Introduction to product strategy
Products that appear to come out of nowhere are actually the result of a lot of hard work by a product team that has a solid strategy. This strategy includes a vision, goals, and initiatives, which help to create value for customers and the business.
What is product strategy?
Your product strategy answers the question, “Why are we doing this?” Product strategy is the process of defining what you want to achieve and how you plan to get there. It is the “why” behind the product and must come before the “what,” “when,” and “how.” A goal-first approach is a product manager’s best path towards innovation. Strategic planning takes place before you dive into the detailed work of building your roadmap and developing new features.
In order to create a strong product strategy, you need to have a thorough understanding of the market you are operating in. This means being able to empathize with the challenges your customers face, being familiar with other similar products on the market, and being able to explain why yours is the superior choice.
Elements of product strategy
From capturing the big picture to determining KPIs for success, components of product strategy include:
Foundation: What you want to achieve
The foundation of your strategy affects every aspect of your business. Leaders in the executive and product departments will work together to create a vision for the product and identify the problems it will solve for a particular customer base. The end result of this process is often a business model and a positioning template, which makes it easy to communicate the strategic vision to everyone in the company. When you’re ready to create a product roadmap, you can refer back to these models to make sure that the work you’re planning aligns with the overall strategic vision.
Vision
The “product vision” is the key element that makes your product unique. It is something that everyone in the company should understand deeply- the reason why the product exists.
Business models
The purpose of a business model is to give entrepreneurs a framework to further understand the customer problems they will face, the solutions they will build, and the growth opportunities that exist within their market. Models are especially useful when launching a new product or evolving their strategy to adapt to changing market conditions.
There are many different types of business models. The example below is a business model developed by Aha! that focuses on why your product is worth buying. The model includes key product messaging, go-to-market details, and investments required.
Positioning
Positioning is a strategic exercise that is done to help define where a product will fit in the marketplace and what unique benefits the product provides. This supports marketing strategy, brand storytelling, and content development for customers.
Use a product positioning template to capture your mission, tagline, customer, market, and more — all the details you need to position your product for success. Product positioning is a marketing technique that helps you define your product’s place in the market and present it to your target audience. A positioning statement is a concise description of your target market as well as your product’s key benefit, advantage, and point of difference.
Market: Your customers and the market landscape
It is important to have a strong understanding of your customers and what they need from you in order to create a product they will be satisfied with. Developing personas and doing research on your competition are two of the best ways to learn more about the market you are operating in.
Personas
Personas are characters that are made up to represent your customers. Creating user personas is one way to get a better understanding of your customers by documenting their likes and dislikes, what they want to achieve, and what challenges they face. Having personas can help you keep your customers in mind as you work on developing features to solve their problems.
Competitive analysis
Competitive analysis involves investigating other potential solutions to understand their strengths and weaknesses in comparison to your own offering. The goal is to understand your place in the broader market and what opportunities might be most valuable for your customers and the business. Conducting this type of research provides insights into where you fit in the market and what your customers might value most.
It’s important to constantly research your competition in order to find new ways that your product can be improved. Keeping track of this information and sharing it with your team will help everyone stay up to date on the competition.
Imperatives: The work you will accomplish
Now that you have a strong foundation, you can take on the more challenging aspects of strategy, which many people consider to be the most rewarding. This is the time to set goals and key initiatives that will help you achieve your vision.
Goals
A goal is a measurable and time-bound objective that has a clearly defined success metric. It is a benchmark that you want to achieve in the next quarter, year, or 18 months. For example, if you want to increase revenue and expand into new territories, one goal might be to “increase revenue by 30 percent in the third quarter.” The second might be to “expand into five new countries in the first half of the year.”
Initiatives
In order to achieve your goals, you need to implement high-level efforts, or big themes of work, known as initiatives. Linking your goals to everything planned in your product roadmap, these strategic investments ensure that your product roadmap leads to the achievement of your goals.
Initiatives typically entail collaboration among employees from different departments. Managers often create diagrams or charts to track the milestones and timeframe for these projects.
Strategic considerations for product teams
You will need to think about what makes your product unique and how that will help you achieve your goals when you are creating your product strategy. Some teams prioritize creating products that are cheaper than others, while other teams focus on creating products that have features that no one else has. Knowing where you want your product to fit in the market can help you figure out which parts of the product strategy are most important to your team.
Type of strategy
Cost strategy
The most affordable product is positioned among the competitors to build the customer base.
Differentiation strategy
Some ways you can make your product stand out against the competition is by emphasizing its unique features and highlighting how it is more functional than other similar products.
Market-oriented strategy
Developing products based on extensive customer research to learn what they want.
Platform-based strategy
This term can have different meanings depending on the context. Sometimes, it refers to developing a digital platform that can be easily integrated with other products, allowing businesses to create added value together. Other times, it simply refers to transitioning from offering one product to several related products that share common core features.
Quality strategy
We strive to deliver the highest quality product possible in terms of design, functionality, data, customer service, and reliability.
