I’m in the process of developing a new waffle iron. This machine will be able to flawlessly detect when a waffle is golden brown, regardless of the volume or thickness of the batter. We’re talking about next-level waffle technology. It could change the game completely, but in this case, something goes wrong.
The product development process is rushed and there is no clear guidance or objectives. The manufacturer of the waffle iron does not have any information on what kind of audience it will attract, how it compares to other waffle irons, or what benefits it will bring to the business.
If that were true, then this amazing feat of engineering would go to waste because it didn’t have a good plan to guide its development.
What is Product Strategy?
Product strategy is the plan for developing and marketing a product. This section list the product’s goals, how it plans to achieve them, and what tactics it will use.
Market research is a critical aspect of product strategy. You need to understand your target market and what they want. You also need to find the best way to reach them. You will need to have a clear idea of your product’s features, benefits, and how it differs from other products on the market.
After you establish a reliable product strategy, you can begin promoting and selling your product. Your strategy should be well-defined in order to help you make good decisions about where to allocate your resources and how to grow your business.
Why is Product Strategy Important?
Product strategy is important because it allows a company to figure out what products to make and how to place them in the market. A product strategy that is well-developed can help a company achieve its goals and objectives.
Your strategy includes key decision-making factors about how a company will introduce, price, and market its products. These decisions will be based on your analysis of the competitive environment, your target market, and your company’s strengths and weaknesses. A well-devised product strategy can have a positive effect on a company’s ability to generate revenue and its brand reputation.
A strong product strategy gives your business a clear purpose and plan. It can help you decide which markets to compete in and whether to launch new products or keep existing ones. Although it is easy to say what characteristics a great product strategy possesses, it is difficult to put these characteristics into practice – especially because there are many different approaches.
You may come up with a plan, but that does not mean it will be successful.
Bad Product Strategy
If you don’t know what your customers want, you won’t be able to give it to them. If people aren’t interested in your product, it doesn’t matter how good your development processes are. This text is talking about how businesses can grow by diversifying into new areas, but before doing so, they should consider if it’s an area that the business is strong in. Diversifying into new areas can be beneficial for businesses, but only if it’s an area where they can excel.
An effective product strategy takes into account not only what your product’s strengths are and what needs it satisfies, but also anticipates and preempts any potential problems. You might find that avoiding one type of customer segment could prevent you from having to deal with lots of returns, complaints, or legal issues.
Product Strategy Framework
The three main components of a product strategy framework are the market vision, product goals, and product initiatives.
Market Vision
Who is the target audience for this product, and how does that affect your business? What are the critical questions to answer when defining your market vision? This section contains information about your target customers, plans for positioning your product, and how it will perform compared to your competition. What do you want your business to achieve in the market? Address your customer needs, what kind of buyer personas you want to attract, and how you will be able to beat the competition.
Product Goals
Your product strategy needs to have a goal or final outcome. You have to work towards something. Creating goals is essential for plotting your journey and ensuring you stay on course. Goals help guide your development team’s progress and success.
Your goals should be specific, measurable, achievable, relevant, and time-based. The goals should be clear and concise, with a sense of urgency. Also, don’t save all your goals for the end of the project. Create timely milestones for your team to ensure that they are making progress and completing everything that needs to be done.
Product Initiatives
Product initiatives are essentially more conceptual product goals. These are large-scale concepts, such as the trends you want your product to have an impact on. This refers to the goals that you want to achieve for your business, which can be things like improving your reputation or the status of your industry.
Product Strategy Example
The Macintosh 12K8 was the first version of the Apple computer that would become the world’s most popular brand of personal computers. The Mac was a game-changer in the world of computing. Even though it didn’t meet all its initial goals, its product strategy is worth studying.
Market Vision
High-tech marketing and product strategies in the 70s and early 80s catered primarily to hobbyists and “early adopters” — people without backgrounds in computing who were willing to learn about it to improve work productivity.
There wasn’t much emphasis on appealing to the common consumer — exactly who Apple made a point of trying to reach. The company’s market vision was to make personal computing accessible and appealing to everyone.
Product Goals
Apple created sales goals that could be quantified and given a specific time frame. Apple estimated that the Mac would sell 50,000 units within its first 100 days, which it managed to do quite easily. Those early sales didn’t reach the long-term goals.
Apple has specific goals for its sales figures in order to gauge the success of its product strategy.
