Product Strategy: Definition, Types, Importance, & Tips to Develop it.

When we talk about product strategy, it indicates a roadmap required to develop your product or feature. It encompasses all of the tasks that your team requires to achieve your business goals. Your team will utilize this document as its model and will refer to it whenever they have questions. 70% of companies refer to the product strategy whenever they need to make major decisions. So, it’s necessary to build a detailed and thorough strategy to ensure every task is accomplished correctly and on time.

The product strategy tells how the product will help the business. It explains the problem that the product will solve and the impact that it will leave on customers and the company. Once this approach is clear, it can lead to a product definition that defines what you will build and when. The product strategy then serves as a baseline that will help you measure success before, during, and after production.

Three Major Elements of Product Strategy

A product strategy comprises three major elements. Let’s review each one of them in the sections below.

1. Market Vision

The market vision defines who will be utilizing your product and what that opportunity intends for the business. It highlights who’s your target customers, how you’ll position your product, and how it’ll stand against other competitors in the market. Your market vision should also incorporate a go-to-market plan that describes your customers’ needs and how you’ll deliver a competitive offer.

2. Product Goals

You can’t design a product strategy without key objectives. These are particular goals or metrics that you’ll obtain as a result of making your product. They guide your development team and assist you in measuring success once the product is released.

While goal-setting, it’s necessary to make your objectives time-based, so there’s urgency for when you’ll achieve them. This combines more value to your product’s development because you’ve added a time constraint to its success.

3. Product Initiatives

Product initiatives are quite similar to product goals, but they’re more conceptual. These are big-picture thoughts or trends that you’ll influence as an outcome of your new product.

Why Product Strategy is Important?

In an unpredictable environment, it’s difficult to know whether what you plan to do will pay off. But you still require to make decisions and produce results in line with your business goals.

It’s like sailing a ship.

You can’t go from A to B without a voyage plan and constantly checking where you are. And you’ll adjust along the way. You’ll have to bypass other ships (you’d be surprised how many you find at full sea) and adjust for currents and wind. You may even adapt your whole voyage plan to drive clear of a hurricane.

Your product strategy works as a voyage plan for your product, whether you’re selling tech devices, groceries, or enabling customers to buy building products online.

a) Staying Focused

A product strategy is essential because it supports you in focusing on your aim. It helps you to stay on course and resist the lure of that nice tropical island along the way.

Many people believe that the Focus is about saying “yes” to something and neglecting the rest. But it isn’t. Focus is all about saying “no” to everything that sounds great but doesn’t suit your overall idea and planning.

Saying “no” is difficult enough as it is—everyone with an approach has reasons why you should go for it.

Product strategy will make it far more comfortable to say “no” and stay on course because a product strategy doesn’t only inform you what you will do. It also shows you what you won’t do. Explicitly, or by omission.

b) Staying Aligned and Agile

Having and communicating a precise product strategy serves as the voyage plan, the initial course.

Understanding where you need to go and what you’re trying for is required for making quick, confident decisions. This enables you to respond and adjust more quickly to changes in your business environment without deviating too far off course.

For instance, suppose a product data analyst who is in a dilemma between spending more time to improve the task user experience of your product or creating a new way to measure some metrics. If part of your strategy is to own the easiest-to-use product, the dilemma is off the table: the product data analyst perceives to focus on the user experience.

Transparency in what you’re aiming for means you no longer have to spell out what employees require to do.

What’s more, a product strategy acts not just in your product and development teams. But it is also in marketing, support, operations, and well, actually, all departments in your organization.

So you no longer have to be concerned about decision-making processes throughout your organization. Your teams can figure it out for themselves as they have knowledge and expertise in their areas; they’ll uncover better solutions to support you in those aims than someone outside their department ever could.

c) Charting the Way Forward

A product strategy is a high-level, comprehensive plan. It doesn’t yet reveal to you exactly what to do.

But it’s crucial in creating those more detailed plans. Your product strategy guides the process of building a product road map, which includes deciding what has to be done first and what can’t wait until later. It is like guiding the developer in deciding how much time he needs to spend

And it serves the same purpose for other departments that work on or for the prod.

Types of Product Strategies

a) Cost Strategy

A cost strategy concentrates on producing the best product for the lowest price. It evaluates the resources being used and defines where money can be saved during production.

