Say I'm in the process of developing a new waffle iron. It's going to be capable of perfectly detecting when a waffle is golden brown no matter the volume or thickness of the batter. We're talking about next-level waffle technology. It could be an absolute game-changer, but in this scenario, something goes horribly wrong.
The product is rushed through development without any real guidance or objectives. And when it's sent to the manufacturer, there's no picture of what kind of audience will gravitate to it, how it stacks up to other waffle irons, what it's going to do for the business, or other crucial factors that might give this waffle iron an identity in the marketplace.
If that were the case, then this once-in-a-generation feat of waffle engineering would go to waste — all because it didn't have a solid product strategy to guide its development.
A product strategy is an overarching plan that guides the course of a product's development. It addresses factors like your target audience, where your product fits in the market, and its ideal business impact — establishing firm pictures of your company's market vision, specific goals, and big-picture initiatives.
A sound product strategy can be the difference between a product being able to carve a permanent place in its market and being an absolute afterthought. It can put weight and sensibility behind a product to help it resonate with consumers as effectively as possible.
It's the foundation for a successful product lifecycle, so if you're interested in developing a product at any point in the future, it's a concept worth having a picture of.
Here, we'll get an understanding of what a product strategy is, the framework that structures it, the key elements it should address, and an example of the concept.
Product Strategy Framework
A product strategy framework is typically composed of three core components: market vision, product goals, and product initiatives.
Who is this product for, and what does that mean for you as a business? Those are the critical questions to answer when defining your market vision. This portion includes information about your target customers, plans on how you'll position your product, and how it's going to perform relative to your competition. Your market vision has to address your customer needs, the buyer personas you intend to appeal to, and how you'll deliver a competitive offer.
There has to be some sort of endgame to your efforts with a product strategy. You have to work towards something. Setting goals is crucial to charting your course and keeping you on track. Goals guide your development team, allow you to keep tabs on progress, and ultimately measure success when your product has been released.
Make sure your goals are SMART — specific, measurable, attainable, relevant, and time-based. Make them clear-cut with a sense of urgency behind them. Also, don't backload all your goals for the end of the project. Set individual, timely milestones along the way to ensure that your team is maintaining a solid pace and accomplishing everything that needs to be done.
Product initiatives are essentially more conceptual product goals. They're big-picture ideas, including trends you want your product to influence. They represent the kind of impact you want to have on your business, your reputation, your status within your industry, the state of your industry, consumers' lives, or the world at large — depending on the scale of your operation.
Product Strategy Example
In 1984, Apple released the Macintosh 12K8 — the first iteration of what would go on to become the world's most popular brand of personal computer. The Mac was a bold step forward in the landscape of computing, and though it ultimately fell short of the goals it set initially, its product strategy is worth examining.
There wasn't much emphasis on appealing to the common consumer — exactly who Apple made a point of trying to reach. Its market vision revolved around giving the average person access to straightforward, aesthetically appealing personal computing.
Apple set a series of measurable, time-oriented goals for the Macintosh — specifically when it came to sales. Apple estimated the Mac would sell 50,000 units in its first 100 days — a target it hit with relative ease. However, those early sales proved to be misleading, and the Mac 12K8 didn't come close to hitting its long term sales goals.
Though that might be the case, the fact remains that Apple set specific goals about its preferred sales figures to ultimately gauge the success of its product strategy.
Apple released the original Macintosh with the tagline, "The computer for the rest of us." It was easily operable with an accessible graphical user interface, among several other approachable, straightforward features.
The original Mac was designed, positioned, and marketed as a machine that would shape the future of personal computing. It was going to make the concept more accessible for the general population, beyond hobbyists and traditional PC users. That was Macintosh's product initiative — to democratize personal computing. And for what it's worth, Apple nailed it.
Key Product Strategy Elements
An effective product strategy revolves, in large part, around four key elements: honing in on a customer segment, understanding the competition, ironing out the business end of the strategy, and considering the macro-environment.
