Product Strategy: Definition, Importance and How to create one?

What is Product Strategy?

Product strategy is a top-level organizational strategy that portrays what an organization needs to accomplish with its product and the way in which it intends to accomplish it. It refers to a product roadmap or a guide for making a product. It records every one of the undertakings that the product team needs to perform to create a product as per the needs of the target customers.

A product strategy describes how the product can help the company or brand optimize its presence and conversions in the target market. Product strategy makes sense of the issue that the product will address as well as the impact it will have on target audiences. When brands have a product strategy, they will have the option to give a reasonable product definition of what they expect to create and when. It fills in as a benchmark against which brands can quantify their success all through the product development process.

Product strategy is the most common way of characterizing what you want to accomplish and how you intend to get there with a product. A product strategy lays the “why” behind the Product, plus it also precedes the “what” “when” and “how” of a product development process. It refers to the strategic planning involved in developing a product from its ideation stage to launching it in the target market.

To come up with a solid product strategy, brands should profoundly comprehend their target market. This implies understanding the difficulties your target audiences face, being aware of alternative arrangements in the market, and defining why your product is better than others. Your product strategy should connect with each piece of work the product development team performs. group finishes. It synchronizes the team around a common vision and keeps everybody zeroed in on the work that makes the biggest difference.

Why is Product Strategy Important?

1. Offers clarity for your company

It lets the product development team be in a superior situation to offer their best performance by providing them clarity about development goals. Product developers will know how the pieces of the product they’re working on add to the bigger companywide objectives.

Product Strategy clarifies all the doubts for them. Your advertising and marketing teams will actually have their go-to-market strategy, as product strategy will explain the USP and key upsides of your product. The pricing team will also be aware of the right cost strategy for the product.

2. Prioritizes your product roadmap

Product strategy helps the management and development team to make a result-driven action plan as well as construct a convincing product roadmap.

Without having a product strategy, the product development team might focus on unnecessary things and consumer time, and other key resources.

On the other hand, when product teams start with a strategy, they will have a more clear roadmap of what they can achieve with their products and how they can do that.

3. Improves team’s tactical decisions

We all know that no product teams offer a product to the target market following the specific arrangement drafted in the product roadmap. Many plans and tactics change en route, and that is why product teams should be ready to change their plans to manage those changes.

A clear product strategy helps them in settling on more intelligent choices and adapting strategic decisions as per the demand of the hour particularly in the event that they lose resources or need to change their assessed deadlines.

Indicators of an Effective Product Strategy

Some of the indicators of successful product strategies are-

• Having a Strong Sense of Purpose
• Understanding Customer Needs and How They Change
• Knowing How You Add Value
• Being Prepared for Change
• Action for Change
• Measuring Success

Components of a Product Strategy

1. Foundation

It talks about what the brand wants to achieve with a product. Different elements included in this are-

Product Vision

It refers to core essence of the product of the brand. It addresses what makes a product extraordinary and what its USPs are. Vision ought to be something that everybody in the organization profoundly comprehends.

It talks about the “why” behind the product, who precisely the target audiences are, and what issues the product will resolve. Delving into these inquiries will enable you to get the genuine worth of your product. This way you can create a vision statement that is both precise, authentic, and optimistic.

Business models

These are further utilized to additionally comprehend the issues that your product will address. A business model will talk about the solutions you will construct, and the potential growth opportunities that exist inside your market.

These are valuable when you introduce a new product or need to advance your product strategies with the change in the market. Many business models like Porter’s 5 forces, lean curves, the 10Ps marketing matrix, etc are popular. among others.

Positioning

It is an essential activity that is generally done before introducing a product to the target market. It characterizes where a product fits in the target market and the USPs it offers. Effective positioning will uphold the marketing and advertising strategies as well as brand storytelling and other content marketing endeavors.

Brands can utilize a product positioning template for capturing their product vision, mission, customer, tagline, market, etc. It will cover every one of the subtleties you really want to position your product for goal accomplishment.

2. Market

It refers to the customers and market landscape for a product. It will let product managers and development teams understand their customers and their specific needs to make a personalized product. Different elements of the market section are-

Personas

These are understood as fictitious characters that resemble the customers of a brand. It is a useful method for creating empathy for your target audiences. Brands use personas to document preferences, likes, dislikes, challenges, professional aspirations, etc.

Competitive analysis

It includes gathering information on available alternate solutions or competitors in the market.

The objective is to comprehend where the product can succeed and where it can miss the mark compared with other solutions in the market. It gives bits of knowledge about where you fit inside the more extensive market.

3. Imperatives

It will talk about the goal that your product will accomplish to help you realize your vision. Key elements of this element are-

Goals

Goals refer to the quantifiable, time-bound targets that accompany well-characterized success metrics. The goals of the product strategies are benchmarks that the businesses need to accomplish in the following year, 18 months, or quarter.

You can plot your goals on a diagram in light of the efforts required from your product development team and the effect on your target audiences.

Initiatives

These refer to the top-level endeavors that should be carried out to accomplish the goals.

All such initiatives connect your objectives to everything anticipated on the product roadmap, plus they more often than not include cross-functional work.

Analyzing the timing and progress of these initiatives will assist with keeping product development teams working synchronously and being on the same page.

Types of Product Strategies

Cost Product Strategy

The cost product strategy is compelling when a brand intends to make the best product at a price that is less than the average price.

This strategy investigates the stages at which your brand can save money and resources.

Some of the low-effort companies, for example, toys and housekeeping products this strategy is advantageous. Such markets have customers who have customers that have very little loyalty towards any specific brand.

Differentiation Product Strategy

This strategy is indispensable to have an extraordinary selling point for introducing your product into the target market. There are multiple ways that a product can have an optimized presence in the market.

A product itself can be extraordinary or have exceptional feature sets. It features the uniqueness of your product to improve the user experience and make it significant for the target audiences.

Focus Product Strategy

It is appropriate when a brand has an enormous customer base. For the most part, brands that utilize this strategy need to divide their customer base into different personas.

Brands need to know which persona is the most applicable to their product.

This strategy customizes answers for specific personas. It helps in optimizing brand loyalty during penetration of the market and processes of acquiring new customers.

Quality Product Strategy

This strategy is useful in acquiring customers who are seeking top-notch products. It makes the product of a brand stand apart from its competitors by vigorously putting resources into the product development process.

When implementation of this strategy takes place, the production cost ends up being higher but this doesn’t prevent a few clients from searching for such an excellent product. In case the product comes into the category of a luxury item, many customers would even want to pay the price assuming they love the product.

Service Product Strategy

Buyers of a product don’t simply purchase the product for its features or experiences yet additionally for their interaction with the brand. Many businesses utilize the section option of offering personalized interaction for their potential benefit.

Offering customized customer-support services to handle complaints, issues, or doubts of the customers is one of the crucial product strategies that help many brands in having loyal customer bases who opt for the products of a particular brand just because of their exceptional service product strategy.

7 Steps to Develop a product strategy – How to develop a product strategy?

A lot of product analysis is needed to develop a strategy. Besides product, you need to analyze your competitors, the market and various segments so that you can come up with the right product strategy. Here are the steps of Product Strategy.

1) Marketing mix

The product is the most important element of the marketing mix. If you have decided on a market segment to target, then product design plays a crucial role. This is because a change in the product brings a change in all the other elements of the marketing mix. Be it a service or a product, the marketing mix majorly depends on the product for other aspects like promotions, place and price.

You need to consider the marketing mix while deciding on the product strategy. You also need to consider various aspects of the product such as product line and length, what would be the packaging of the product and what kind of labelling will be involved. In essence, the core aspects of the product and its contribution to the marketing mix is decided in this step.

Example – While deciding on an electronics product strategy, you need to decide the various product line and length that a single model will have. You also need to decide the packaging and labelling to use besides considering the effect of all these expenses on the marketing mix.

2) Levels of a product

A product has various levels. One of the articles on this site discusses the three levels of a product which includes the core product, the actual product, and the augmented product. The article also discusses examples of the same so if you want to know the three levels of a product then click here.

A marketer needs to assume the various levels of a product while deciding the product strategy. Example – An automobile manufacturer or an equipment manufacturer needs to give service along with the product to the end customer.

If the manufacturer does not give service, then the product will not sell. Hence at such a time, the manufacturer has to understand the important role of the augmented product in the product strategy. Without the various levels of the product and their proper implementation, the product strategy can fail.

3) Type of products

The product that you are designing will be of which type? There are various types of products. However, while deciding the product strategy you need to consider what is the type you want to target? Some of them are

• Durable products / Nondurable products
• Shopping goods / Specialty goods / Convenience goods
• Industrial goods/consumer goods
• Service products

Deciding on the type of product can help you in determining how to penetrate your target market. STP is an important step in strategy but this step will clear your mind on which segment you are going to target because the product is restricted to that segment only.

4) Differentiation

There are various possibilities to differentiate a product or to differentiate services. We have detailed articles on each which you can find by clicking the links above. However, to make it simpler, here are the features which you can use to differentiate a product or a service.

• Product Form and Product features
• Product performance levels
• Reliability / Repairability / Durability
• Style and Design
• Ordering ease / Ease of installation
• Customer service / Warranties and Guarantee

As can be seen above, these are critical decision-making elements for any consumer and by creating differentiation at the product level, the product strategy becomes a sound strategy to compete on even grounds with the competitor.

Example – American Tourister is known for its durable luggage. The same goes for Woodland shoes. These are brands which have targeted product reliability and durability as a differentiating factor right from the product strategy stage. As a result, their complete marketing strategy is focused towards one direction – Promoting their products as far superior then competition due to the differentiating factors.

5) Brand elements

Brand identity and Brand image are important considerations for the success of any company. Naturally, when deciding on the product strategy, you need to decide the brand elements for the product. There can be numerous branding elements involved thereby giving more recognition for the product and accumulating more respect in the market.

Example – Victorinox as a brand has several elements which can help differentiate between the genuine products vs a fake one. It has a spring in its swiss knife which makes a distinct sound thereby confirming that the knife is genuine. Similarly, it has symbols on the top of the knife as well as in smaller tools within the knife to differentiate the genuine from the fake. The symbols are unique too thereby clearly helping the customers pick the right product.

Such brand elements are important for the recognition and adoption of the product in the market and they need to be created at the product strategy and product design stage itself.

6) Product Design

Quite simply, a computer is a generic product name whereas desktops & laptops are all variants of a computer. The only difference between laptops and desktops is the product design. Both of them have CPU and both have monitors. Thus, product design plays a crucial role in the success of a product and should be given due consideration while designing the product strategy.

The technology market is built on product design. This is why smartphones have become a major crowd puller because of their differing aesthetics. If we want to talk about product design, we just cannot ignore the fashion industry which is completely dependent on the design of the product to built its brand identity. Fashion labels like Gucci, Armani and others spend a fortune getting the design right.

Here is an article on Product design and its influence on the marketing of a product.

7) Product Mix

Sometimes a single product might not make the cut but its product variant might be an instant hit. Take shampoos for example. Most in demand shampoo are the Anti-dandruff shampoo. However, besides this, most of the top shampoo brands have a variety of products on offer with minor differences in ingredients. These are nothing but a combination of the product mix.

This article explains best what Product mix is and how to analyze it. Various concepts are explained such as the product line length, product line width, product line depth, product line consistency etc.

In essence, to cater to all the various types of customers out there, a company can come up with a complete product mix so that each customer is satisfied with different variants of the same product. Because a huge market share is covered with almost the same product, product mix needs to be considered strongly in the product strategy stage.

When all this information is in hand, then the timeline matters. At the launch of the product, you need your marketing mix in place. Once you notice the rise of the product, you can decide on the type of product mix you want to introduce in the market to encourage further purchases and to improve brand equity of the product.

Examples

There is a wide range of product strategies like Microsoft’s product innovation strategy, IKEA’s low cost at a consistent level of quality, Netflix’s profit and margin-driven strategy, etc. Let us have a look at some of the examples of successful product strategies of some top brands around the world-

a. Google

Google has a product strategy that is technology-driven as it claims to solve a big problem in a big way. Google also comprises a market-oriented approach as it grows the market for everyone in the market.

This way of behaving makes Google a market leader. It optimizes for growth and not for the ROI. The product development strategy of Google revolves around a long view that makes it a consistent market leader.

b. Amazon

Amazon has a customer-oriented product strategy that focuses entirely on the needs of the target customers. Their management prefers working backward from the target market, as they first compose the press release for the product and afterward they make it easy for anyone to understand.

Their press releases do not have any technical jargon regarding the UIs or technologies. Then their teams work backward from the press release to the product. This product development strategy is effective in focussing on the internal process of Amazon that let the brand engage with customers for creating a specific product for meeting the identified need of the customer.

c. Apple

Apple’s product strategy is a platform/derivative strategy that tends to be product-driven.

The brand first creates a product and then finds the target market for that product. They believe that customers would pay a premium for the top-notch market-leading products.

Apple’s product strategy depends upon brand loyalty and it does not care if its competitors control the market of the lower-priced products.

Conclusion!

In the final analysis, it can be said that a product strategy outlines everything from ideation, creation, and development of a product to creating a product and marketing campaign that can optimize the presence of a finished product in front of its target audience.

A product strategy template will cover the product initiatives, its life cycle, differentiation strategy, pricing strategy, quality strategy, marketing campaigns, and synchronization of all this with the company’s goals.

A product manager works in synch with the product development team, marketing team, sales teams, and research team to create innovative products with a detailed plan of product management, sales pitch, and creative thinking to ensure product success.

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