Let’s face it–you can't force users to love your product. Creating a product that users genuinely adore takes a lot of work. Companies need to understand their users, identify their pain points and find the best way to solve them. 

Once you’ve found the right solution to your users’ needs and how to develop it, you’re only at the halfway point. You need to have a strategy in place that integrates all aspects of the product development process and how it’s tied to your organizational goals, and that’s where your product strategy comes in. 

Think of your product strategy as a guiding light for the entire team. Without it, even the best teams will succumb to chaos from being pulled in ten different directions.

In today’s article, we’ll walk you through how you can build a winning product strategy for your product, so you are always focused on creating a product that your users enjoy. 

What is a product strategy? Why is it important?

Product strategy is a high-level plan that describes what your product hopes to accomplish and how it plans to meet those goals. Product strategy is not a mere vision and mission statement. It’s neither a set of ideas, metrics, your product features, your roadmap or a launch plan. A great product strategy should answer the following four core questions:

• Who is the product for? Who are its users/customers?

• Why would people want to use and buy it? What specific problem does it address, or what benefit does the product offer? 

• What kind of product is it and what makes it stand out? How is it different from other products? Why would people choose this product over other alternatives? 

• What are the business goals? What benefits does the product create for the company?

It's common to see your development team ship out features incessantly, without understanding why they do what they do. Your product strategy helps your product manager and developers better understand how the features they’re building connect to the bigger picture–the company-wide strategic goals.  Your marketing and sales team will thank you for having a product strategy–-because it allows them to articulate the product’s true value to prospective customers. Having no strategy makes generating sales and revenue extremely difficult.  At the end of the day, product strategy is meant to connect your organizational goals with user needs. Without a strategy, you’ll forget why you’re building the product in the first place.

What are the different types of product strategies?

Before we go into the five different types of product strategies, remember that the best strategy for your product depends entirely on your product–no strategy works as one size fits all. 

Cost Leadership Strategy: This strategy prioritizes offering products at the lowest possible price point. It involves optimizing production processes, minimizing waste, and achieving economies of scale. The cost leadership strategy works best for commoditized products or attracting budget-conscious customers.

Differentiation Strategy: This strategy focuses on creating a product that stands out from the competition. Differentiation focuses on your product’s unique features, superior quality, or brand identity compared to the rest of your competitors. This approach targets customers who value factors beyond price and are willing to pay extra for something that’s more special.

Focus Strategy: This strategy targets a specific niche market with a product that caters to their particular needs and preferences.  Companies using this strategy become experts in solving problems for a well-defined customer segment, rather than be everything for everyone. 

Quality Strategy: As the name suggests, this strategy prioritizes exceptional product quality and reliability. Think of using high-quality materials, rigorous testing procedures, and exceptional customer service. This approach targets customers who value durability, performance, and dependability, often at a higher price. 

Service Strategy: This strategy focuses on the additional services that complement the core product offering.  It emphasizes factors like installation, maintenance, customer support, and warranty options. This approach is  valuable for products that require ongoing support or have a complex setup process.

What goes into a product strategy?

Now that we understand what a product strategy is and its different types–how do we start developing it? First, product strategies are divided into three components: 

Product Vision

Product vision describes the reason behind creating a product and how it evokes change in the problem you are trying to solve. Product vision should address: 

• Who is your target audience and users? Which market or segment does your product address?

• What problem does your product solve? What benefit does it offer?

• What is your product? What are its key features? How does it set itself apart from other products? Is it possible to develop it? 

• How does your product benefit the company? What are the business goals?

It’s also important to list and prioritize the 3-5 key features that make your product stand out and the key overarching business goals that you’d like to achieve. 

Product Goals:

Now that we’ve figured out our product vision, it’s time to outline specific product goals. When measuring the success of your strategy, it’s best to create time-bound, measurable goals that follow the SMART principle–specific, measurable, achievable, realistic, and timely. Applying this principle helps keep your goals realistic and feasible within a given timeframe. Your product goals will also help influence what the team prioritizes in the product roadmap. 

Here are some examples of product goals: 

• Increase no. of users signing up for free trial by 50% in the next 8 months

• Improve revenue from in-app purchases by 10% in 2 months

• Improve customer retention rate by 20% in 3 months

Product Initiatives:

Product strategy isn’t complete without setting product initiatives. These are the strategic themes of your product goals. A product initiative explains your company’s focus and areas of investment. The difference between product goals and product initiatives is that it requires more planning that brings multiple stakeholders together to achieve long-term success. More often than not, it also spans across an entire product life cycle. 

Many use goals as the foundation for their initiatives. For example, if you might set a goal of improving revenue from in-app purchases by 10% in 2 months, then an initiative would be to grow your audience and create multiple marketing campaigns to drive engagement. 

How to create a product strategy?

Now that you know what makes up a product strategy, it’s time to create one!

Create your product vision:

When you first start outlining your product vision, consider the following bullet points:

• Your product: What problem does your product solve? What benefit does it offer?

• Audience: Who is your target audience and users? Which market or segment does your product address?

• Competitors: What companies are dominating the market of your product? 

• Strengths & Weaknesses: What are your company’s strengths and weaknesses? Where does your company excel and struggle? 

• Value proposition: What is your product? What are its key features? How does it set itself apart from other products? Is it possible to develop it? 

• Go-to-market plan: How are you going to launch your product in the market? How will you promote the product?

Set your product goals

Now, it’s time to set your product goals. Make sure to keep in mind the SMART principle when you’re creating goals for your product strategy. Focus on being the numbers and the timeline, so you can measure the progress and success of your goals throughout the process. 

• Metrics: What metrics do you care the most about? How are these metrics related to your product’s purpose?

• Timeline: How long does it take for you to complete your goal? Is it flexible or rigid?

Create product initiatives:

Next, let’s set your product initiatives. When setting your initiatives, review your product goals first and see how it connects to your company’s high-level themes and big picture. Once you’ve decided on your initiatives, you can add them to your product roadmap. Your cross-functional team will review them and break them down into smaller, more detailed and manageable tasks and begin working on them. 

To help, here’s how you can come up with your initiatives:

• Your company: What does your company need the most? Is it publicity? Is it more users and revenue? 

• Collaborate with your team: Ask for your stakeholders’ input in the organization. What are the areas that need to be prioritized? What should you invest the most time and resources in?

• Audience: What do your users and target audience care the most about?