Product Strategy Overview: How to Create a Product Strategy

A product strategy is an overall plan for developing, rolling out, and marketing a new product or product update. It is ideally wide-reaching, encompassing internal factors, like business goals and marketing strategy, and external factors, like identifying new customers for a specific product. A successful product strategy effectively communicates the product vision to all relevant team members so that everyone understands how their work contributes to the big picture.

There is no one-size-fits-all approach for creating an effective product strategy. Instead, product strategies will vary depending on factors like the product’s target market and the results of competitive analysis. Most strategies fit into one or more of these broad categories:

1. 1. Cost strategy: As the name implies, a cost strategy aims to undercut the competition by developing and marketing a product that your team can sell at a lower price point. Product development under a cost strategy typically involves analyzing each part of the product to determine what you can produce or obtain at less cost. Learn how the product development process works.
2. 2. Differentiation strategy: This strategy involves establishing differentiators that set your product apart from the competition. Identifying your product’s unique features early on is a valuable tool for the sales team, who will focus on highlighting the key elements that make the product stand out.
3. 3. Feature reduction strategy: While it may seem counterintuitive, a product that offers too much may confuse potential customers looking for it to perform a particular function. One solution is to simplify what the product provides to communicate its appeal more clearly.
4. 4. Product-as-a-service strategy: One popular product strategy is to turn something that people buy every day into a convenient subscription. If consumers can trust your product to show up at their door, they’ll be less likely to seek out competing products.
5. 5. Quality strategy: Best applied to luxury markets, quality strategy is the opposite of cost strategy in product positioning. A quality strategy aims to create and market the highest-quality version of a product possible through superior constituent elements or processes.
6. 6. Segmentation strategy: Also known as focus strategy, segmentation strategy aims to create a niche product for one particular part of the market or several different versions of the same product to sell to likewise specific market areas. A segmentation strategy relies on prospective customers looking for a particular item or service.
7. 7. Service strategy: A service strategy focuses on the user experience rather than particular product features. The goal in the product rollout—and for the product life cycle—is to maintain a level of customer service that appeals to prospective customers and makes them more likely to continue using the product.

Creating a product strategy requires large-scale conceptual thinking and concrete planning for each part of the business. It is both a high-level plan and a detailed roadmap.

1. 1. Define your product’s purpose. The first step in creating a product strategy is considering the overall product vision. Your product vision answers questions like: Why is this product necessary now? What is its market fit? What unique perspective or method can your company bring to this product? Use market analysis to determine what the competition has to offer and how you can create something different. It’s also a good idea to think through different buyer personas at this stage. Who’s the target audience, and why would they want what you’re selling?
2. 2. Develop a go-to-market plan. Once you’ve figured out what your product will be, work out how you’ll present it to the world. How can you best leverage your business model to distribute and market the product?
3. 3. Define your product goals. You should be able to tell your team members what constitutes success in real, numerical terms. What key performance indicators (KPIs) are you aiming to hit? Without clearly measurable markers, you won’t know how to judge your product’s performance.
4. 4. Consider overall product initiatives. Your product initiatives are more theoretical than your goals; they’re the parameters you and your team will use to think and talk about the product. What does it mean for the business and the consumer?
5. 5. Lay out and communicate your action plan. Finally, you need to distribute relevant responsibilities to the various teams in the business based on the goals you established earlier. Ideally, every team member should know where they fit into the overall business strategy.

In this example, assume that you want to create and sell a new running shoe.

• Surveying the market: First, you would survey the market to determine what’s out there. What are comparable competitors selling in stores and online? What are commonalities in design and price points? Maybe you’ll conduct consumer research to determine what runners are looking for in their next shoe and how they feel about the current offerings.
• Developing the product: After completing your thorough research, you direct your product team to develop a cheaper shoe than what is available on the market at the moment with a more minimalist design. In this way, you’re utilizing both a cost strategy and a differentiation strategy by embracing a product design that sticks out along multiple dimensions.
• Releasing the product: Finally, you take your great product to market. Since you’re a new brand and have noticed the wide variety of running shoes currently available in stores, you opt for a marketing and sales strategy that makes use of online channels to advertise and sell your sneakers. You use the information about your target audience you gathered earlier to target ads at prospective customers and drive them to your site, where you sell your surprisingly inexpensive shoes. Everything leading up to this point constitutes your product strategy.

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