Product Initiatives
Apple released the original Macintosh with the aim of making it accessible and straightforward to use for everyone, with a graphical user interface that anyone could easily operate.
The original Mac was designed to be a cutting-edge machine that would change the landscape of personal computing. The authorities wanted to make the concept more accessible to the general population, beyond hobbyists and traditional PC users. Macintosh’s goal was to make personal computing available to everyone. And for what it’s worth, Apple nailed it.
The Foundation of Business Strategy
The book 7 Powers by Hamilton Helmer discusses how to make a company enduringly valuable. The theory is based on the idea that power is the potential for differential returns. The book covers how to attain power and make decisions based on that power.
Economies of Scale
As production is increased, the unit cost of production decreases. This is due to the fact that, with increased production, more efficient methods of production can be used and fixed costs such as overhead can be spread out over more units. The increased utilization of capital and labor, the spreading of fixed costs over a larger output, and the learning that comes with experience all contribute to increased profits. The more you produce, the cheaper it is per unit.
Network Effects
Network effects occur when one person’s use of a product or service makes it more valuable to others. As more people use a product, it becomes more valuable due to network effects. This is an important concept in tech businesses.
The more people who use a communications network or service, the more valuable it is to everyone who uses it.
A very common example of a network effect is the telephone. If more people have phones, the phone network becomes more useful to each person because it allows them to communicate with more people.
Other examples of goods or services that exhibit network effects include:
- Social networking websites (Facebook, Twitter, LinkedIn)
- Online marketplaces (eBay, Amazon, Alibaba)
- File-sharing platforms (BitTorrent, Dropbox, iCloud)
Counter Positioning
Product positioning is the process of designing the marketing mix for a product such that it occupies a desired position in the minds of consumers relative to competing products.
If you create a brand and business model that your competitors have a conflict of interest in, they will be unable to compete effectively against you.
Switching Costs
The costs associated with switching from one product to another are known as switching costs. The costs associated with retraining employees, the lost productivity while employees are being retrained, and the loss of customers can be significant. If switching costs are high, customers may not switch to a competitor’s product.
Brand
Brands are powerful tools that can help create a competitive advantage, but they require a lot of time and effort to establish. They can be complex, so it’s important to be thoughtful about how you manage them.
Product success is often reliant on building a strong brand that resonates with customers. A product with a strong brand is more likely to be successful in a competitive market because customers are more likely to trust and recommend it.
Cornered Resources
When a company has preferential access to a resource, it has a monopoly over it. Some things that can be considered resources are intellectual property, human capital, physical resources, distribution channels, and access to capital.
Process Power
Process power is the power that is the least obvious and can be extremely difficult to replicate. The process is ingrained in the organization and its culture and is not written down anywhere. It is not just about the steps to take to achieve something, it is about the principles and values that guide those steps.
Building the moat
The key to making a company enduringly valuable is gaining and maintaining power during your business’s Origination, Take-Off, or Stability phases. A business is unlikely to develop a power moat once it is in decline.
Product Positioning
Product positioning is the idea of how customers will see your product in their minds. It’s about figuring out what space in their minds your product will occupy. The goal of marketing is to create a specific perception of your product in the mind of your target audience.
Your positioning statement should also lay out what makes your product different from the competition. Your product’s positioning should be summarized in a “positioning statement” – a concise explanation of how your product is suited for your ideal buyer persona. Your positioning statement should also explain what makes your product different from competing products. The purpose of this tool is to help marketing teams to make their efforts more consistent with the brand and what it represents.
For mobile users aged 13 to 24, TikTok is a video-sharing social networking service that never stops running videos tailored to their specific preferences. TikTok plays new content automatically and nonstop, which is what users have demonstrated that they like to see.
Companies use things like market research and focus groups to figure out the best way to position their product. Businesses can use these strategies to understand how to best reach their target audiences. Having that information allows companies to see how they can show the benefits of their products in a way that will be appealing to consumers.
Product positioning often informs a company’s marketing efforts. This means that certain aspects of the product, such as the way it is presented and the language used to describe it, are adapted to meet the needs and wants of the target audience. This often requires changes to things like packaging or display.
Successful product development needs guidance. Businesses cannot afford to randomly guess their way through because they will not be successful. A product strategy sets the tone for the process. It starts and continues development.
Product strategy is about figuring out what a product is for. The most important function of a product is to establish the why of the product. It is difficult for product teams to know where to start and how to proceed without that.
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