How to Develop a Product Strategy for Startup
With new goods hitting the market daily, there is an ever-increasing demand for improved product development. The industry, kind of product, features, and other factors have a role. That is why you need a strong product strategy.
Products are company's most valuable investments. The products generate revenue and profit. And they are the reason businesses continue to exist. People want things. Only organizations can provide what they desire. Despite the public's desire for items, releasing a new product isn't always a sure thing. You must use the proper strategies for developing, designing, and distributing it. Otherwise, it will not generate money or profit for your company.
Creating a product involves many processes, beginning with the generation of an idea and ending with the distribution of goods to clients. Each step needs a plan to be successful and create income for a company. So, before developing a new product, think about its best strategy.
This post describes product strategy, real-time examples, and how to create one to make your idea a reality.
What is product strategy?
A product strategy is a plan that defines what a company aims to reach, the steps needed to do it, and how this plan fits into corporate goals.
Strategy determines the product's direction and what the founders want to achieve. An effective strategy allows all team members to focus on the work that matters most. It directs the larger topics of work and tiny specifics that help you achieve your goals.
Strategy unites the business around a common goal and keeps everyone focused on the most important job. It doesn’t matter if you’re just starting out or already established; every business needs a good product strategy to thrive today.
You could have a fantastic concept for the next great thing. However, it's unlikely that you can go from "dreamed up" to "drawn out on paper" without a well-thought-out, step-by-step method and data-driven knowledge.
The strategy of the product is the basis of its life cycle. If you want to build successful product strategy, pay attention to its aspects: vision, goals, and initiatives we cover below.
What are the key components of a product strategy?
In several elements, you can make startup product strategy. Here are the three major elements you must put in place into your product strategy to achieve success
Every product is the result of an idea. Product vision represents the core of your product and what makes it unique. It should be something that everyone in the company deeply understands — the "why" behind the product you are all responsible for.
Teach for America's mission statement is inspiring: "One day, all children in our country will have the chance to get a quality education." It clarifies Teach for America's goals. A single line summarizes the organization's goals for society and the future. Any product approach developed should serve that goal.
Product vision and market vision together create your product direction. The goal of your product that it intends to fulfill in the long run is its product vision. Market vision is about how your target consumers will use your product and how it benefits the company.
To find out the vision, the Lean canvas framework is extremely useful, but you can start by answering those questions as well
- Who exactly are your customers? – Determine who you're selling to and what your market looks like.
- What exactly are you selling? – Recognize what makes your product stand out in the market.
- What kind of value do you offer your customers?- Create a value proposition highlighting the benefits for clients.
- What will you charge for your product? – Include a pricing scheme and its perceived worth.
- How will you market your product? — Specify how you want to sell your product, and how your target market will get it
A product vision should result in high-level strategic goals. These goals will impact what the CEO, team lead or CTO as a Service emphasize in its product strategy.
Product goals may include the following:
- Increase our average customer rating on key product review sites by one star.
- In six months, increase free trial downloads by 50%
- By September, boost website traffic by 25%.
- Increase new customer reviews by 30%
- Grow our top-selling product's international market share by at least 10% by the end of the year.
Using SMART goals is the ideal method when creating goals for your product strategy. These goals should be specific, meaningful, feasible, time-bound, quantifiable, relevant, and time-bound, just as product roadmaps.
Initiatives are high-level actions that will assist you in reaching your goals. In other words, there are large chunks of complex goals that you may break down into small tasks. For example, to improve client happiness, upsell extra services, and enter new industries.
Visualizing the timing and progress of initiatives will help keep teams united. Product initiatives are comparable to product objectives in that they are more conceptual. These are big-picture concepts or trends that your new product may affect.
Product initiatives include the following:
- Enhance client satisfaction
- Increase the customer lifetime value
- Reduce turnover and increase customer happiness
- Enter new industries or geographic locations.
- Maintain product characteristics
- Boost mobile adoption
So what are you waiting for? Product vision, goals, and initiatives are the core components of product strategies. You can identify your product’s value and solve the customer’s pain points with a vision. Then your vision should be connected to measurable goals. Finally, you should select the initiatives to help achieve the goals.
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Why is product strategy important?
So now we understand what a product strategy is. But why should your team devote time, effort, and money to developing a product strategy?
- Make better strategic decisions
The team may prioritize the wrong items above the important ones without wasting resources to solve unnecessary tasks. Thus, when you create a strategy, you precisely define all points in the discovery phase.
- Reduce the risk of time-wasting mistakes
Bringing any product to market requires trial and error. But small bets that assist you to positive decisions are not the same as those that lead you wrong. Developing an in-depth product strategy based on research and consumer feedback decreases the danger of failure in release.
- Define your product’s niche
A well-researched product strategy, by jobs to be done (JTBD) methodology, gives businesses a clear view of what niche their product will fill when it hits the market. It enables decisions that speak to the product's specialty and target audience.
You have the clients you wish to service at some time. On the other hand, you have your company's profit purposes. Finally, you have the many functions and characteristics of your product that set it apart from the competitors.
