.
In the presence of a clear product strategy, you and your team always have a reference point to fall back on. More tactful strategic decisions can be made with respect to adjusting your plans in case your resources are lost or the estimated timetables need to be changed.
It’s hard to win anything without a strategy and that includes product development. Those who use product strategy are those who end up achieving their goals.