This article contains:
- What Is Product Strategy?
- What Are the Indicators of an Effective Product Strategy?
- What Are the Types of Product Strategies?
- What Are the Elements of a Good Product Strategy?
- Why Is Product Strategy Important?
- What Are the Product Strategy Examples?
- Common Fundamental Product Strategies When It Comes To Selling a Product in the Global Marketplace.
What Is Product Strategy?
The product strategy is a detailed plan that lays out your company’s goals and how it plans to achieve them. Such a 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. It helps ensure everything gets done correctly on time.
Some of the critical questions that the product strategy answers are:
- Which user persona does this product serve?
- 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 its impact on the customer and the company.
Once the product strategy is clear, product definition can be made out of it to know what you need to develop 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?
We cannot do much about bad product strategies because they fail to work. However, the good ones have something in common, and those factors are listed as follows:
There Is a Strong Sense of Purpose
If you are building a product without a product strategy and instead just for the sake of it, it’s a wasted effort.
Like humans need a sense of purpose to survive, products should also have a reason to live.
That reason can be to solve a problem or serve the good.
This is the first step where the purpose of the product is reflected.
Understand Customer Needs and How They Change
You make all the products for customers. Ultimately, the end-users make the company and the product successful.
You should base the product strategy on making the customers happy with their purchases by satisfying their needs.
Often, customers don’t know what they need. In such cases, product strategy should facilitate a bridge between what customers say and what they need.
Remember that your customer’s needs are dynamic. In that case, it becomes crucial to keep updating your product strategy.
Understand How You Add Value
Products and users are interdependent on each other.
They exist in a budding ecosystem, not in a vacuum.
Like every organism serves a purpose and adds value to the ecosystem cycle, every product has its value and purpose that can contribute to humanity at large.
Of course, some conflict exists. However, it is vital to keep updating the product’s role when the ecosystem changes.
Being Prepared for Change
Since we cannot predict the future, staying informed and vigilant about relevant events is essential.
An organization can anticipate crises and should be prepared for change.
The change isn’t always negative. It could also serve as an opportunity to expand your business.
We highly recommend agile business models to be flexible rather than rigid towards change.
Action for Change
As mentioned in the previous point, being prepared for change is essential. However, that is not sufficient if you don’t have an action plan.
For instance, if there is an earthquake and you 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 to make the best 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.
Suppose you implement a product strategy but never measure what kind of impact it brings to the company. In such a case, you may never understand if you are doing is the right thing.
That is why measuring every product strategy you implement is crucial.
It would be best 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
Among the different product strategies, the cost product strategy is effective when your organization aims to create the best product at a less than average price.
It analyzes at which stages your company can save money and resources. Such analysis helps use them 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 costs 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 have a special feature.
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.
Usually, companies who employ this strategy need to break down their customer base into several personas. 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 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 you implement this product strategy, the cost of production turns out to be higher, resulting in the product’s price. However, this doesn’t stop some customers from 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 their interaction with the company.
Many organizations use the latter to their advantage. Suppose your company sells mobile phones with a one-year guarantee and customer service after the purchase. In that case, potential customers are likely willing to buy from you compared to your competitors.
Establishing solid customer-care support should be a priority. Such a support system can respond to queries and complaints, serve as a convenient after-sales service.
It goes a long way in gaining trust 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 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 mission statement follows the vision of your company.
A mission is the action strategy for bringing the vision into a reality. Your mission should always be tactical and highly detailed.
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 the team can 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.
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 competitively exploiting them 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. If you have a tactical plan around this, it becomes a strategy. Being number one is the content of vision or mission.
Initiatives are derived from product goals themselves. However, they are more conceptual.
Initiatives are a significant chunk of complex objectives that you can break down for your team to achieve in small actionable tasks.
Examples of initiatives are improving customer satisfaction, upselling new services, and entering the new industrial territory.
Why Is Product Strategy Important?
One of the importance of product strategy is that it clarifies the team over what they are supposed to do. That will result in increased productivity.
Direction and communication are more precise with a well-drafted product strategy put in front of them.
Your development team will understand what kind of impact the parts they develop will bring out.
Their contribution towards the larger strategic goal will be more evident to them.
It is possible that the team loses track due to the vastness of the project and gets caught up in intricate details. At such times, the importance of product strategy becomes clear.
Your sales and marketing teams will be able to communicate the benefits of your product and its unique selling proposition. However, it becomes problematic 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. You can convert it into a detailed action plan.
Skipping this step of drafting the strategy is common mistake companies make.
What happens without a product strategy is the failure to guide decisions. The team may prioritize the wrong items more than the right ones because strategy is absent.
Such an approach causes 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 you should prioritize. That helps make 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. Over time, the product roadmap goes through constant tailoring, though not a complete change.
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. You can make more tactful strategic decisions to adjust your plans if your resources are lost, or the estimated timetables need to be changed.
What Are the Product Strategy Examples?
Let’s have a look at the product strategy example of Nike.
We will cover how Nike marketed its vision and fulfilled its product goals. They successfully carried this out with initiatives.
Nike’s focus has always been on innovating products like never before. They have done this since they set their foot in the market in 1971. To adapt to the changing times, Nike focuses on crafting fashionable shoes that are technology-driven.
They understood the significance of product strategy and did precisely that with their new product- the Nike air zoom mercurial. They tested the machine on the football players too.
The team at Nike did market research and concluded that they could use the airbag tech to build their next shoe.
Once they set their vision in place, the product teams started building their business goal. The one thing that distinguished this shoe from the others was that footballers could benefit from it since it was based on the dynamic movement.
Football players could gain an extra bounce of energy lift with each step. With research, teams understood where they must place the zoom airbag.
Finally, Nike created a plan to convince the existing customers to buy this new product.
The team planned initiatives to give the customers a peek into how the product worked and its benefits.
Common Fundamental Product Strategies When It Comes To Selling a Product in the Global Marketplace.
Before embarking on the journey to market the product, a company must decide on the two fundamental product strategies to sell the products.
The two fundamental product strategies that companies can choose from are:
Standardizing the Product
When a company decides to standardize its products, it keeps the product the same everywhere globally. The product will not change its core to fit into the local markets.
Customizing the Product
This process means customizing the product to fit local needs, lifestyles, and habits.
The customization of the product will not be drastic, and it varies from one company to another.
A company can decide to customize a product by understanding that particular country’s culture.
You can customize only a few things of a product, such as the name, size, and functionality.
It’s hard to win anything without a product strategy, including product development. Those who use product strategy are those who end up achieving their goals.