A product with a thousand features but no audience will not sell. Setting goals that drive you to charge more than opponents will not help you acquire an audience.
- Provide clarity
Your developers will understand how the product they are working on connects to the company’s overall goals. When you and your team have a clear product strategy, you can make smarter strategic judgments about adjusting your plans, especially if resources are lost or the timeframes must be changed.
The product plan also helps stakeholders discover why you build the product and how you intend to develop it to optimize customer happiness, market and profitability.
What are the examples of using product strategy?
Now that we've gone over the three major methods of product planning let's put them into practice with some real-world examples.
In 2005, Nike took a chance by introducing Nike Free, a revolutionary shoe idea. Many people were worried that the running shoes' strong, unique appearance would not appeal to their demographic. Nike outperformed expectations by developing a product and marketing campaign that surprisingly connected with its clients
- Nike's market vision
According to Nike's research team, their vision was built on "natural technology." It aimed to create a running creative and familiar to customers shoe. So they asked track coaches to determine their players' demands. They eventually arrived at Stanford University, where the track coach required his players to run barefoot. While this rejected Nike's established vision, product team needed to brainstorm and build a game-changing product.
- Nike's free product goal
After identifying its vision, Nike needed to define targets for its new shoe. If it had to appear unusual, it also needed a defining element that made it stand out; it was required to help athletes go faster than they had ever run.
Nike had 10 men and women run without shoes. The researchers employed high-speed cameras and pressure sensors on the athletes' feet. That would monitor how the foot reacts when running barefoot. The product development team used it to construct sneakers that repeated the actions followed the moves.
- Nike product initiatives
But before the product team started work, they had to focus on product initiatives. They wanted to prove that athletes would buy it because it would not appear like a regular running shoe. As a result, the marketing team was charged with addressing the key complaints of stakeholders about the product's design.
Even the shoe would help athletes perform better, Nike's team believed relying on customers to switch from their present shoes was too dangerous. Instead, they would educate customers about the benefits that the product may provide them during training.
As a result, Nike reduced the pressure in the sales presentation and could effectively express the product's differentiator. How is Nike’s case using product strategy? Let’s go on to discover more.
What are effective product strategies and business models?
Business model is a set of steps to be taken by a business to gain profit. It specifies the products or services that the company intends to sell, its target market, and any estimated expenses.
In product strategies, business models help better understand the customer problems to solve, the solutions to create, and the growth opportunities in the market. Models are useful for launching a new product or changing your approach as the market evolves. Let’s discover it more in examples of product strategy.
Many organizations have found that building different versions of a product to meet the specific demands of different people is an effective product approach. For example, if you develop cybersecurity software, you may decide to make a consumer version. This app's selling point may work fully in the background, safeguarding the user's data and gadgets.
A company employs a strategy to make the product its marketing and sales representative. Dropbox and Spotify often offer the product free for a certain level of service and charge only consumers who wish to upgrade to cutting-edge capabilities. Users value the fundamental service and advice to their acquaintances about the product.
Organizations employ the network effect in other circumstances to achieve product-led growth success. Early Zoom, for example, refocused its efforts to make its app more user-friendly for many business customers who needed it to connect while confined at home.
What about the business model, here is an example.
Lean product differentiator
This business model can work whether your product already has competitors or you're launching a new product category. Yahoo! was the dominating internet search engine in the early. However, the company's webpage was overloaded with links, buttons, and advertisements. Then Google came up with a home page with no links, advertisements, and nearly space. The exclusive stated next step on the Google site was to enter a search query. Now we know who won.
You should be familiar with the fundamental components of building a product now that we've analyzed the anatomy of product strategy. Look at some of the many product strategies you might implement in your company.
What are the types of product strategies?
Some teams focus on producing cost value, while others on characteristics that differ their product from others. Understanding your specific strategic positioning might help you prioritize elements of product strategy.
The cost strategy focuses on creating the best product at a less than average price. It estimates existing resources and determines where the company may save money during development. You can use this strategy to create products that are as cost-effective as possible, allowing them to enter the market at a cheaper price than competitors.
It works best when your changes focus on improving the development process. In markets, customers have very little brand loyalty towards any specific company. The product that costs the cheapest immediately becomes the customer’s favorite.
Focus strategy is about the needs of a specific group and developing a custom solution for them, rather than aiming to target the market as a whole.
Companies can use the focused strategy to deliver personalized solutions for particular buyer personas. Consider the following: 10% of the population is left-handed. However, for most of human history, scissors have been designed for right-handed users. By focusing on the demands of a specific group, the business that introduced lefty scissors in 1967 went from competing for the whole market to holding 10% of it.
Service strategy relies on reaching the company when customers purchase a product. Assume your firm sells mobile phones with a one-year guarantee and support. In that case, potential clients are more willing to buy from you than your competitors. Making great customer service should be your top focus.
Time-based strategy prioritizes producing efficiency to reduce the time between concept and delivery to increase client satisfaction and loyalty. For example, you take an agile approach to your cycling app, often issuing updates and fast incorporating client input.