1. Hone in on a customer segment.
You can't develop a product strategy without understanding who you're trying to reach. The first step in identifying that base is determining what specific need you're trying to address with your product. Once you identify the best need to tackle, you have to consider who that need applies to. Don't approach the process with some fuzzy, indiscriminate picture of who's buying — that will be inefficient and unsustainable.
Take time to develop detailed buyer personas. Touch base with who you think you can reach to see if your product will resonate with them. And be prepared to adapt to feedback from your customers as time goes on.
2. Understand the competition.
In all likelihood, your company will have competitors within your space with similar value propositions. That's why you have to understand the options they offer, how you compare, and how you can stand out.
Successful products always have some kind of differentiating factor. Bear in mind, that's not necessarily the same thing as your product's key benefit. Your competition is your competition because your products serve a fundamentally similar purpose. So how do you go about tracking that factor down?
Generally speaking, your differentiating factor will be a matter of better service, better quality, or lower prices. But how do you settle on one? Well, you can run different ideas by that customer base you've landed on. They're as reliable a source of inspiration as you'll find. Also, keep tabs on your competitors. See how they're trying to set themselves apart and try to find a lucrative niche that still has space.
3. Iron out the business end.
Ultimately, a product is a means to an end, and that end is generally monetary. A product strategy will let shareholders know how they'll see a return on their investment. It will detail — in-depth — how you plan to monetize your efforts.
What is your business model? If your product is web-based, will you generate revenue through selling ad-space? What about a subscription model? If your product is a consumer good, what kind of retailers will carry it? Or will it be sold exclusively online?
A business isn't a business if it has no interest in making money. Putting out a product with no concept of how customers will be able to buy it makes for an ineffective, borderline-pointless product strategy.
4. Consider the macro-environment.
The macro-environment is the sum of the major external factors well beyond your control that influence your company. They're the political, economic, social, and cultural forces that can sway the context in which you do business and how your customers might view your product.
Though they're not entirely predictable, your product strategy has to take them into consideration. That could mean being mindful of new technology that might shape your market, different markets you might be able to appeal to going forward, or the ways your customers' needs, interests, and behaviors might shift over time.
The concept of product positioning revolves around how customers view your product — the space in their minds your product is going to occupy. It's essentially the process of determining how to best communicate the useful, compelling attributes of your product to your target audience to shape a specific perception.
How you intend to position your product is often summarized in something known as a "positioning statement" — a concise statement that explains how your product suits your ideal buyer persona. It's meant to be used as an internal tool to align marketing efforts with the brand and value proposition. It goes like this:
For [target customer] who has [need statement], [Product/brand name] is a [market category] that [key benefit statement/compelling reason to buy]. Unlike [primary competitor alternatives], the product [unique differentiation statement].
The statement for video-sharing social media platform TikTok this statement could read:
For mobile users, predominantly aged 13 to 24, who are looking for a consistent stream of straightforward, engaging content, TikTok is a video-sharing social networking service that never stops running videos tailored to their specific preferences. Unlike Instagram or YouTube, TikTok automatically plays new content nonstop — all in keeping with what users have demonstrated they like to see.
Companies generally leverage tactics and resources like market research and focus groups to inform their ideal product positioning strategies. These strategies allow businesses to understand how their target audiences can best be reached. With that information at hand, companies can determine the best ways to convey their products' benefits to resonate with those consumers.
Product positioning often informs a company's marketing efforts. That means tailoring certain aspects of a product's presentation and messaging to suit the needs and wants of that audience. This can often involve adjustments to aspects like packaging or display.
Successful product development needs guidance. It doesn't figure itself out as it goes, and businesses can't afford to wing it. A product strategy sets the tone for the process. It sets development in motion and keeps it on track.
Product strategy is a matter of defining a product's purpose. One of its most important functions is establishing the why of a product. And without that, it's very difficult for product teams to know where to start and how to proceed.
Originally published Apr 23, 2020 3:30:00 PM, updated April 23 2020