How to Craft an Effective Product Strategy

What is a product strategy?

A product strategy is a plan that you implement as you develop your product and bring it to market. While you may have identified a significant new product idea, being able to go from that idea to realized sales will require an effective product initiatives roadmap.

Your product strategy can be a key component of a business plan that may be used to secure funding, or as a specific set of guidelines and steps to follow to keep your business on track to selling your products.

While the specifics of your business and actual products will define exactly what goes into your product strategy, understanding what a product strategy is and how taking the time to develop one can help your company measure success when it comes to achieving sales and brand recognition will be invaluable.

Understand your market and customers

When it comes to developing a product strategy, the first step will be to make sure you understand your target audience, that is, who you expect to buy your product.

Understanding the market for your product and the customers within that market are two different things, and being able to recognize the differences between the two can help your business build a stronger foundation for the product strategy.

Identify your particular market

When you were developing your product initiatives, you probably did some form of market assessment. You saw that there was a need for whatever it is you are selling and decided to develop something to fill that need.

Depending on how deep this initial market assessment went, you may want to take another look to better refine those first thoughts or to identify additional markets for your products.

An effective way to identify your target market is to develop a market vision. This market vision will include a number of things that you identify as contributing to the market and how you envision your product fitting into that market.

You can use the details of the market that you have identified and the market vision to explicitly define the objectives of your product strategy and specify the business goals and product initiatives to meet as the strategy is carried out.

Analyze your customers' needs and preferences

After you have identified the market for your product strategies, you can begin to build a profile of your anticipated customers. This can include their needs and preferences, and the information used to perform this analysis can come from a number of sources.

Although you probably had some idea of who your customers would be and what it is they need, the information you used when you came up with your product vision, taking the time to do a deeper analysis of additional customer insights will be beneficial as you work to construct your overall product roadmap.

When you have a good understanding of what your customers are looking for, you can tailor your product to better address those needs and preferences.

From the basic product need you identified when you first came up with the product concept, you will want to get as specific as you can in terms of the purpose of your product. It is this specific knowledge of what your target audiences are looking for that will help differentiate your product from the competition.

Conduct market research

Market research is a process by which you combine the information you have gathered in identifying your target market and your customer needs and preferences to develop an overall picture of the market you hope to address with your product.

With all of the market research compiled into a single document, it will be easier to see the overall big picture when it comes to the target market and the needs of your prospective customers. This understanding of your market and customers will be the foundation upon which you build your complete product strategy.

Set clear business goals and objectives

Clearly specifying the goals and objectives of your product strategies will help you shape those strategies to best meet the market needs you identified.

Determine what you want to achieve

Knowing what it is that you want to achieve through your product strategy is a necessary step when it comes to developing that strategy. There are a number of reasons to sell your products. But there are good reasons and reasons that are better left alone.

Identifying why you are bringing your product to market can help identify the purpose of the product strategy you build, and how to shape that strategy to be successful. Here, specifying concrete achievements with regard to the ultimate outcome of your strategy will be more effective than just wanting to sell something you created.

Set SMART goals

SMART goals are common in a multitude of areas. The acronym SMART is defined as follows:

• Specific: Having a specific goal will allow you to effectively determine if you meet it. The goal of selling $100,000 of a product is a specific goal.
• Measurable: Being able to measure how well you met your goal is another part of evaluating the success of your product strategy. Quantifying a sales target or market share is measurable.
• Attainable: Setting a goal that can be achieved is the only way you will be successful. If your goal is to sell an unreasonable amount of product in the first week of sales, you will be faced with the reality of not achieving your goal.
• Realistic: Like attainable business goals, you will want to have a goal that is realistic. Achieving 100% of the market share is likely not a realistic goal, but cornering 15% might be.
• Time-bound: If you have a specific timeframe in which to meet your goal, you will be more apt to achieve that goal. Meeting your product sales targets in the first quarter is an example of a time-bound goal.

Using SMART goals to set your expectations for the product strategies is an effective way to subsequently measure how successful you are with those strategies. You will be able to use these goals, and how well you did at meeting them, to identify areas to tweak and improve your product strategy.

Analyze your competition

Chances are that whatever your product vision or service, you will face some sort of competition.

Whether that competition already exists or is anticipated in the future, knowing as much as you can about that competition will be very important as you develop your product vision.

Performing competitor analysis will not only enable you to understand your competition but also to identify how best to differentiate your product from the competition.

Examine your competitor's strengths and weaknesses

The first step in analyzing your competition is to determine its strengths and weaknesses. Most often, when a company looks at the competition, they only look at the weaknesses, trying to find places that make an easy target.

But understanding your competition's strengths is just as important, if not more important. If you know what the competition is doing well, the product features that have made them successful in the market or what they have done to secure their share of the market, you can use that information to your advantage as you develop your product vision.

Ideally, you can see what has already been successful and somewhat emulate those strategies as you begin to shape your own.

But more importantly, by recognizing the strengths your competition has built their success on, you will be able to identify those areas that you should not focus your attention on.

After all, if you want to differentiate your product from other products, you should not spend resources trying to directly replace an existing product with the same thing.

By recognizing what is working for the competition, you can craft a robust product strategy that is counter to the other products and differentiate your product as a strong alternative, rather than just a better example of something that already exists.

