Define Product Strategy in Marketing

Product strategy is a core component of the overall marketing strategy. The product itself guides decisions that a business makes to achieve marketplace success. Decision-makers assess the product attributes, industry and competitors. The information is used to develop a product strategy designed to achieve short-term and long-term sales, revenue and distribution goals. The product strategy is developed and written by the organization's marketing team, and requires final approval by the chief executive officer (CEO).

Market Research

Research is used to identify needs and desires of target customers to develop the product strategy. This is not limited to consumer products; it includes products for businesses as well. In the trade, this is referred to as a B2B (business-to-business) product strategy. Airlines used B2B product strategies to identify special needs of business travelers, and subsequently introduced business-class seating and loyalty rewards programs. Food manufacturers leveraged the identification of busy working parents to introduce a wide array of frozen complete meals and “heat and serve” food items.

Product Development

Consumer-products manufacturers heavily depend on strong product strategies. Because billions of dollars and market share are at stake, manufacturers of nationally recognized food and household-goods products will spend millions in product development to introduce new brand variations. The term “new and improved” is used to advertise reformulations of existing products to generate new life and consumer interest, and to upstage competitors. For example, the product strategy for a laundry detergent can be based on the addition of a fragrance, a fabric-softener additive or use in cold water.

Product Positioning

Companies market products to meet the needs of targeted customers. They develop a “positioning” for the product to compete against other products and brands in the marketplace. Positioning is also referred to as a “unique selling proposition” (USP). The positioning or USP claim often results from product research. For example, a toothpaste manufacturer may position its brand as one that “prevents cavities four times better than other brands.” The product strategy would then incorporate the positioning statement as required language to be used in advertising, packaging, product displays and promotions.


Distribution plays an important part in product strategy. In some cases, the distribution strategy may even determine the positioning. This is often used for direct-to-consumer (D2C) products that are advertised as “not available in stores” or “as seen on TV,” and that require mail or telephone ordering. Conversely, some companies may limit the availability of products to a select group of one or more retail stores. This strategy provides exclusive distribution of the product in order to drive and increase sales.


In some instances, product strategies are based on price alone. This is often used for store brands (also referred to as “private label”) found in grocery stores and “big box” super stores. The store brand is often priced up to 20 percent less than major nationally advertised brands. Shoppers purchase items like toilet paper or canned foods at a lower cost, but also complete the rest of their shopping at the store. Membership-based or “club” stores are totally driven by a product-pricing strategy. Car dealerships use pricing as a part of their product strategy to clear out older inventory and make room for new models by offering discounts below the manufacturers suggested retail price (MSRP).


About the Author

Cheryl Munson has been writing since 1990, with experience as a writer and creative director in the advertising industry. She holds a Bachelor of Arts in journalism with a focus on advertising from the University of Wisconsin in Madison.