What is product strategy?
Product strategy is a big-picture plan outlining a product’s direction and goals throughout its lifecycle. Also called a product development strategy, it defines what the product is, who it’s for, and how to develop and promote it.
A strong product strategy ensures the product meets the end user’s needs, while it fosters alignment among product managers, developers, and marketers. It provides a vision and a sense of direction to guide decision-making from product development to lifecycle management.
Many product teams use strategy and innovation roadmapping tools to assist them in planning and organizing. These tools prioritize tasks, show users the relationship between ideas, and facilitate collaboration among team members.
Types of product strategy
Companies often take a specific angle or approach with their product strategy. From design to marketing, they position the product to fill an identified gap in the market. Four common types of product strategy are:
- Differentiation strategy. Organizations that choose this product strategy make their product unique in some way, like focusing on an unusual feature. Then, they emphasize this feature or quality in their marketing.
- Quality strategy. With this approach, organizations design a product that stands out due to its quality. While the product may be similar to others on the market, it offers high-end materials or components. Companies following a quality-oriented product strategy promote the product as luxurious or prestigious.
- Focus or niche strategy. This is when organizations with a large customer base design a product for a niche market and market it specifically to that group.
- Cost strategy. With this strategy, companies determine how to use resources in a cost-effective way. Then, they use the product’s cost to make it stand out from competitors’ and attract potential buyers.
Basic elements of a product strategy
Companies that develop an intentional product strategy reduce the risk that a new product flops.
Some of the elements companies put in their product strategy are:
- The vision, just as a company crafts a vision statement outlining what it stands for and the impact they want to make, a product strategy details an aspirational statement about what the organization hopes to achieve with the product. This vision stays the same over the product’s entire lifecycle.
- Goals arise from the product’s vision. These high-level strategic goals guide the team’s priorities and dictate measurable benchmarks for success, like gaining 1,000 monthly active users in a set timeframe.
- The target market is the part of product strategy concerned with identifying which segments of the population will benefit from the new product and why. Understanding the target audience helps with product development and marketing.
- Competitor and market research aims to position the product effectively by understanding the competitive landscape. This means identifying and evaluating competitors to look for opportunities to differentiate the product.
- A product roadmap should be a main feature of any product strategy. As a visual summary of product features and delivery milestones, this roadmap also includes an execution plan with the resources and responsibilities needed to bring the product to market. Unlike the product vision, the product roadmap evolves over time as the company gains a better understanding of its users and the market.
Benefits of product strategy
A well-defined product strategy helps companies achieve long-term success. Making a product strategy before launch can:
- Create team alignment. A product strategy provides clarity and purpose for all team members working on the project, guiding their decision-making and encouraging collaboration. For example, members of the development and marketing teams gain a shared understanding of the goals, target market, and timelines.
- Gain a competitive edge. Businesses use product strategy to stand out from competitors. With a thorough understanding of the product’s audience and the competitive landscape, the team can identify a unique value proposition so the product wins customers and builds brand loyalty.
- Optimize resources. Companies make better decisions about allocating and perfecting their budgets, labor, and time. Team members know which initiatives pair with which strategic goals and can work to promote features and maximize revenue.
Product strategy best practices
Creating a product strategy requires time and input from various stakeholders, but it increases the chances of a successful product launch. When developing a product strategy, companies should:
- Take a customer-centric approach. Conduct surveys to explore customers’ wants and needs, and run concept tests to gather feedback on early product iterations. By keeping customers top of mind, companies create products that meet their clients’ needs, resulting in more product success and revenue.
- Create strong goals. A product strategy’s goals influence every step of a product roadmap. Companies must ensure that their goals are SMART: specific, measurable, achievable, relevant, and time-bound.
- Take an iterative approach. Instead of relying on a static product roadmap, companies should stay agile, adapting and refining their strategy based on customer feedback, market shifts, and evolving user needs. Creating and testing prototypes, and iterating the roadmap and product as needed will ensure the product stays relevant and effective.
Learn more about how your product management team can build a better product.
Kelly Fiorini
Kelly Fiorini is a freelance writer for G2. After ten years as a teacher, Kelly now creates content for mostly B2B SaaS clients. In her free time, she’s usually reading, spilling coffee, walking her dogs, and trying to keep her plants alive. Kelly received her Bachelor of Arts in English from the University of Notre Dame and her Master of Arts in Teaching from the University of Louisville.
