The success of any product heavily relies on a robust and comprehensive product strategy, coupled with a competent product team.
In the context of this piece, we will be examining:
What exactly is meant by the term “product strategy?”
What elements must be encompassed within a product’s strategy?
Regarding product strategy, what errors are commonly made by product managers?
Explaining the Concept of “Product Strategy”
Product strategy pertains to a detailed business plan that delineates the product’s goals and methods for achieving them. It entails considerations such as identifying the target market (represented by personas), determining the product’s value proposition to this market, and aligning the product with the company’s long-term objectives.
Product strategy has been a time-honoured means of enhancing revenue. Ensuring that your offering is based on a sound product strategy is crucial. What are the key constituents of an impactful product strategy? To learn more, please continue reading.
You may also be interested in: 9 Phases of the Software Product Development Life Cycle.
Elements to be Included in a Product Strategy
A winning product strategy comprises of seven pivotal components. Here they are:
Innovation GoalsA distinct and succinct product vision is a vital prerequisite for successfully creating and releasing a product. This mission statement must cogently articulate the company’s intended long-term results, taking into account the target market’s needs and objectives, as well as the methods of achieving them. Also, it should take into account any potential advantages and risks.
Product ObjectivesA well-defined product vision facilitates the creation of strategic, specific, measurable, and time-bound product goals. These objectives should be featured in the product roadmap, which highlights the team’s primary priorities. To improve efficacy and success, product objectives should adhere to the SMART framework (specific, measurable, achievable, relevant, and time-bound) as illustrated by the SMART criteria. This will enable the team to monitor the progress of their objectives.
Here are a few examples of product objectives:
- Over the next six months, we aim to achieve a 50% boost in downloads of free trials.
- Enhance the average customer rating on leading review platforms by one star.
- Attain a revenue of $5M within the next year.
- Globalize your business’ operations within 24 months by extending your presence to three more countries.
Product InitiativesInitiatives involve splitting a long-term, complicated objective into smaller, attainable tasks. By deploying initiatives, one can identify the most crucial steps for achieving the desired product outcome. Hence, initiatives can be regarded as projects with a specified completion deadline. In short, initiatives represent the strategic themes that are incorporated into the product roadmap while deriving them from the product objectives. It is essential to remember that product plans should always align with the overarching business strategy.
Examples of typical product development projects include:
- Optimize customer satisfaction
- Maximize the lifetime value of each customer.
- Enhancing the User Interface (UI)
- Reduce the subscription cancellation rate among customers.
- Maintain the current product standards
- Emphasize on language localization.
CustomersCustomers are a crucial aspect of any successful product strategy. Providing customers with what they need is essential to drive sales. In essence, without buyers, the product would not be feasible.
When devising a product strategy, it is crucial to determine individual target audiences for each product. To accurately represent your desired customer base, acquiring data on customers who have previously purchased similar products and their favoured channels is crucial. It is vital to be as precise as possible while defining your ideal customer base. Gathering maximum relevant information aids a better understanding of your target market. Creating customer profiles facilitates product design customization and promotional campaigns to appeal to your target audience.
CompetitorsAfter determining your target market, researching your competitors is imperative. This research should involve assessing both direct competitors (like Pepsi and Coke) and indirect ones (such as Airbnb and Hilton). It is critical to comprehend their strengths and weaknesses, and evaluate their product strategy, including market share, product packaging, and positioning. Taking the time to analyse this information can help you develop a successful business strategy.
A thorough analysis of competitors’ products can reveal potential market opportunities that haven’t been capitalized upon, which can be channeled to develop an effective product strategy.
Strategic ObjectiveUltimately, all companies exist to generate financial returns. Investors and shareholders expect the organization to earn a profit, with higher returns being preferable. Therefore, it is crucial to align the commercial objectives of shareholders and C-suite executives with the product strategy. This strategy’s goal should be to guarantee a profitable outcome for the client from the developed product.
It is essential to reflect on the end-user’s product usage. Will customers only make a single purchase or opt for repeat transactions? Additionally, does the product follow any particular ideology or philosophy? When creating a product strategy, all these factors should be considered, including sales and distribution plans that align with the target audience’s intended use of the product.
