Product Strategy Examples

by George Lawrence J.D.; Updated September 26, 2017
Businesspeople in meeting

A business looking to introduce some product into the stream of commerce must plan and design a product strategy carefully. Two major product strategies include price-based product strategy and product differentiation. When developing a strategy, strive to answer the following questions: who the product is aimed at; what benefit the product brings; what your position is in the marketplace; and what advantage the strategy will have over those of your competitors.

Price-Based Product Strategy

When using a price-based product strategy, the product is planned according to such things as cost-plus pricing (where you set the price of the product at the production cost plus a specific profit margin); value-based pricing (where the price is derived according to the product's value in relation to competitor's products); and target-return pricing (where you set a price in order to receive a certain profit return). Essentially, your strategic angle in a price-based strategy is to set the price in such a way that your product has a competitive advantage over other similar products.

When implementing a price-based product strategy, consider another facet: price discounts. After choosing a price-based method, and after formulating your strategy according to the factors in the overview, you will arrive at a list price (the price that you want to sell the product). Discounting the price lowers the list price, but makes purchasing the product more lucrative. Discount examples include quantity discounts (to be offered for customers who purchase a specific bulk quantity of your product) or seasonal discounts (to be offered during the year).

Product Differentiation

Use a product-differentiation strategy when your firm and competing firms offer a product that fulfills the same need (such as coffee). In a product-differentiation strategy, your goal is to put distance (in a good way) between your product and your competitor's product. Essentially, your competitor sells Coffee Blend A, but you Sell Coffee Blend B; in your strategy, you need to produce Coffee Blend B so that coffee lovers find yours to be superior to your competitor's.

There two forms of product differentiation: vertical differentiation and horizontal differentiation. To implement a vertical product-differentiation strategy, your goal is to improve features of your product so that the customers percieve a difference in quality due to your improvements. Horizontal differentiation focuses on your customers' preferences and should be used when the features of your product cannot differ substantially from the features of your competitors. According to, one common example of horizontal differentiation is with ice cream: different flavors are not "better" than others. If you cannot make your product "better," focus instead on marketing to customer taste and preference (such as conducting research to discover more people like one flavor over another).

About the Author

Based in Traverse City, Mich., George Lawrence has been writing professionally since 2009. His work primarily appears on various websites. An avid outdoorsman, Lawrence holds Bachelor of Arts degrees in both criminal justice and English from Michigan State University, as well as a Juris Doctor from the Thomas M. Cooley Law School, where he graduated with honors.

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