Do you know that over 30,000 new products are introduced each year, and around 75- 95% of product launches fail? Despite this, a few giants like Netflix and Google are leading in their respective industries. So, what’s the secret sauce behind their success? They all follow one common mantra: implement a robust product strategy that emphasizes the product design process and is compatible with a clear product vision.
Let us take you through the details of product strategy: what it is, why it’s imperative for businesses, and what are its different components with various examples.
What is Product Strategy?
A product strategy is a high-level plan that encompasses a strong vision, initiatives, and goals to support the development and launch of products. Also known as a product development strategy, this essential foundation connects customers’ needs with companies’ objectives to derive the real purpose of the product.
What are the Benefits of a Product Strategy?
Designing a quality product strategy before diving into the process of product development is pivotal because it supports you with the following benefits:
1. Gives Clarity
A well-researched product strategy helps product and development teams with a clear picture of the product they produce. It guides them to deliver their best to attain the set targets. Moreover, a well-thought product strategy allows your marketing and sales teams to better articulate the Unique Selling Points (USPs) and benefits of products to add more leads and customers to their pipeline.
2. Focuses on Product Roadmap
A product roadmap is a master plan for developing, launching, and expanding products. It helps your company to efficiently manage the assigned task and meet the given deadlines. Product strategy lays the foundation for your company’s product roadmap. It sets high-level deadlines and phases to develop and modify products based on customer feedback and demands.
3. Make Informed Decisions
Companies can’t introduce a successful product by following an obsolete strategy. Things change, and so do customers’ needs. Companies need to adjust their plans and priorities according to those changes. An effective product strategy can be the right solution. It allows your team to make intelligent decisions about adjusting plans, especially when there is a surge in customers’ demands for a particular product.
ALSO READ: How to Become a Product Manager in 7 Steps
Key Components of Product Strategy
According to Roman Pilcher, product management expert, explains a clearly defined product strategy should consist of the following three components:
- The product’s USP
- The company’s prime objective for the product
- The problems that the specific product will address and the market for the product
However, a powerful product strategy should have these three prime components:
Product vision defines the long-term mission of your company’s product. It should be concise, aspirational statements that convey the prime objective that the company desires to achieve with the launch of that specific product. That’s why a product vision is always static.
An impactful product strategy can’t function without goals. They empower your company and its product and development team to prioritize tasks in the product roadmap. Hence, your company sets goals that should be specific, achievable, deadline-oriented, relevant, and measurable. So, it benefits both products and the company.
Initiatives are the strategic approaches that you derive from product goals. These are more conceptual and significant that you implement to complete small tasks. If a company can design an efficacious product strategy and meet business goals, it’s because of initiatives.
Difference Between Product Strategy and Product Vision.
Successful products don’t happen accidentally. They require innovative ideas and full-proof planning. Product strategy and product vision are equally important in turning those ideas into reality. However, both concepts are significantly different.poles apart. Let’s understand how!
|Product Vision||Product Strategy|
|Product vision is the initial thought process about the product that goes to the market||Product strategy is the blueprint or foundation of product development|
|It’s a vision to see the future growth of a new or existing product||It’s an approach that the product team takes to analyze the future of the state of products|
|Product vision doesn’t include strategy||Product strategy starts with the product vision|
|The product vision is aspirational, ambitious, brief, and direct||Product strategy is a well-thought strategy to understand who may use the product and how it benefits customers and companies|
What are the Types of Product Strategies?
There are five types of strategies related to products: cost, differentiation, focus, quality, and service. Let’s understand these in-depth!
1. Cost strategy
The cost strategy focuses on developing cost-effective products by using minimal resources. It is applicable for low-effort buying, such as household cleaning goods. Usually, consumers don’t think much while buying household cleaning items because they all serve the same purpose. That’s why we look for low-priced products. Hence, companies should align their cost strategies to produce low-cost products and beat competitors’ prices in the market.
2. Differentiation Strategy
This strategy centralizes toward one fact: how your company’s product stands out in the market. There are various factors that decide the USP of a product. It may be the use of quality material for luxury or the innovative features that separate the product from others in the market. With the differentiation strategy, you can define your product and make it preferable for customers.
3. Focus Strategy
Focus strategy helps companies build products that cater to particular customers or buyer persona. For example, if your company has a large customer base, focus strategies enable you to target a specific group of customers and create personalized products for them. It develops brand loyalty while adding new customers to the pipeline.
4. Quality Strategy
With 68% of consumers willing to pay more for products and services from a company that offers quality, it’s evident that quality matters more than price. Quality strategies allow you to focus on producing quality products and target audiences, who are looking for the highest quality product in the market. Apple products are a great example for this type of product strategy. Apple products are highly priced yet they hold a significant market share purely because of quality.
5. Service Strategy
According to the Salesforce report, 89% of consumers like to make another purchase after receiving a positive customer service experience. Service strategy plays a pivotal role in this scenario. It helps companies to take a customer-centric approach that resolves customers’ problems and provides after-sales service and satisfaction.
Steps to Create an Efficient Product Strategy
By now, you probably have much understanding of what product strategy is, its prime components, different types, and why it’s imperative in developing a profitable product. It’s time to move ahead and learn the steps to design a robust product strategy.
Step 1. Know your potential customers: who are they, what do they want, and what are their problems?
Step 2. After unlocking customers’ attributes and creating buyers’ personas, ensure you have a well-defined product vision.
Step 3. Find the USP for your product to determine how your product stands out in the market.
Step 4. Bring the product team and C-level executive stakeholders together to understand your company’s requirements and concerns related to product development.
Step 5. Once your company launches its product in the market, the next step is to follow up with customers for their valuable feedback. It helps your company to modify the product and meet customers’ expectations.
Examples of Effective Product Strategy Models
Some of the prominent examples related to product strategy models are:
- Product-led growth model: During the pandemic, companies like Zoom and Slack have used a product-led growth model (PLG) to create a user-friendly app for many new business users.
- Product segmentation: This model is applicable to construct different versions of one product to meet unique customers’ needs.
- The lean product differentiator: Remember how Yahoo ruled the market for online research! But when its webpage became cluttered with multiple links and ads, users found it inconvenient and disorganized. Then Google came, and users started appreciating it for its user-friendly and clean design. Eventually, Google acquired the market. This perfect example lets you understand how the lean product differentiator model solves users’ real problems.
Now as you have understood how product strategy is mission-critical for product development, making a career as a product manager is quite tempting. Start your journey today by learning how to design successful product plans with Emeritus’ courses on product strategy and innovation.
By Swet Kamal
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