Ecology on a Macro ScaleThe macro-environment refers to the present state of economics, politics, culture, and technology that influence customers’ purchasing and selling habits. Consequently, product managers must conduct a thorough analysis of the macro-environment before creating a product strategy.
Carefully analyzing purchasing and selling behaviour can aid in extending the product’s life cycle. When devising a product strategy, it is crucial to take the following aspects into account:
- Potential markets for product growth
- Upcoming technologies that could impact your clients
- Economic factors that may influence your clients’ purchasing power or preferences
- Modifications in consumer inclination and behaviour
Common Errors in Product Planning
Outlined below are seven of the most prevalent mistakes made when planning a product’s strategy.
Now that we have reviewed the fundamentals of product strategy, let’s take a look at the most common mistakes made in this area.
Inflexibility and Lack of Long-Term PlanningOne common mistake is delaying the adoption of a product strategy after extensive planning, which can have severe implications for businesses. Planning is a critical aspect of the manufacturing process, and there is a significant risk of product failure if development begins before a product’s concept is clear. However, there is also a risk of missing out on potential success if the plan is not put into action in a timely manner, as market conditions may have changed by then.
Failing to recognize that product strategy is an ongoing process rather than a one-time document can leave an organization lagging behind competitors. Outdated product strategies can be costly for businesses.
Ways to Avoid This Mistake
Delaying the release of your product until it is “perfect” is not always the best approach. The longer you wait to bring your concept to market, the harder it will be to create a practical framework and make a compelling business case. Rapid prototyping, releasing a good minimum viable product, and continuously improving learnings are recommended to ensure your product is successfully developed.
It’s crucial to remember that your product strategy should not be a static document, but something that evolves over time. To ensure relevance in the face of product and market changes, it’s recommended to review the strategy every three months. A flexible approach that allows for adaptation to evolving market needs is critical to delivering successful end results.
Emphasis on Novelty over UtilityAs a product manager or leader, the objective is to create a product with as many advantageous features for customers as possible while ensuring fair pricing. The customer’s focus is on the value they will obtain from using the product, while the product manager should aim to perfect the product.
It’s crucial to ensure that your offering provides a clear advantage to the target audience, focusing on addressing a specific problem or issue. It is unwise to incorporate all available features into the product without considering their relevance.
Ways to Avoid This Mistake
When striving for innovation, always remember the true value of your product. To ensure that the product is successful, it is crucial to understand the target market and what they require. All stages of the product development process should aim to increase its value. If the outcome is not advantageous, the decision should not be pursued. Successful products and satisfied customers are ultimately the result of following this framework to guide decision-making.
It’s essential to keep in mind that the emphasis should not be on consumer desires. Instead, one must focus on what the market demands to succeed.
Failure to Differentiate between Essential and Desirable FeaturesIt’s important to remember that not every feature on the roadmap can be implemented in the initial version of the product. To quickly enter the market, you must prioritize your product features. The crucial features of the product, the ones that must be implemented before launch, must be developed first.
It can be challenging for product teams to differentiate between necessary and helpful features.
Ways to Avoid This Mistake
Develop a prioritization system based on importance, working with colleagues to determine which characteristics are essential and which can be omitted.
Focusing on releasing a Minimum Viable Product (MVP) and then developing and refining based on feedback is a key strategy for ensuring project success. This approach allows for the evaluation of the proposed product while avoiding any potential delays that could occur during the development phase.
It’s essential to launch an MVP that provides early adopters with enough value, demonstrates potential future advantages, and includes a feedback loop for further development. Using this approach, it’s possible to understand customer requirements and continually improve the product based on empirical data.
Developing Product Specifications in IsolationOne of the most common mistakes made in product strategy is developing requirements without input from all involved parties. Gathering the right input from everyone involved in product development is critical during the product strategy creation process. If necessary persons are left out of the product development process, product managers miss out on valuable new perspectives and opinions, and they overlook the needs of specific stakeholders.