This is a helpful strategy for low-effort purchases like household cleaning items. These are things that we don’t think about too much when we buy because all products in this space are the same, and we don’t have any loyalty towards a particular brand. So for these industries, if you can build a product that undercuts your competitors’ price point, it’ll be a sure favorite for your customer base.

b) Differentiation Strategy

Price is not the end-all-be-all when it comes to distinguishing your product. There are lots of other ways to make it stand out in your industry. Maybe it’s a luxury product that utilizes the best materials. Or, maybe it has ground-breaking features that revolutionize the space altogether. Whichever it may be, this strategy focuses on giving your product a personality that makes it memorable and delightful to your customers.

c) Focus Strategy

If your company has a huge customer base, maybe you want to build a product that appeals to one particular buyer persona. This is an effective strategy because it targets a select group of people and creates a personalized solution. It is a great way to increase brand loyalty while acquiring new customers.

d) Quality Strategy

Sometimes what can place your item apart from competitors could be the make and brand behind it. The quality approach focuses on the customers who are looking for the highest quality product in the market. The prices are usually high to compensate for the supplies required in production, but that does not prevent some buyers. If it is acknowledged as a luxury, several customers will go out of their way to compensate for it if they believe it’s worth the investment.

e) Service Strategy

Many customers may be looking for a specific product but will base their buying decision on the customer service provided by the company selling it. Companies that use excellent service offerings to entice customers to understand just how worthwhile that reputation can be. By providing quick response and better after-sales service, brand loyalty in any market can be built to last.

Tips for Developing a Product Strategy

1. Stand apart by offering a solution, not just a product.

Think about the world’s most remarkable and iconic products. Respected brands such as Coca-Cola, Apple, and IKEA are likely among the names that readily come to mind.

Why are these products successful? Particularly with so many similar items on the market. They stand apart because their product strategy is to meet basic human needs, like:

• The need for belonging or to identify with a group
• The need to be understood or express ourselves
• The need for accomplishment and independence

Coca-Cola was never just a beverage company. Even its proprietary bottle reflects its status as a unique brand with a global mindset. Apple offers more than smartphones and laptops—it depicts a lifestyle and creative ethos. As the first $1 trillion US public company, no one has changed the way products look, feel, or work more than Apple.

With IKEA, people aren’t just purchasing furniture with a minimalistic design aesthetic. They are achieving a sense of achievement from working with their hands or exerting frugality.

Such distinctions allow customers the kind of value that competitors can’t easily match. And the solutions your offer are not restricted to product features or traits. Your product strategy might work upon the convenience derived from your company’s ability to secure prime retail-shelf space or its use of customer-data mining to help build new products.

Solving problems generates value. And the value will always help your product stand apart.

Within your product strategy, ensure that you can identify your customers’ problems and your product’s solution. If this proves difficult, take time to reassess.

2. Instantly adapt to industry changes, so you don’t become a “one-hit-wonder.”

People usually gravitate toward products (and companies) that provide value that others can’t match. This value isn’t just tied to cost. It’s how a product continues to differentiate itself from its competitors or how a business tries to stay relevant to its customers.

Customer loyalties change. So, if you already have a strong product, resist the urge to become satisfied. Situational awareness should be part of your product strategy.

And if change or disruption within your industry leads to an opportunity, capitalize on it.

Industries quickly change—so do customer loyalties. As you can see from these product strategy examples, you need to be ready to change or adjust your product offering accordingly. And always take advantage of opportunities for quick wins.

3. Use self-disruption to inspire sustainable growth and innovation.

Nothing lasts forever. Market demand and sustained growth are no different.

Eventually, people’s interests change. The once-large audience for your product begins to diminish and is slowly replaced by a new generation of consumers—one with different tastes and perspectives. Inevitably, the demand for your product completely stagnates.

In this situation, it seems you’ve become a victim of your product’s one-time success.

As a growth-strategy consultant and acclaimed author Clay Christensen describes in his best-selling book, The Innovator’s Dilemma, if you work in technology, you know the life cycle of products is on endless repeat. Basically, it looks something like this:

• Your new product is a success and builds an audience.
• A newer product emerges and ups the innovation ante.
• These usurpers also grow, only to be displaced as well.

Christensen says that sustainable growth comes from aggressively seeking to kill your cash cow before someone else does. Instead of trying to protect what you already have, your efforts to innovate may need to destroy it. Once you are willing to cannibalize your existing audience, you can have a product strategy that can survive in the long term.

Steve Jobs once said, “If you don’t cannibalize yourself, someone else will.”

Sure, the iPhone cannibalized much of Apple’s iPod business. And the iPad cannibalized the sale of Macs. Yet, the product strategy championed by Jobs prevailed because he recognized the larger audience he wanted to capture—the massive Windows market.

Suppose Jobs had limited his ability to innovate new products out of fear of losing market share for its flagship iPod and Macbooks. Would Apple be the successful company it is today?

As the world’s largest book retailer, Amazon made a similar decision when it released the Kindle—knowing that it would take away from the audience that purchased physical books. But they also knew that if they didn’t offer a digital product, someone else would.

Be fearless in your product strategy. Your innovative new product might disrupt existing sales. But then, you are the ones who are keeping innovation central to your company.

Putting it all together—your product strategy roadmap in action

Taking a product from idea to reality doesn’t happen overnight. At each stage of product development, you must be willing to innovate, adapt, and make changes. By developing a product strategy, you will be better equipped to achieve your company’s objectives.