Have you ever wondered about the secret sauce to the success of seven companies like Amazon, Ikea, Microsoft, or Coca-Cola? The common denominator in achieving their global ambitions is their product strategy. A survey conducted across top organizations shows that nearly 70% factor in their product strategy when making critical decisions, such as the marketing strategy for a new product, research and development, and customer use cases. Startups and Small and Medium businesses can learn from these organizations to develop a winning product strategy for their products and services. But what is a product strategy, and why is it essential for an organization to develop a great product strategy? We discuss this and the best framework to create a successful product strategy.
What is A Product Strategy?
A product strategy is a series of steps to help companies bring the envisioned product/service to life. Essentially, the product strategy is a road map that helps employees understand what the company wants to achieve with its products and the steps involved in accomplishing it. A product strategy helps identify how a company’s product first into the market, the target customers who’ll benefit from it, and how it complements the other products and services in the company’s portfolio. A well-thought-out product strategy can help position the product right, clearly differentiating it from available offerings in the market and identifying why it will be the preferred choice for the customers.
Why Should You Employ a Product Strategy?
There are several benefits to developing a successful product strategy. When a clear and well-thought-out plan is in place, teams at the company will be in a better position to work together to deliver their best and achieve the set targets. In addition, the sales and marketing teams in the organization will be able to identify better and articulate their unique selling propositions. Customer success teams will also determine the use cases for their products to better help their customers deal with support. The product strategy helps the development team keep true to the drafted vision and stay focused.
In addition to helping employees better understand the product and their roles, the product strategy also helps prioritize the roadmap. Building a compelling roadmap with a high-level action plan will help management prioritize the straightforward tasks that will help advance the vision to get the product to market. In the absence of a roadmap, the likelihood of misaligned prioritizations, measurement metrics and allocation of time and resources is a given, resulting in delays and many mishaps – a product strategy fixes this, making product development streamlined & result oriented, saving both cost & time.
Types of Product Strategies
There are different product strategies available depending on the product or service. Let us look at some of the more popular ones.
Cost Strategy – A cost strategy aims to create the best product at the lowest price. It ensures that the company uses your resources effectively and assesses where you can save money during production— a valuable strategy for mass-produced low-effort purchases.
Differentiating Strategy – A helpful strategy when bringing in a product that addresses an untapped need or bringing a new feature, sets new boundaries, or has a unique USP. It can range from a luxury product using the best materials to a groundbreaking product that brings new features into the space.
Focus Strategy – Building a product for a specific audience or that addresses a particular need – an effective strategy to increase brand loyalty, which helps the company retain current customers happy and attract new ones.
Developing a Successful Product Strategy
Creating a successful product strategy involves several steps. –
Talking With Prospective Customers – Most companies focus on developing products by talking internally with their teams, including conversations between executives and product and marketing teams, while also pouring over market data. However, this reflective approach can be flawed as it misses the critical element – The Customer. For a successful product, teams need to combine their instants with the crucial feedback they receive from their customers. Companies need to keep the customers at the centre of the product experience, taking continuous feedback.
Finding The Product Market Fit – An essential aspect of developing the product strategy is defining the problem that the product or service solves for the customer. Companies need to determine if the problem is worth solving by testing if the target audience is willing to pay for the service—an essential step to determine the product market fit.
Establishing Product Vision – The product vision is the North Star of the business and is essential when developing the company’s product strategy. To create the product vision, the organization needs to establish long-term goals, find motivational triggers for the development team and align everyone. Defining a vision for the product helps everyone understand the big picture.
Defining Product Goals – After establishing a big-picture vision for the company’s product, the next step is to determine a set of objectives the product would accomplish. Another way to think about product goals is to define the key metrics to see if the product strategy is working. Once the product goals are defined, they form the basis to determine the product’s features, functionality, and other aspects.
Developing a Roadmap – The company can use its product goals and vision to help design its roadmap. While this is the document that guides the product development, one has to remember this is a living document that will evolve as the product development progresses.
Having a product strategy or not can define whether you are a market leader or a follower. The key to a successful product strategy is reaching your customer with a product that addresses a need—positioning it right in the market aces the path to success.