In addition, if the team does not have a specialist for each product function, managers must rely on a select few to provide expertise across all product strategy related fields.
Related post: How to Grow Your Design Team at Any Size: 6 Steps
Ways to Avoid This Mistake
Luckily, this is an error that can be easily remedied. Product owners, UI/UX designers, developers, engineers, and architects should all be included in the product planning process to gain a comprehensive outlook.
An inclusive approach to staffing provides a range of perspectives and ensures that all aspects of the user experience are taken into account before product launch. This is essential for creating a successful product that appeals to the market.
Ignoring the Threat of RivalsSome businesses are introducing new products in response to a competitor’s offering, while others are not taking competition into account. It’s crucial to consider the possible risks associated with any strategy, and moving ahead with a product strategy without taking market and competitor analysis into account is unwise.
Other businesses may create similar products to yours, so being aware of such developments is significant.
Ways to Avoid This Mistake
It’s essential to understand where your product fits into the marketplace and how to successfully promote it. You should have a clear understanding of your main competitors. By carefully analyzing the competition, you can identify your product’s Unique Selling Point (USP) and enhance the customer’s Lifetime Value (LTV). To succeed in the market, you need to find a way to differentiate your product from the competition. Simply mimicking the strategies of your competitors is not advisable.
Consider the following questions:
- To what degree do you believe your product is distinct?
- What is the reason for your target customers’ requirement of your products?
- Can you provide information about the problems your product solves?
- How does this product contribute to your company’s goal achievement?
If these concerns are not adequately addressed, your product may become obsolete quickly. Conducting a thorough analysis of your competitors is essential to ensuring that your product remains competitive in the market.
Making an uninformed technological decisionThe selection of an inappropriate technology stack may lead to an increased likelihood of needing to reconfigure your product. This could result in additional costs in terms of time, effort and materials.
For example, when a product is developed for a specific market, it is important to ensure that the technology it is built on is able to meet the needs of users when it is released to the public. A product’s failure can often be attributed to the inability of its technology stack to handle the demand.
Options for avoiding this blunder
It is essential to ensure that the technology employed is suitable for the project and aligned with the objectives of the organisation. Consider the aims of the project and how they correlate with the technology and desired business outcomes.
It is important to ensure that the technology you are considering employing is growing in popularity, as using a technology which is in decline can impede production and may be difficult to maintain in the future.
When developing a digital product, it is essential to assess a range of technological options and to choose a solution that can accommodate your current and future requirements. Features of the product, system load capacity, scalability, and security must all be taken into account when determining an appropriate technology stack.
Excessive and Inefficient SpendingOverspending is a prevalent product strategy mistake that is often overlooked. Businesses require stability to grow consistently, so experimenting with the budget constantly may not be a good idea. After developing a solid go-to-market product strategy, it’s important for product managers to ensure that they use the budget efficiently.
Ways to Avoid This Mistake
Determine how many iterations of the product’s beta version you can afford to create and distribute, and allocate your budget accordingly.
To calculate the cost of adding new features to your product, research prevailing rates for professionals in relevant fields. Then, determine the maximum and minimum amounts you are willing to spend on specific resources, considering the available funds.
Success in the market can never be assured, but with an effective product strategy, the journey can be more manageable. Avoiding common mistakes can help to ensure that any products launched are of high quality and ready to be sold.
Do you need assistance building a product development team? We can help you source and engage with qualified and experienced software engineers who have already undergone a rigorous screening process.
Make every effort to attempt.
Works enables the expedient identification of the most suitable candidates from a pool of over two million developers, within three to five days. The best part is that you can experience a two-week trial without any obligation. If you decide to cancel, there will be no charge.
What are the three unique product strategies?
Differentiation, market segmentation, and comparative product positioning are the three primary product strategies used by brands. Comparative positioning is utilised to emphasise a favourable price point by showcasing the product alongside its competitors. A segmentation strategy aims to diversify the product’s packaging, such as into smaller packets, bottles, and cans, while a differentiation strategy focuses on emphasising the product’s distinct qualities compared to rival brands.