Ever wonder what brands like Tesla, Dollar Shave Club and Chipotle have in common? It's their product strategy that contributes to their global success. As a small business owner, you can learn from your favorite brands and develop a winning product strategy for your goods and services. All it takes is some creativity, planning and market research.
What Is a Product Strategy?
Creating a successful product requires more than a great idea. Whether you're a small business or an established organization, you need to plan every step of the process. It's crucial that you differentiate yourself from the competition and give customers a reason to choose your brand. That's where a well-thought-out product strategy can help.
Think of it as the vision or the road map for your product. It describes how the product fits into the market, how it complements your business and who will benefit from using it. A good product strategy will map out the steps needed to bring your idea to life and make it successful.
Approximately 70 percent of organizations are factoring in their product strategy when making major decisions. They also say that by doing so, their teams work better together. Having a clear strategy helps define your vision so you can set smart goals and determine the steps required to reach them.
Key Elements to Consider
An effective product strategy will serve as a road map and guide your business decisions. Its role is to help you define and plan your company's activities and ensure that your products will have the impact you expect. Before getting started, make sure your strategy covers the following aspects:
- Product design
- Features and key characteristics
- Target audience
The strategy should align with your company's vision, branding efforts and product life cycle. It should also meet customers' needs. Its core elements include your vision, goals and initiatives. Each of these steps requires an in-depth analysis of your product, your competitors and your target market.
Just because you have a good product, it doesn't mean that it's what customers need or want. Your idea should fill a gap in the market, stand out from the others and deliver real value to the end user.
Define Your Vision
The first thing you need to do is to define your vision. Think of it as a big picture of what you're trying to achieve.
Let's take IKEA, for example. Since its very beginning, the company strived "to create a better everyday life for the many people." Its products are designed to make the home a better place. They are stylish yet functional, fit into any budget and provide superior quality. IKEA's vision is to offer practical furnishing products at prices so low that everyone can afford them.
What do you hope to achieve with your products? Do you want to change people's lives for the better, help small companies grow or promote health and well-being? Envision the future you are trying to create. Think long term rather than focusing on the immediate needs of your target customers.
Set SMART Goals
Next, define your product's goals. These should be specific, measurable, achievable, realistic and time sensitive and should align with your vision. Ask yourself the following questions:
- What do you want to accomplish with this new product or service?
- Why does this goal matter?
- How will you know when your objectives are met?
- What does it take to achieve your goal?
- Does it match your other needs and efforts?
- Is this the right time to do it?
- What can you do five weeks, five months or five years from now?
Let's say you want to launch a new protein shake that's lactose free and made with organic ingredients.
A general goal would be: We want to become a top-rated protein supplier. A SMART goal could be: We want to become a leading supplier of organic protein shakes, double our market share within one year and triple our revenue within two years. Determine how you plan to achieve these objectives and which resources are needed. Consider any challenges that may arise along the way.
Establish Strategic Initiatives
No matter how big or small your goals are, you must specify the work and effort required to achieve them. For example, you may need to expand your operations and enter new markets or switch to more efficient equipment and train your team in order to accomplish your objectives.
Let's return to the previous example. You already have a customer base consisting of people in their late 30s who care about their health and well-being. Perhaps you're selling dietary supplements, such as multivitamins, fish oil and sports formulas.
Your new protein shake, which is made with organic ingredients, will appeal to a more specific audience. You want to target health-conscious individuals who emphasize quality over price and have an active lifestyle. They're 30 to 55 years old, have an above-average income and play sports or go to the gym regularly. Therefore, you'll need to narrow down your audience and come up with a marketing strategy that targets this specific market.
Customer Focus Vs. Product Focus
When developing your product strategy, you need to determine whether you want to focus on the actual product or the end customer. A product focus definition could be an approach to business that defines a company's operations, strategies, metrics and performance in terms of products. Manufacturing companies, for instance, are constantly improving their products and embracing the latest trends in order to remain competitive.
Apple, for example, is a product-focused company. Its products disrupted the world of telecom and contributed to the so-called fourth industrial revolution. The tech giant created a market that customers didn’t even know they wanted or needed.
Customer-focused businesses, on the other hand, plan their operations, set metrics and assess their performance in terms of customer satisfaction. Compared to product-focused companies, they're more flexible about their offerings and processes. Their primary goal is to meet customer needs and wants, even if they don't necessarily align with the latest industry trends. Samsung, for instance, goes back and forth to fulfill customers' needs and adapt its products in response to the market.
Make Data-Driven Decisions
Having access to quality data is essential at each stage of the product life cycle. Research other businesses in your niche, read case studies and success stories, research the market and keep an eye on the latest industry trends. The more information you have, the higher your chances of developing a winning product strategy.
Determine what your target customers really want. For example, if your goal is to help people live healthier and make smarter food choices, find out what products they're currently using and what their pain points are. Perhaps their favorite protein shakes are too expensive, lack flavor or contain certain additives that may pose health risks in the long run. Maybe they come in large containers, causing inconvenience for those who wish to use them in the gym or on the go.
Collect customer feedback via polls and surveys. Analyze the market and its growth rate. Check your competitors and try to come up with a better product strategy. Base your business decisions on hard facts and data, not assumptions.