Platform-based strategy refers to creating a digital platform that interacts with other goods so that businesses can collaborate to produce more value.
Note: It’s not a quick strategy with many leads in a few days; it goes a long way toward generating trust and brand loyalty for your business.
Quality Strategy attracts clients looking to buy high-quality products in the market. It challenges your product as the current market leader by offering an improved product experience. Apple fans continue to buy devices because they are accustomed to the aesthetic design and operating system that the company provides.
Hiring skilled specialists and creating the best goods involves money and resources, and those expenses are reflected in the end price of the product. A corporation like Lamborghini does not sacrifice the quality of its automobiles to appeal to a lesser price, which only adds to the product's desirability despite the costly price tags.
When you adopt this product strategy, the production cost rises, raising the product's price. Many buyers will gladly pay high-price if they like the goods.
This product strategy focuses on giving your product character that makes it memorable and enjoyable to your customers. Customers are attracted by unique features or capabilities they may not have realized they lacked. The key to a differentiation strategy is to create a product that stands out, and there are several ways to do it:
- Create new features. Customers like your goods because no other product can fit their needs like yours.
- Improve the usability of a product. Some businesses market their goods as the "simplest" means to get the intended objectives.
Vision, business models, positioning, personalities, goals, and initiatives are critical to your product strategy. Once your strategy is in place, you can move on to the following stages of the product development process.
How to create a good product strategy?
New products might fail to impress and produce a profit. One common reason they fail is a lack of a solid product strategy. So don't be discouraged by the recent practice of unsuccessful new product launches. Following these suggestions for creating a product strategy will help your product succeed:
- Define product vision
You're more likely to get executive clearance to proceed forward if you can explain a compelling vision for your product. The ability to tell your product vision increases the chance that people will participate in your product's success. Defining with developers, marketing and sales teams, and analysts in your sector will share your passion for your product. When you define a product vision, your decisions about the product will have a more strategic foundation.
- Identify who your customer is and which problems you can solve
Determine the income levels, vocations, or personality types you want to target, if your product is for individuals, your target audience's primary needs, their challenges, what they anticipate from any solution, and where present solutions fall short.
Truth is: Every successful product was created to answer a problem. It will fail if your product does not meet a user's needs or if people do not comprehend how your solution addresses the problem.
- Create a unique selling point
To better comprehend the environment and define your product market ask what makes your product unique. Unless you're starting from scratch, your potential clients may already be using other goods.
Your solution must not only be comparable to competitors' offerings but also provide something unique and enjoyable as USP that will encourage individuals to prefer your services. It determines how your product will stand out from the competition and compete on the market in terms of usability, quality, cost, customizability, and features
- Develop a roadmap
What is your primary point of interest? How to define product strategy, including defined set of goals and important results? These are influenced by your client categories and prioritized based on the impact on the consumer.
Of course, you must include an outline of how you intend to sell your product. For example, you may begin by focusing on a small group of consumers with the greatest experience with the issue and then extend to include others later. Alternatively, you may target a bigger audience with a free solution to a minor problem and then monetize later with premium features.
- Test and analyze
Once you've created a minimal viable product (MVP), discover how consumers interact with the product, particularly those whose needs aren't being addressed. MVP development for startups allows you to incorporate all of these discoveries into the product plan. To engage in continuous discovery, ask customers for input regularly, and assess whether your product strategy is still relevant.
To sum up
Leading a product team with an unclear product strategy is similar to taking one step forward and three steps back. Product managers waste lots of time and resources because of uncertainty when product strategy sharpens user experience. Take time during the earliest planning stages to brainstorm and adapt your approach so that your long-term vision remains consistent throughout the product development lifecycle.
Any product design project should start with defining the experience you want your consumers to have when they use your product or service. The ultimate purpose of your product strategy is to provide the relevant features and user experience for your customers.
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An effective product strategy is not an accidental action; it’s serious work. Pay attention, and your smart strategy will lead to the successful release of the product.
Truth is: It is difficult to win anything without a product strategy. Those who use product strategy end up reaching their goals. The goal is not to accomplish everything; rather, the goal is to do everything feasible without compromising product quality or user satisfaction.
What is a product strategy?
A product strategy is an overall plan that defines the long-term goals of a product and how they can be achieved. The strategy consists of goals, vision principles, and specific initiatives.
How to create a product strategy?
To create a product strategy, you should identify your target audience, define its needs and your product vision, state product design principles, determine success metrics, and finally perform the strategy.
What are the steps of product strategy?
Your product strategy should be the outcome of understanding your consumers, their challenges, and the market you are attempting to penetrate. The steps of the product development strategy consist of
1. Starting with a clear vision and answer to the question, “Why build this product?”
2. Considering the problem, market, and customer needs
3. Researching competitors
4. Setting measurable goals and metrics
5. Creating a go-to-market strategy for launching your product
6. Monitoring the processes and reports to adjust strategy or metrics immediately