The 4 Key Components of Product Strategy
A business requires a bare minimum of two things: Something to sell. And someone to buy it. The eternal question that businesspeople must grapple with until the end of time is, “How do I get someone to buy what I’m selling?”
The short answer is product strategy. The long answer is: Keep reading.
Because we’re going to walk you through the key components of product strategy, why it’s so important, and how to create your own product development strategy for successful launches and more revenue.
But first, let’s look at the definition.
What Is Product Strategy?
Product strategy can be thought of as the “vision” behind a product.
It’s the planned steps and strategies to get your product into the maximum number of hands. But those steps and strategies encompass many moving parts and disparate resources, which we’ll look at in the next section.
How the product will look and feel, how it will be marketed, where it will be sold, how it will integrate with your existing line of products, who the target market is for the product. All of this and more is considered and mapped out as part of any good product strategy.
With a clear product strategy, you’re able to:
- Decide on next steps for developing the product at any stage.
- Prepare for taking on your competitors and surviving in changing markets.
- Identify the target market and an ideal marketing strategy.
- Form the full vision for the product and complete its development much faster.
4 Key Components of Product Strategy
Product strategy is a combination of many components that when combined, create a total plan ready for execution.
Below are just some of the most important components of product strategy:
Who is your target customer?
It’s going to be a grueling uphill battle moving your product out of the warehouse and into the hands and homes of customers if you don’t know who they are, what they want, and why they need your product.
The foundation of product strategy is your customers. Your products are designed to satisfy them, after all. And without them, your product is useless.
Spare no details when defining who your customers are. You want to get granular and dig up as many nuggets of insight as you can. Gathering all these insights into a single customer profile allows you to create a rich portrait of who you’re selling to.
You should perform this exercise for every product you choose. Many businesses have multiple customer profiles.
Of course, one customer profile can match a variety of other products. But for each product, make sure your customer profile is updated to include any new or relevant information you should include for the particular product being developed.
Also, the same principles apply if you’re selling B2B.
Now that you know who you’re selling to, you need to look at the competitors selling to the same target customers.
Most likely, you have companies directly competing against you in the market. Like Coke and Pepsi.
You may even have some indirect competitors who do something similar to you, but they don’t quite offer the same product. Like Airbnb and Hilton.
Either way, you’ll want to identify these companies and analyze them to understand their strengths and weaknesses (as best you can) and as many other aspects of their product strategy you can uncover.
Look at their marketing, packaging, customer service, sales, current market share, product positioning, and any other relevant factors threatening your bottom line.
The more you know about your competition and document this knowledge in your product strategy, the easier it will be to differentiate from them and stand out in a crowded market.
Your company’s shareholders expect you to make money and provide a return on investment. The higher the better.
Your product strategy has to account for the product you’re developing will achieve this fundamental business goal.
This may include competitive pricing strategies, special offers like discounts, or a major sale (which can be particularly helpful at launch).
You also need to consider how the product will be consumed. Is it only a one-time purchase like a cast-iron skillet?
Or will consumers want to buy it again and again, like Moleskine notebooks? Or is it a product you subscribe to?
Your product strategy must include these considerations and needs to detail out exactly how you will sell the product and how customers will consume it.
4. Macro Environment
The macro environment is the current state of technology, culture, economics, politics, and your particular industry.
It’s all the giant forces that affect the buying habits of your customers and the selling possibilities of you and your competitors.
For example, the mobile app market began exploding after the release of the iPhone in 2007. If you were considering creating an app as your next product, you would see this as an emerging market to take advantage of.
Or similarly, you would see this emerging technology from Apple and decide to emulate it and create your own “smart”-phone.
These exciting opportunities need to be weighed against other factors that may impact consumer buying habits. The ‘08-’09 financial crisis wiped out the fortunes of millions of people, decimating their desire to spend any more money than they need to.
In that type of economic environment, selling new real estate insurance options may be a bad idea.
As you’re developing your product strategy, take a survey of the current climate and trends in society that may negatively (or positively) impact the launch and life cycle of your new product.
How to Create a Product Development Strategy
Each product development strategy is unique to your business, industry niche, and customers. So while we can’t provide tips on how you, specifically, develop a good product strategy, we can give you general advice.
Below are a few common ways to create a working product strategy.
1. Gather Insights from Your Target Market
Way too many product managers choose to develop a product strategy using the insights from their internal team alone.
They’ll bring in departments like sales and marketing.
They’ll talk to executives and other stakeholders.
They’ll brainstorm and create a product strategy just from introspection.
Do you think a product strategy developed this way, without ever speaking to a single prospect or past customer, has a chance of successfully selling a new offer to your market?
Without feedback from the end user, there’s no way to accurately predict what features should be included in the product, how or where to sell it, and how to differentiate it.
Before committing to a product strategy, you should get feedback from your prospects.
2. Determine Your Product’s Goals
Developing goals for your product is critical.
One of your goals is obviously to make money. But that’s a given.
A more robust goal in this category would be to triple revenue year-over-year. And like all goals, you should be able to measure it. If your revenue is currently $10 million a year then the metric you could use to measure your goal is hitting $30 million in new revenue.
But financial goals are far from the only ones you should have.
Perhaps you want your app to be #1 in its category.
Or your garage door opener to capture more market share.
Or maybe you realized through customer feedback that the people who bought your cat food would gladly buy branded food and water bowls. Now the new product supports existing products.
Establishing your goals in your product strategy will guide the development of the product to the most functional end.
3. Review Your Product Strategy Before Execution
As you make progress on your product strategy, you’ll feel the plan being molded into a final, usable form.
The strategy will feel firm. Perhaps even…unchangeable.
It’s at the end point when everything looks completely cemented and fixed that we advise you to step back and reevaluate your vision for the product.
Does everything still make sense?
Do your product goals match the roadmap?
Do your product features match user feedback?
Does your marketing and sales strategy align with current market conditions?
Make sure you can answer “yes” to these questions and plenty more you should be asking yourself and your team.
Asking and answering them now will prevent you from being forced to do it midway through development when it’s far more costly and painful.
Improve Your Product Strategy Through Enhanced Communication
Developing a product strategy doesn’t happen alone.
You have to communicate with many different people in various departments. Holding endless in-person meetings and trying in vain to get your point across through long, text-heavy messages complicates the process.
There are better ways to get your point across and better collaborate.
We’re talking about hosting remote meetings with your webcam.
Whipping up a simple walkthrough using a GIF.
Or annotating screenshots to provide feedback.
At Zight (formerly CloudApp), we believe fast and easy collaboration is a must-have for truly efficient product development.
We’ve been ranked by G2 Crowd as one of the top sales enablement tools and we can help you better develop products with better communication.
Discover why Zight (formerly CloudApp) is an essential product strategy tool today.