A 5-Step Guide to building an Effective Product StrategyLAB325
According to several leading market research over the past few years, 75–95 percent of new product launches fail every year. That’s a lot of waste if you look at it from the angle of invested time and resources. A major reason for this trend, among other factors, is the lack of a clearly defined product strategy.
This means that the success of a new product is not only dependent on the effectiveness of your marketing campaign or the quality of the product. A number of important factors typically determine the success of any product, starting with your market analysis, competitor analysis, customer satisfaction, alignment of the product with your brand promise and business goals, product support, and more.
Essentially, if you want to develop a product, introduce it in the market, and see it continue to succeed, you can’t afford to ignore the crucial role of a product strategy. In this post, you’ll learn more about what a product strategy entails, why you need to build one, and useful tips to help you build an effective product strategy for your next product.
Let’s get to it already!
What is Product Strategy?
Your product strategy is the plan that defines how your product will be developed and marketed. It is an elaborate plan that also describes how the product supports your business goals and how that product will come to life. Product strategy typically includes recommended actions for dealing with contingencies, especially when you experience slight to major drawbacks along the journey.
Note that product strategy is different from product roadmap. While the product strategy defines the desired accomplishments you want for the product, the product roadmap outlines the necessary steps to take to achieve the set vision and desired product goals. In other words, the product roadmap is somewhat a function of the product strategy.
When building an effective product strategy, there are some important questions that must be answered. So, for example, you should be asking:
- Who are your target customers?
- Does your product solve their problems?
- What is your product’s unique selling point?
- How does the product help in achieving your business goals?
Importance of Having a Product Strategy
A well-developed product strategy can help your team avoid costly mistakes. From conceptualization to product launch, building a product strategy isn’t actually enough. It’s essential you build an effective one. Here’s why:
1. Sustains Focus on a Common Goal
With a clearly communicated product strategy, every team member and unit in your organization is in tandem with your business goals. This has a positive impact on productivity and ensures transparency. Since every team has a unique set of tasks and goals, a product strategy ensures that everyone is working towards the same as the product is being developed.
2. Drives Prioritization
Considering that the resources available to your team are not infinite, it becomes very important to manage them. This includes time allocated and personnel deployed to develop a particular product, starting from inception to product launch. Product strategy prevents the waste of resources and helps to reduce the product’s time-to-market.
3. Risk Reduction
This is the main goal of building a product strategy. You want to drastically reduce the chances of failure when your product hit the marketplace. Product strategy helps to eliminate guesses and bad experimentation. As mentioned earlier on, it makes provision for contingencies, so you can anticipate and quickly tackle problems that may pop up along the product journey. With a product strategy in place, your company can focus its resources on the right goals and prioritize your products’ most critical features and functions.
4. Making Better Decisions
Between ideation and ongoing product support, chances are, your team will likely encounter situations that call for strategic decisions. With a product strategy in place, they can always refer back and make decisions that align with the product roadmap and goal of the business. This is a major ingredient for market success because one bad decision alone is enough to take a performing product off cause and initiate a downward spiral of poorer decisions.
Steps to Building an Effective Product Strategy
1. Define Your Business Goals
The first and most important step toward building an effective product strategy is defining your business goals. This involves identifying clear metrics that will help you measure your progress.
2. Define your Product Vision
Your product vision is the foundation of building a winning product strategy. It is a key component of the product roadmap, and will always serve as the reference for development and growth throughout the product’s lifecycle. Your product vision must be linked to the business goal.
3. Conduct Market and Competitor Analysis
With proper market research, you will be able to identify opportunities that you can leverage, as well as threats that are before you. That said, building a strategy to overcome identified challenges and take advantage of available opportunities becomes easier. Market and competitor analysis allows you to understand your target market (what they want) and the competition (their selling points and market positioning).
4. Identify Your Unique Selling Proposition (USP)
What differentiates your product offering from the competition? As you define your USP, remember that it must answer the needs of your customers with a satisfactory solution, and it should be kept simple and easy to understand.
5. Get the Perspective of Your End-Users
The mistake most product developers make is leaving out the input of potential consumers at the start of the product development cycle. One powerful step you can take during product development is to evaluate market opportunities and reduce risks through customer surveys. When conducting market surveys, product development teams often engage top-level stakeholders and executives, and even their marketing teams, but leave out the users. That said, note that this is different from market and competitor analysis.
6. Develop a Roadmap
As part of your product strategy, you need to define the steps you want to take to achieve your product goals. Your product roadmap must have a clear timeline and should evolve as the product evolves.
7. Define Your Product Differentiators
The market you are targeting likely has one or more competitions for your product. How do you intend to make your product stand out? What differentiators do you want customers to identify your product with? How will these differentiators stand you out among existing or new alternatives? Note that your product differentiators can be anything from your price point or product design to your marketing strategy.
8. Monitor and Evaluate
Before launching your product, be sure to have a product monitoring and evaluation system in place. This will enable you to track your progress and make adjustments where necessary. As you explore the market and learn more about how you improve your product, be flexible enough to make changes.
An effective product strategy is a secret ingredient for the success of any product development initiative. The more detailed and elaborate a product strategy is, the better your chances of navigating the product development cycle smoothly and launching a product that not only meets your customers’ needs, but also succeeds.
First picture credits: Image by upklyak on Freepik