How to create an efficient product strategy that will lead your product to success?
Successful outcomes often depend on a well-thought-out strategy. It applies to various spheres of life and work: from results in a sports career to the release of a strategically important product. Whether you are a promising athlete or involved in Agile product management, strategy is what will lead you to success.
So, what is meant by product strategy?
What Is a Strategy?
A strategy (“στρατηγία” from the ancient Greek language) is the art of a commander. In a broad sense, this is the highest level of knowledge and practical activity that ensures the achievement of the set goals based on the implementation of the most important laws. The easiest way to understand this term is to consider how it applies to sports.
A sports strategy means all possible options for training and conducting competitive struggle at a given time, alternative forms, means, and ways of achieving a result. In team sports, a strategy is directly related to solving problems of sports training, managing the training process, forecasting, and rational distribution of forces in short-term and long-term tournaments. The strategy provides the development of a plan for the distribution of forces along the long path of the competition, as well as for solving organizational problems.
With sports, everything looks more or less clear. What about product management?
What Is Product Strategy?
In product management, a strategy is a roadmap that is used to develop a product or a specific feature. It contains important tasks that will be performed by the team to reach actual business goals. This document is used as a guide for the team whenever they have questions.
All modern companies strive to create a detailed and reliable product strategy to ensure every single task is completed properly and on time.
Effective product strategies should outline how products will benefit businesses. They should describe the problem that products will solve and the impact they will make on potential clients.
A good product strategy is a reliable baseline for measuring success before, during, and after production.
An effective product strategy consists of three core components.
What Are the Components of a Product Strategy?
The vision of the market determines who will be using a product and what it will mean for the business. It describes the target audience, the ways you will position the product, and how it will act in the competitive space. A well-defined market vision should also include a go-to-market plan where you need to explain your customers’ needs and your competitive characteristics.
There is no product strategy without goals and objectives. These goals define everything you will achieve as a result of creating your product. They will help your team to measure success once the product is released.
Product initiatives look more conceptual in comparison with the goals. They represent the trends and ideas that you’ll influence with your new product.
The Importance and Benefits of Product Strategy
Why is product strategy important? Let’s say, it serves three essential business purposes:
1. Providing clarity for a company
When you communicate a clear product strategy to your company, your team is able to deliver their best work.
- Developers understand how every element of the product they’re working on contributes to the global strategic goals.
- Marketers and the sales team can easily formulate the benefits of the product and its unique selling proposition.
- Customer success managers better understand the product’s use cases and provide better support.
2. Assisting in roadmap prioritization
Now it is time to turn your brilliant strategy into a high-level action plan. This is actually about writing an effective product roadmap.
It is not a good idea to skip this strategy-drafting stage (like many teams do, jumping right into listing themes and epics on their roadmap). Without a reliable strategy, the product team is more likely to find itself misusing its limited resources and time.
3. Improving tactical decisions of the team
Surely, it is almost impossible to deliver a product to the market exactly following the plan drafted in the initial roadmap. Everything changes over time, and PMs with their teams need to be prepared to adjust their priorities and plans to deal with those changes.
A proper product strategy will help you to make smarter decisions about how to adjust your plans if you lose resources, for example.
What Are the Types of Product Strategies?
1. Cost strategy
This kind of product strategy cares about creating the best product for the lowest price. With the help of a cost strategy, you assess your current resources and decide where money can be saved.
2. Focus strategy
Sometimes companies that have a large customer base want to build a product that appeals to one specific group of buyers. This is quite effective as it targets the needs of a select group of people and offers a personalized solution.
3. Differentiation strategy
When it comes to product differentiation, the price is not the key point. This approach can be related to a luxury product (why not) or some extraordinary and innovative features. Whichever this strategy may be, it will be focused on giving the product a personality that will make it delightful and memorable to your clients.
4. Quality strategy
This type of product strategy is oriented to the consumers who are looking for products with the highest quality. Of course, the prices are naturally higher, but that does not deter some shoppers. Many people are ready to pay for such a product if they believe it’s worth the investment.
5. Service strategy
Sometimes people, who are looking for a certain product, base their purchasing decision on the customer service provided by the selling organization. Businesses should understand how valuable that reputation can be.
Tips to Create a Winning Product Strategy
How do you develop a product strategy?
Setting a product strategy includes considering your product’s concept and introducing changes to the design process to recognize the direction of product design.
All products are different, and there is no unique guide on how to generate a specific strategy, but it is possible to give some tips that will help you with that. Here are 8 recommendations to help your team create a winning product strategy.
1. Study your audience
One of the most common reasons for startup failures is a weak product-market fit. Many businesses strive to uncover their strategy after shipping a product to the market. They ship a product and track its impact, but it rarely ends well.
Remember that any product is utilized by users; therefore, putting people with their needs first is always a winning idea. Your goal is to deeply understand your target audience, their desires and needs, even before you start creating something.
2. Dig deep into the problem
Understanding a problem in a product strategy is a critical point. And your product should be capable of solving users’ problems.
Identify the problem and try to recognize the core reason why you want to create a product and then evaluate your product decisions in terms of the value they bring to your potential customers.
3. Designate the vision
A good strategy will be the basement for a product’s journey with its unique vision.
Hopefully, you understand that the vision and the strategy are not the same. Follow these three easy steps to define your product vision:
- Set long-term goals.
- Make the vision inspiring to get emotional buy-in from your team members.
- Ensure that everyone on your team totally understands the global goal.
4. Check the current and target conditions
Many companies define two states: the current state and the target condition. The first state represents their product experience today, and the target one shows the ultimate user experience they aim to achieve. With the help of the product vision, they can define a destination (say, target condition).
What you can do is plan a route towards the target destination by focusing on exactly what you need to create.
5. Claim product design principles
There is always some uncertainty that makes us doubt our decisions.
With the help of product design principles, you can significantly simplify the decision-making process. These principles are aimed to define what good design means in your business.
6. Stay focused
It is a crucial thing to deeply understand the ultimate experience you target before starting to solve a problem. Often businesses get this step wrong. They suppose that including more and more features in their product will make it more valuable for the audience. As a result, they deliver their products full of useless features. That’s why it is so important to stay focused.
7. Set the metrics of success
Another objective for you is to measure how fast you are moving towards your goal. With the help of appropriate metrics, you will have a chance to measure overall performance and know if you are on track.
8. Execute the strategy and get feedback
After introducing your product strategy, you will definitely get feedback on it. Do not forget to revise it systematically and adjust tactics if necessary when you get information about what works and what does not.
Product Strategy Quick Example
What about product strategy examples? Let’s dive into a small case.
Of course, the product strategy template for your product will be probably longer and will vary. However, it should be built in accordance with the components of the product strategy we’ve described above. So, let’ say the following:
- We produce quality fabric for sportswear and outdoor activities.
- Our customers are young European people who want durable and reliable fabric for their sport suits. They are interested in eco-friendly and wear-resistant materials.
- We use a retail channel to sell our product.
- Our product is priced per unit and is considered a high-end solution.
The power of a product strategy depends on what you determine and what you exclude. For example, choosing a particular market in your product strategy, you exclude other target markets. It helps you to understand which projects fall outside your strategy and distract you from the set goals.
A product strategy is a crucial element of product management and companies’ success. It states where your product is going, how it will get there, and why it will succeed.