Product strategy: What it is, and why it’s important
By: Leanne Armstrong
Like any profitable endeavor, engaging in product strategy is all about coming up with a plan. And as a prime component of product development, the point of that plan should be to sort through exactly what your business hopes to accomplish with a particular product – and how it intends to accomplish it.
On its own, a fantastic new idea isn’t usually enough to carry a product through to success. But by creating a solid strategy around your solution, you can significantly increase the likelihood of its both reaching and pleasing the right audience.
In this introductory guide, we’ll delve into the question of what is product strategy, find out what it’s used for, and discover why it’s so important for proper market positioning.
What is product strategy?
You can think of product strategy as your “vision-turned-blueprint” for what you want a specific product to achieve. Essentially, it explains what problem your offering is going to resolve, while simultaneously outlining what its impact on both your customers and your business will be.
By connecting your company’s overall mission to an agile product roadmap, for example, product strategy effectively funnels the vision you have for your solution in the marketplace toward the benefits and objectives it will help you attain. And it does that by turning the entire journey into a practical plan.
That said, most every product strategy can be broken down into a sequence of 5 key questions.
- Why are you developing a particular product?
- Who is your target audience?
- How will your product be positioned in the market?
- What makes this product different or better than anyone else’s?
- When and what specifically does your business want to achieve with this product?
To answer these questions, you’ll generally need to speak directly with prospects or stakeholders. You can then use the information you glean to create a strategic document your development team can follow – and a product plan you can continuously review and update.
Different product strategy angles
The angle you take with your strategy will be determined in part by the business you’re in. But an even bigger influence in most cases will be your product’s purpose, and the market-positioning goals it’s intended to serve.
If, for example, your aim with a particular offering is differentiation, your strategy will likely revolve around what’s different, innovative, or revolutionary about your product in terms of specific features, superior performance, or unique benefits.
Here are some other common product strategy angles you could adopt:
- Quality. This might involve emphasizing your brand name or the high-end production materials you’ve elected to use.
- Cost. Strategizing around cost usually means developing the best possible product for the lowest possible price.
- Niche focus. Your goal may be to improve brand loyalty by developing a personalized solution for a small, but specific category of underserved buyers.
- Service. If you have an outstanding reputation for customer service – or you’re looking for a way to enhance that status – you might decide to develop a product that supports or leans heavily on that aspect of your business.
No matter the approach you take, your vision can be brought to life with the help of a product development roadmap – one that clearly defines all the tasks you and your team will need to complete to reach your product strategy goals.
Why use product strategy?
One of the main reasons for using product strategy is to successfully direct, and plan around, your company’s marketing activities.
You can use the strategy you create, for example, to outline:
- Who a new product is for (your target market)
- How it will benefit your audience (the reasons why they’d want to buy or use it)
- What your goals are for that product over the course of its lifecycle (including what you’ll build out and when)
Not only will forming such a plan help you determine the steps you’ll need to take to ensure your product (and any upgrades) gets embraced by your customers, you can use it to prepare for the inevitable response from your competitors, or eventual changes in the market you’re targeting.
Product strategy is also a great way to develop a baseline for measuring your company’s success before, during, and after the development, launch, or revamp of a product.
Product strategy core components
Your team will probably want to use the product strategy document you generate as a reference guide when they have questions or need to make important decisions during the development process.
So, to maximize practicality, your document or diagram should be based on 3 core components.
- Market or positioning vision. This part of your strategy will typically outline details around who your target customers or users are going to be, what their specific needs look like, and how your product fits into the market. Your vision should help stakeholders and everyone else better understand the competition, the stance or direction you’re planning to take, and how that path connects to your company’s broader goals.
- Time-driven objectives. Ideally, the goals you lay down will both guide your product development team and help you regularly measure the success of your offering. These objectives – and the tasks and metrics associated with them – can be transferred to a separate map showing how your product will move from idea to market.
- Big-picture context. Outlining the bigger picture will help clarify the vision around your product’s impact. It’s important, for example, to explain how you’ll both create and continue to develop your product over time – perhaps by describing the features you’re planning to build, their timelines, and how each will contribute to the overall goals of your product.
As you think about how you’ll pull these core components together, it’s a good time to recognize the importance of product strategy for setting a direction, reducing waste, and aligning everyone around a shared set of goals.
The importance of product strategy
Thoughtful, visual planning will take you further no matter what your business goals are. But a strong product strategy is especially important for ensuring your new or repurposed solution gets positioned impactfully in the market.
As a minimum, product strategy prevents you depending on instinct, luck, or a biased experience to reach the successful outcome you’re after.
By providing a constructive method for channeling the innovation and enthusiasm around a new product, the right plan will keep your team focused, and prevent them going off on expensive or time-consuming development tangents (very easy to do when you’re excited about a great new idea).
As we’ve already discussed, product strategy is also essential for:
- Creating a vision and direction your entire business can get behind
- Identifying and strategizing around your product’s distinct selling proposition and benefits (or what sets it apart)
- Promoting alignment around a key market position – instead of trying to develop a product that aims to be everything to everyone
At its best, the plan you build will give your team a clear product overview, as well as a direct line of sight to your company’s bigger mission and aims. From a practical perspective, however, it will also serve as the central cog around which all the moving parts of your promotional, launch, and marketing activities can revolve.
Positioning your product for success
Because product positioning is intimately tied to whatever’s driving your product strategy, it’s important to narrow that strategy down to a single approach – be it cost, quality, or differentiation.
Remember – determining marketplace fit and positioning is all about drilling into:
- Who you’ll be selling your solution to
- How it’s uniquely equipped to meet their needs
- Why it’s better than similar products, or even distinct alternatives
Not only is correctly positioning your product a critical step for long-term success, it’s what dictates the various promotional aspects of your offering – including the sales and advertising steps your business will take to show your audience what your product offers, that comparable solutions can’t or don’t.
Here are a few key points to take away.
Fit is an important facet of product strategy. A good strategy should help your team prioritize their focus on researching, and even testing, market fit. If, for example, your objective is to boldly develop a brand-new product category, how will you convince your intended audience they need something that didn’t previously exist?
The message that springs from your strategy is key. Your business will need a plan for carrying your messaging forward consistently if you’re to cement and sustain product demand.
Risk management plays a prominent role. Even in established categories, if you don’t use product strategy to determine who your prospective buyers are and why they should care about your solution, you risk wasting valuable resources developing a marketplace dud.
By mapping out what your offering is, why it’s unique, and how you’ll communicate that vision to your audience, a tool like MindManager can help you create a solid product strategy that will position your company for better long-term performance.