Product strategy: A step-by-step guide

Product strategy plays a key role in ensuring that the product you’re thinking about creating is a good fit for your target audience and business.

Here are some of the most important things to know about product strategy, including why it matters and how to create an effective product strategy for your business.

Product strategy covers every aspect of the process of bringing a potential new product from vision to reality, such as details about how you plan to create the product you are looking to sell, why adding it to the market will benefit users by filling a specific gap in the current market, and how that specific product will help advance your business goals.

It’s an early step in the process of developing and releasing a new product. It involves thinking through the following two things:

• Why a particular product is a good fit for the current market

• Exactly what your business will need to do to transform your idea from a vision into a product or service customers buy and use

Effective product strategy plays a key role in working out the details and ensuring your plans are a good fit for your customers and business before you move further in the process.

Here are some of the ways a product strategy can help you:

Helps you make the most of your resources

You don’t want to invest time, money, and effort into creating products unlikely to result in enough sales to ensure a strong return on investment (ROI). This is a waste of resources that you could have used more effectively to create a different product that would better align with what your target audience is looking for.

Defines your product’s niche

You need a solid understanding of exactly who you plan to market your potential new products to and why. This will ensure that you are creating marketing materials and strategies with your target audience in mind.

Do plenty of market research and define who makes up your target audience prior to working out the details of your new product. You need to know what your niche is and what your target audience’s demographics and interests are.

Understanding and clearly describing why your product provides value to the target audience you identified can also help build trust in your brand.

Very few products are of interest to everyone. You’ll need to make an effort to understand exactly who will purchase your product or service. It’s important to narrow down your marketing strategy to appeal to (and form the best connections with) the right potential buyers—those who are most likely to provide the sales and profits your business needs.

Informs your product roadmap

Carefully consider exactly what you want your product to do for your business. This will help you set realistic short-term and long-term goals for how well you would ultimately like to see it perform over time.

Create a detailed product roadmap. This is an important step in making sure that your overall product management strategy is as effective as possible.

Strong product roadmaps contain details about:

• Your business strategy

• How you want your customers to respond to it

• What your competitors are doing

• How you can ensure that your results are better

• What your product’s place in the macro of your industry ultimately looks like

Provides direction and clarity for internal teams

An effective product strategy outlines exactly what each department and team member’s responsibilities look like. It plays an important role in keeping everyone on the same page. Everyone should understand what they are supposed to be doing to avoid important steps from being missed.

Here are some of the most important steps for creating an effective product strategy framework that helps you make the best decisions for your business and customers.

Step 1: Create an ambitious product mission or vision

Clearly identify exactly what you want your product to accomplish before beginning the process of creating and marketing it. This is key to ensuring there’s demand for what you are creating before you invest time and money into it.

A strong market vision identifies the following:

• Specific buyer personas that your product is most likely to be a good fit for

• Gaps in the current marketplace that you see your product filling

• A detailed go-to-market plan that brainstorms ideas for how you will promote your product

Your vision should also provide preliminary research into who your competitors are, what their weaknesses look like, and how you can ensure your business retains a competitive advantage in those areas.

Step 2: Learn about customer needs and how they are evolving

Carefully consider the specific types of products your customers are actually looking for and the problem or gap they want to address. This can help you make strategic decisions that meet your customers where they are.

Rather than creating the product you want to create and hoping you’ll be able to find a market for it, start by considering your target audience’s current needs. This can make a significant difference when it comes to making sure that your finished product will have plenty of buyers.

However, it’s also important to keep in mind that your customers’ specific needs are likely to fluctuate over time. Keeping your product and marketing strategies as flexible as possible is key to retaining their interest as the specific products they are looking to purchase evolve.

Step 3: Understand your product’s place in the value chain

Understanding where your product will fall in comparison to the rest of the value chain can help ensure it will provide something your customers are looking for. This means examining how your product fits into customers’ day-to-day lives, how it will be consumed, and other factors that will impact a customer’s experience with your product.

Step 4: Look for similar growth patterns and cycles in other markets

Markets can evolve very quickly, and patterns can reveal how demand for your product is likely to change over time.

For this reason, learning about trends and cycles that tend to impact similar markets to yours can give you the best possible predictions about changes you might see over time.

Step 5: Identify how your market might change and be ready to make adjustments

No matter how well you think you understand your target audience and the potential market for the product you are envisioning, it’s important to keep in mind that markets fluctuate frequently depending on current interest in and demand for certain types of products.

Your team will need to proactively identify how your target audience may change over time. Make plans for how you might best respond to those changes to stay one step ahead of your competitors.

Step 6: Develop your strategy’s KPIs

Once you have developed your product, you’ll need to monitor key performance indicators (KPIs) to assess how it’s doing. Define clear KPIs for your product strategy early on. 

You can adjust your KPIs later on once you learn more about how well your target audience is responding to your product strategy and whether you are bringing in the sales and profits you hoped for. However, your early KPIs can provide helpful initial insights into whether early interest in your product is living up to the benchmarks you hoped for.

Step 7: Build your product roadmap

Your product roadmap reflects where you want your product strategy to go and how you want to get there before moving further in the process.

A successful product roadmap should outline the details of what your product strategy’s place in the bigger picture looks like, especially when it comes to finding ways to gain an edge over your closest competitors.

Creating a strong product roadmap involves a significant amount of market research to determine what other brands in your industry are doing. It also involves setting strategies that increase your product’s likelihood of performing better than those of your competitors.

Step 8: Communicate your strategy

Strong communication is a must when it comes to crafting any well-executed product strategy. It helps you ensure that everyone stays in the loop. Team members who are not properly informed about their role in relation to what the wider process looks like will be less capable of carrying out their tasks at the highest level. This could potentially impact your product strategy’s overall success negatively.

Ensure that everyone involved is sufficiently informed about what they are supposed to be doing at all times. This will increase your team’s ability to carry out a successful product strategy with minimal concerns and obstacles.

Step 9: Start executing your strategy

Once you have worked out the details of how you would like your product strategy to function, you can start executing it.

You don’t necessarily need every variable solved before you start getting your product to market. Every new venture starts with some degree of trial and error. You’ll likely need to adjust your approach when you get going and have an idea of how well your initial vision is working.

However, starting with as much information as possible before moving forward can give you the best chance of avoiding major problems that you didn’t anticipate along the way.

Step 10: Measure your progress and course correct along the way

Continuously monitoring your product strategy’s progress is key when it comes to making adjustments to improve your overall results.

No matter how well your team researches and plans your initial product strategy, it’s unlikely to provide the best results immediately. Diligently identify specific areas where early corrections may significantly improve your results. Make small changes proactively. Don’t allow minor issues to grow into much larger problems that require more time, money, and effort to solve.

Here are some examples of the types of product strategy frameworks your business can choose from:

• Ansoff Matrix: sometimes known as the Product-Market Matrix, the Ansoff Matrix can help you find opportunities to grow your business’s revenue. It shows you where you can tap into a new market by developing a new product or service. The model invites you to consider four key areas: market penetration, market development, product and development, and diversification.

• The Lean Canvas: this framework is a development of the Business Model Canvas, but it’s more suitable for entrepreneurs looking to develop new products or services. You can use it to consider problems, solutions, key metrics, and unfair advantage, amongst other key aspects of launching a new product/service.

• Blue Ocean Strategy: this framework is based on a book of the same name by Chan Kim and Renée Mauborgne. The model focuses on capturing uncontested market space, meaning there’s no competition. Demand is created—not fought over.

The Business Model Canvas: this tool—a one-page document with boxes corresponding with different elements of a business—helps you put your idea through its paces, visualizing and assessing it.