The key to identifying the competition's weaknesses is to find places where your product can meet an existing but unfulfilled need.

As you analyze the competition and their products, look for challenges they may have faced with getting their product to market or failures to meet specific customer needs. These weaknesses are ideal places to begin the next step of analyzing the competition, which will be to identify specific gaps in the market.

Identify gaps in the market

You may have already identified a big market gap as you began to develop your product concept. Using the competitor analysis, you can identify more specific places in the market where your product may meet an unfulfilled need.

These gaps may be areas where another product is not adequate or may be areas where there is a need that no product meets.

Understanding the differences between inadequate product solutions and a lack of solutions can help as you develop product initiatives to fill these gaps. Developing a product that better meets a need will require a different business strategy than developing a product to meet a previously unmet need.

You can also use your previous market research to help identify market gaps and evaluate a differentiation strategy to fill those gaps. By combining your competitor analysis, product strategy goals, and market analysis, you will have the necessary information to move forward with creating a unique solution to the market gaps you identified.

Develop your unique selling proposition

If you want to be able to sell your product, you will need to be able to present to your customers a reason why your solution is what they are looking for.

Whether you are fulfilling a need that you are the first to identify or are presenting customers with an alternative to existing products, how those customers view the uniqueness of your proposition will be a key part of the success of your product strategy.

Define what makes your product unique

Through the market research and competitor analysis you have already completed, you have identified areas where your product does something better than any other product.

This is what makes your product unique, and you want to demonstrate to your target customers why that uniqueness should be important.

Customers are unlikely to buy a new product or service if they view it as too similar to what they already have or the other products available. It will be up to you to make it clear to those customers what sets your product apart from all of their other options.

If your product is designed to fit a niche market that you have identified as previously unfilled, the task of demonstrating product uniqueness will also involve demonstrating why the customers should care about the market you have identified. You will need to be able to convince those customers about the uniqueness of the market as well as the solution you are offering.

If the purpose of your product is to better fill an existing need or fill a market gap you identified, then showing customers how your solution is ideal is best accomplished by explicitly demonstrating how you are solving their needs in a new and different way.

The uniqueness of your product solution will be an essential differentiator that you can leverage as you present the competitive advantage of your product to the market.

Identify your competitive advantage

Once you have identified what it is that makes your product unique and how it fills any market gaps left by your competitors, it is time to define your competitive advantage.

Using market research and competitor analysis, you can make a detailed list of what it is that sets your product or solution apart from everything else on the market and how what you are selling meets the market needs.

Craft your value proposition

A value proposition defines exactly what it is that your product is providing to customers. It is a short statement that specifies why your customers will want to buy your product or service, and is what you will use as you develop your plan for the product roadmap.

Create a product strategy roadmap

Your product roadmap will be the plan that you initiate and follow as you seek to transform your product from an idea to something your customers are buying and using.

You will use all the data and information about the market, your customers, and your competition, as well as your SMART goals to craft this roadmap.

Outlining the steps you need to take to achieve your goals

You will need to define the specific steps of the product strategy that you will follow to meet your SMART goals. These steps should be individual, with large steps being broken down into smaller steps. Being able to identify individual steps along the product strategy will help in determining once a step has been met.

Identifying key milestones and metrics

To determine whether your product strategy is effective, you will need to identify milestones and metrics against which you can measure success. Milestones are points along your roadmap where you can step back and take a look at what has been accomplished up to that point and make any changes if needed. The metrics are the specific ways you will measure the success of your plan, and may include things like sales targets or market share.

Test and iterate

With the completion of the initial product strategy, you are ready to begin evaluating how effective it is. To do this, you will want to carry out small-scale tests in the market to determine what is working and what can be improved or needs to be changed. You are not ready to apply your plan at a full market level, so you will want to carefully choose areas where you can effectively test your product strategies.

Conduct market tests and experiments

Market tests are small-scale applications of the proposed strategy. Examples include focus groups or product testing. These give you the opportunity to get your product in front of your target audience without spending time, effort, and money to go to the full market, and obtain feedback from the testing to make refinements to the product roadmap.

Gathering feedback and data

Using customer reviews, you can gather information about how well your product strategy is meeting the needs of your target customers. These data can be evaluated using the previously defined SMART goals and you can determine how successful you were in meeting the objectives of your strategy.

Make adjustments and improvements

Once you have evaluated how well you did at meeting your objectives, you can look for ways to make adjustments or improvements.

Being flexible with your product strategy will give you the opportunity to easily make changes and improve subsequent iterations of the plan. Additionally, having the ability to adjust and improve your plan can help keep your product or service relevant as market conditions change.

Communicate your product strategy

Once you have finalized your product strategy and the plans you have for gathering feedback and iterating the strategy, you will want to share everything with the rest of your team.

Whether you are a company of one whose team only includes your bank or you are a manager at a multinational corporation, the stakeholders and contributors to the success of the strategy will need to know and understand the plan and the role they play in its success.

Make sure everyone is aligned on the same vision and goals

Having the buy-in from the necessary stakeholders and contributors will be essential to the success of your product strategy.

Taking the time to talk to everyone involved in the plan to make sure they understand the overall product vision and the goals of the strategy will be the final step before you implement things. You can use feedback from stakeholders or participants to make minor changes, but at this point your product roadmap should be ready to be implemented, putting your business on the road to filling the market need you initially identified.