Time-based strategy
Making production more efficient so you can get products to market faster will make you more competitive.
How to create a product development strategy
The product management team is responsible for developing the product strategy and ensuring its execution. They work closely with the engineering and design teams to ensure that the product meets the needs of the customer. Product development is a much broader process that involves the coordinated effort of many teams across a company, including:
- Product management
- Design (UX/UI)
- Development (or manufacturing)
- Marketing
- Testing and QA
- Sales
- Shipping or distribution
- Support
What is a product development strategy?
A product development strategy is beneficial for many reasons. A few reasons include:
1. It helps align the cross-functional team around the big-picture goals and priorities from the start.
This will help the team make better tactical decisions throughout the development process when issues come up.
2. It provides the team with feedback and guidance for every step of the product’s development journey.
What if the team’s user personas don’t show much interest in the new product concept?
If the team has a clear product development strategy, they will know whether it is more important to stick to the plan or make changes as necessary.
3. It enables more efficient development.
When a company knows what it wants to develop, it can better plan how to use its resources and predict how long the process will take.
Build a product development strategy around design thinking
A focus on the customer, for example, is essential to any good product development strategy. Different companies have different product development strategies, which can be affected by factors such as the industry they’re in. There’s no one approach that always works, but there are some elements that are often present in successful strategies. One important element is making sure that the needs of the customer are always a priority.
Applying a Product Development Strategy to The Design Thinking Approach:
1. Empathize with users
Home appliance manufacturers devised a strategy decades ago where product managers would visit homes of customers and watch them use their products in order to understand how customers use their products.
The PMs would take note of which features customers used, how they activated those features (which often wasn’t the way the company intended), what problems they encountered while using the products, and what if any workarounds they came up with. This data would help the PMs understand how customers interact with their products and identify potential areas of improvement.
For example, a customer who is using a vacuum cleaner with a long cord that tangles easily, may simply throw the cord over their shoulder while vacuuming. This signals to the product team that they need a better solution to help users keep the cord out of the way while they are using the vacuum.
How can you learn about your user persona’s worldview and the real-world challenges your products can solve?
2. Define the problem
Now that you’ve been able to view how your users view the world, you can think about some of the challenges they face. For example, you might have noticed them throwing a vacuum cleaner cord over their shoulders.
For each stage of your product development process, you will need to create a detailed plan.
You might organize your work into the following 3 steps:
a) Write down every user pain point you’ve identified.
b) Narrow the list of pain points to only the most severe or those that you believe your team could most quickly and easily develop a solution for.
c) If you have a product team, it’s a good idea to get their input on a list of ideas before deciding which ones to pursue. This way, you can make sure the team agrees that the ideas are worth pursuing.
3. Brainstorm potential solutions
Every step of a product development strategy needs to have a structure. Brainstorming does not mean that a person should sit in a room by themselves and try to think of ideas. For example:
Before meeting with your cross-functional team, share your findings from research done to gain empathy from users’ points of view. Doing this will help the team better understand the types of solutions you’re hoping to build, and why.
If not, it’s dropped. You should establish go/no-go criteria for each suggestion at the beginning of your session. For example, you might decide that each person who presents a product idea has 5 minutes to persuade the group that it is viable. If a majority of the team agrees, the idea will advance to the next level. If not, the idea should be dropped.
Once you have a smaller list of potential product concepts, do a quick estimation of the time, money, and resources it would take to create a minimum viable product or even just a minimum viable feature. This will give you another set of guidelines to help you pick which product concept to move forward with.
4. Build a prototype
You will work with your designers and developers to create a working version of your concept that you can show to real users to see how interested they are.
At this moment in the process, you should have a good understanding of the problem you’re trying to solve in the market, as well as a broad overview of your product’s strategy for solving it. Share this information with your designers and developers, and let them use that strategic understanding to inform their work.
5. Test your solution
The final stage of the design thinking process involves letting your user personas test your product and give you feedback on what they like and don’t like about it.
This stage of your product’s development should have some sort of structure, for example, you should have defined goals or metrics to determine whether or not to continue with the product. For example, if 30% of users say they were impressed with your MVP, would you consider the concept viable? If 10% say they would buy it, would that be enough?
An agile product development strategy
The strategy for developing a product should not change depending on the type of organization. This means creating a plan for development that everyone involved can follow.
An agile development approach can improve your product development strategy. By spending more time gathering and analyzing feedback from users early on in the process, you can make sure that every subsequent stage of development benefits from hearing what users think and feel about the product.
Product development strategy for existing products
- Creating a new product
- Updating an existing product
- Enhancing or repositioning an existing product to enter a new market
- Extending an existing product to including new pricing models or tiers
- Reducing and eventually eliminating product updates and support as it declines
- Sunsetting a product at the end of its lifecycle
To develop a product, you need a strategy that encompasses elements such as vision, business models, positioning, personas, competitors, goals, and initiatives. Once you have your strategy set, you can move on to the next steps in developing your product, which include coming up with ideas, planning, and creating the features and functionality that will make your vision a reality.