Did you know that the potato chip was invented by thinly slicing French fries? Or, that Play-Doh was designed to be a cleaning product until children started using it for fun?
It's true. These products were lucky to become the household items they are today.
However, not every successful product has to be an accident. Instead, you can ensure a product's success by creating a strong strategy to guide its development.
In this post, we'll discuss what product strategy is, then provide you with a template so you can create one for your next product or feature.
What Is Product Strategy?
Your product strategy is the roadmap that's used to develop your product or feature. It includes all of the tasks that your team needs to complete to achieve your business goals. Your team will use this document as its guide and will refer to it whenever they have questions. In fact, 70% of businesses refer to the product strategy whenever they're making major decisions. So, it's important to create a detailed and thorough strategy to ensure every task is completed correctly and on time.
The product strategy outlines how the product will benefit the business. It describes the problem that the product will solve and the impact that it will make on customers and the company. Once this strategy is clear, it can be used to create the product definition which explains what you will build and when. The product strategy then acts as a baseline that you'll measure success to before, during, and after production.
The graph below outlines how this relationship plays out.
A product strategy consists of three major components. Let's review each one in the sections below.
The market vision describes who will be using your product and what that opportunity means for the business. It highlights your target customers, how you'll position your product, and how it'll fare against other competitors in its space. Your market vision should also include a go-to-market plan that explains your customers' needs and how you'll deliver a competitive offer.
You can't create a product strategy without key objectives. These are specific goals or metrics that you'll achieve as a result of building your product. They guide your development team and help you measure success once the product is released.
When goal-setting, it's important to make your objectives time-based, so there's urgency for when you'll accomplish them. This adds more importance to your product's development because you've added a time-constraint to its success.
Product initiatives are similar to product goals, but they're more conceptual. These are big-picture ideas or trends that you'll influence as a result of your new product.
For example, when HubSpot launched it's CRM, it didn't want to just sell software. It wanted to become a thought-leader in marketing automation and reveal new business opportunities for its users. That bigger picture of the product's impact helped establish a clear vision for how HubSpot would create and develop its tools over time.
Now that we've dissected the anatomy of product strategy, you should be familiar with the core components that go into designing a product. However, how you organize this information can vary depending on the product you're creating or the expectations laid out by management.
Below, let's take a look at some of the different product strategies you can use at your business.
Product Strategy Types
1. Cost Strategy
A cost strategy focuses on creating the best product for the lowest price. It assesses the resources being used and determines where money can be saved during production.
This is a useful strategy for low-effort purchases like household cleaning items. These are things that most of us don't think too much about when buying because all of the products in this space are essentially the same and we typically don't have any loyalty towards a particular brand. So for these industries, if you can create a product that undercuts your competitors' price point, it'll be a sure favorite for your customer base.
2. Differentiation Strategy
Price isn't the end-all-be-all when it comes to differentiating your product. There are plenty of other ways that you can make it stand out in your industry. Maybe it's a luxury product that uses the best materials. Or, maybe it has ground-breaking features that revolutionize the space altogether. Whichever it may be, this approach focuses on giving your product a personality that makes it memorable and delightful to your customers.
3. Focus Strategy
If your company has a large customer base, maybe you want to create a product that appeals to one specific buyer persona. This is an effective strategy because it targets the needs of a select group of people and creates a personalized solution for them. This a great way to gain brand loyalty when acquiring new customers.
Now that we've covered the three main approaches to product strategy, let's see these put into action with a real-world example.
Product Strategy Example
Nike has been known for its innovative products since the first shoe it released in 1971. However, in 2005, the company took a major risk when releasing a new shoe concept, the Nike Free. It was a bold, unique look to a running shoe and many employees were worried that it may not appeal to their target audience.
But, with Nike's well-thought-out product strategy, the company defied these expectations and created a product and marketing campaign that surprisingly resonated with its customer base.
Let's take a look at the strategy Nike created to ensure the success of the Nike Free.
Nike Free Market Vision
When defining the market vision, Nike focused on what its research team called "natural technology." It wanted to create a shoe that was innovative but seemed familiar to the user. So, the research team surveyed track coaches to see what needs their runners had.
This led them to Stanford University, where the track coach was having his athletes run barefoot. While it went against Nike's conventional vision, this was exactly the type of innovation that the product team needed to develop a ground-breaking product.
Nike Free Product Goal
Once the vision and market fit was discovered, Nike needed to establish goals for its new shoe. If it was going to look unique, it needed to have a differentiating factor that made it stand out; it needed to make athletes run faster than ever before.
To do this, Nike had 10 men and women run without shoes on. Using high-speed cameras and pressure sensors on the athletes' feet, the research team captured exactly how the foot reacts when it runs without a shoe. Using this data, the product development team's goal became creating a shoe that mimics the same motions they observed in the film.
Nike Free Product Initiatives
But, before the product team could start their work, they needed to set some initiatives for the product as a whole. Since this was going to look nothing like a traditional running shoe, they needed to justify that athletes would still buy the product. So, the marketing team was called in to address the concerns that key stakeholders had with the product's design.
Nike's marketing team decided while the shoe would make athletes perform better, it was too risky to depend on customers to switch from the shoes they were already loyal to. Instead, they would educate customers about how the shoe could help them practice and would position the product as a training tool. That way, Nike lifted the pressure on the sales pitch and could better communicate the product's differentiator.
Using all of this information, Nike came up with the shoe below.