How to Develop a Product Strategy

Developing a product strategy is a key stage in the development of any business. It determines what products, services or services the company will offer, how they will be positioned in the market, and what goals and objectives the company faces. We will tell you what a product strategy is, the main stages of development and methods.

What is a product strategy?

A product strategy in marketing is a company's long-term plan of action aimed at developing a specific product or assortment. It involves deciding which products should be developed, manufactured, and sold, how they should be marketed, what price to set, how to promote them, and how to manage the product lifecycle.

When developing a product strategy, marketers consider many factors, including the needs of the target audience, the competitive landscape, technological trends, economic conditions, and legal restrictions. They also analyze sales data, customer feedback, and market research to understand which products are most in demand and how they can be improved.

Product development strategy may change over time based on changes in the industry, consumer preferences, and other external factors. Therefore, companies regularly review it to remain competitive in the market.

Goals and objectives of the product strategy

Product strategy goals are specific results that a company aims to achieve with its product. An example of a product strategy: to bring a new product to the market or improve an old one, to expand the range, to occupy a new niche, to reduce or raise the cost of a product or service.

Product strategy objectives are specific actions that need to be taken to achieve the set goals. The product development strategy helps to solve the key tasks of the company: the development of new markets, attracting more customers and increasing profits. In addition, it provides an opportunity to: formulate business prospects, plan resources, improve the team's understanding of the product, and ensure consistency between departments.

Example of a product development strategy

The Natur company is engaged in the production and sale of environmentally friendly food products. It has been successfully operating in the market for several years and has a stable customer base. The products are in demand, business processes are established, stable profits are more than six months, so the management decides to scale up through the expansion of the sales market.

Goal: Launch of existing EcoLine products in new markets.

Tasks:

• Study the needs of potential customers in new regions.
• Adapt products to the requirements of new markets.
• To create a network of distributors and partners in new regions.
• Organize marketing activities to promote products in new regions.

Stages of product strategy development

The creation of a company's product strategy includes the following stages:

1. Market analysis. At this stage, key market players, their advantages and disadvantages, and their strategies are studied. In addition, the company identifies and divides the target audience into groups, analyzing its needs, preferences and behavior.

   Collecting and analyzing feedback from customers allows businesses not only to improve their product, but also to adapt to the changing needs and preferences of their customers, stay ahead of competitors, and increase the loyalty of their audience.

2. Creating a USP. It is important for the company to convey the value of the product, service or service and tell the customer how his life will improve with the help of the product, show how it differs from competitors, and why competitors will not be able to offer the same one.

   The USP should clearly and convincingly explain why the customer should choose your product, service or service among many similar offers.

3. Pricing. The company needs to determine the optimal price for products that will correspond to its quality, uniqueness and value for consumers.

   You can proceed from how much customers are willing to pay for a product and how much competitors ask for similar products or services. It is also necessary to take into account the costs of promotion and distribution of products. Determine whether there will be discounts or special offers.

4. Bringing the product to market. The process of launching it into the market and promoting it to consumers. At this stage, it is important to develop a marketing strategy that will help attract attention to the product and its sales.
5. Product promotion. A set of measures aimed at increasing product awareness, drawing attention to its advantages and stimulating sales. Promotion can include advertising, PR, participation in exhibitions and conferences, as well as other forms of communication with consumers

Types and Methods of Product Strategy

In product development and management, there are different kinds of product strategies that help companies achieve their business goals. Let's consider the main ones:

SWOT Analysis

A method that helps to assess the strengths and weaknesses of a product, as well as the opportunities and threats that exist in the market.

Internal factors:

• Strengths, strengths - unique technologies, highly qualified personnel, efficient logistics.
• Weaknesses are inefficient business processes, outdated equipment.

External factors:

• Opportunities are changes in laws, an increase in demand for certain goods or services.
• Threats are competition, economic crises, and a decrease in purchasing power.

SWOT analysis on the example of a manufacturing company:

BCG Matrix

A strategic analysis tool designed to evaluate a company's product portfolio. It is based on two key parameters: market share and market growth rate. Products are classified into four categories:

• Stars have a strong competitive position in the market and a high growth rate. They require significant investments, but also bring high profits.
• Dairy cows – with a high market share, but a low growth rate. They generate a stable income that can be used to finance other products.
• Troubled children – with a low market share, have the potential to grow, but require significant investment. The most unpredictable: they can "shoot" and become cash cows, or they can bring losses.
• Dogs – with a low market share and growth rate, bring low profits. Products have been present for a long time, but do not arouse interest among buyers, so it is difficult to promote them, and it is more advisable to stop their production.

For example, the company "TechGadgets" produces various electronic devices. As part of the analysis of her product portfolio using the BCG matrix, she determined:

• Stars are the latest generation smartphones in high demand.
• Cash cows are a line of laptops that are consistently sold and profitable.
• Problem Kids is a new line of smartwatches that requires investment to increase market share.
• Dogs are an old line of tablets that are no longer popular.

VRIO Analysis

A strategic planning tool that helps to identify the company's resources and capabilities and identify potential sources of sustainable competitive advantage. The analysis involves evaluating four aspects of each resource or capability:

The analysis involves evaluating four aspects of each resource or capability:

• Value: How valuable your product is to customers.
• Rarity – what unique technologies or resources your company has.
• Imitability – how difficult it is for other companies to imitate your product.
• Organization — how efficiently the company uses resources.

A VRIO analysis in the context of a product strategy can include the following steps:

1. Make a list of resources and capabilities. It is necessary to analyze all tangible and intangible resources, as well as the strengths and weaknesses of the company.
2. Evaluate resources. For each resource or opportunity, you must answer VRIO analysis questions.
3. Create a strategic hypothesis. Based on the results of the analysis, select those resources and opportunities that can become the basis for creating a sustainable competitive advantage.

Method of vision

In the context of product strategy, it is the formulation of the future state of a product or company, which reflects its mission and goals. The visioning methodology helps the team stay focused on long-term goals and motivates them to overcome current difficulties.

You can describe the product vision using the Product Vision Board:

PESTLE-Analysis

A technique that allows you to assess how various factors affect a company's business strategy. With its help, it is possible to identify opportunities and threats to the external environment that can affect the success of the product development strategy.

Components of PESTLE analysis:

• Political is political stability or instability, legislative changes, trade restrictions on the international market.
• Economic is the level of economic growth in the country, exchange rates and inflation, unemployment rate and availability of labor resources, taxation policy.
• Social – demographic changes, educational level of the population, culture and social norms, changes in lifestyle and consumer preferences.
• Technological — the pace of technological development, research and development, automation.
• Legal — legislation in the field of the consumer market, antitrust and competition law, patent law and intellectual property.
• Environmental – environmental legislation, climate change and weather conditions, waste management and energy consumption.

Examples of using PESTLE analysis: