Building a product without a product strategy is like navigating without a map. While there’s a chance you’ll find your destination, there’s a high likelihood you’ll end up stranded.
Rather than relying solely on your intuition for product development, a product strategy offers you and your team a robust roadmap to follow, ensuring everyone pushes in the same direction—and maximizes your chances of launching a successful product.
Ready to dive into the world of product strategy? Ahead, explore what makes an effective product strategy and why you need one.
What is a product strategy?
A product strategy is a plan for how a business will develop a new product. It tells the whole story of the product a team is building and its intended audience. It also defines the course of action your organization must complete to develop a product, keeping everyone involved in the product development process on track.
The product strategy answers the questions “what,” “why,” and “how” a company will sell its product over time.
Product strategies apply to a company’s entire product portfolio and individual products. The objective is to create a unique value proposition—a compelling reason for the target audience to buy the product.
Product strategy vs. product vision
Many product teams assume product vision and product strategy are the same, but in reality, they are two related but different concepts. Product vision is the high-level, ultimate view of where the business is going. It’s the reason you are making a product in the first place. Meanwhile, product strategy breaks down how you’ll develop a product, why it needs to exist, and how you’ll sell it.
Why is product strategy important?
- Provides clarity
- Optimizes resources
- Differentiates your product
- Enhances market fit
- Drives effective decision-making
- Keeps teams aligned
Solid strategic planning turns good product ideas into success stories. It keeps new product initiatives focused and helps development teams set realistic expectations. Here are the key advantages of product strategy:
Provides clarity
A product strategy outlines the necessary steps to develop a product, providing transparency into the process for your team. As product development takes place and unexpected challenges arise, a product strategy can help everyone remain focused and clear on how to move forward.
Optimizes resources
Without a product strategy, you might sink time and money on the wrong tasks. A product strategy can help you understand what to prioritize, ensuring you use your resources as efficiently as possible.
Differentiates your product
Product strategy includes market research and competitor analysis. This comprehensive view of the market provides insight into what’s missing and how you can fill that gap, giving you the tools to differentiate your product among competitors.
Enhances market fit
For your product strategy, you’ll identify a market that’s large and has a demand and adapt your product to fit the needs of that market. Finding the right market is one part of the process. You’ll also determine the best way to present your product to your audience so that they see it as the solution they need.
Drives effective decision-making
Product strategy requires gathering research, such as market research and insights from your teams. This means you can make strategic product decisions based on data instead of hunches.
Keeps teams aligned
Product strategies set expectations and outline every team’s responsibilities. This helps everyone move toward the same goals. All teams understand what the product does, why it’s important, the future vision, and how you’ll convey this to your target market.
Key elements of a product strategy framework
- Product vision
- Product roadmap
- Target audience
- Goals
- Market and competitive analysis
- Resources
- Risks
- Metrics
These are the main components of a product strategy framework:
Product vision
As with any journey, you must have a vision for where you’re headed. Market research, customer landscape analysis, competitive analysis, product positioning, and a marketing plan can inform your product vision.
Product roadmap
A product roadmap outlines the plan and timelines for a product’s development. It includes features, updates, and improvements and aligns teams on goals, milestones, resources, and priorities. A product roadmap can also communicate your company’s product vision and plans to stakeholders and investors.
Target audience
A detailed buyer persona summarizes who you’re targeting and why they’ll buy your product. Demographics such as age, gender, and location and psychographics can explain how your target audience thinks and feels, such as their goals, interests, values, and purchase motivations.
Goals
A strong product strategy includes measurable goals. Using the SMART goals (specific, measurable, achievable, relevant, and time-based) framework, you can create tangible, quantifiable goals that help you make real progress. Vague objectives can be more intimidating.
Market and competitive analysis
A competitive analysis evaluates your competitors’ product strategies to help differentiate your brand in the market. Combined with a SWOT analysis, which details your strengths, weaknesses, threats, and opportunities, competitive analysis can help you more clearly identify how you will differentiate your offering from your competitors’.
Resources
The best product strategies bring new products to market while minimizing the number of resources used. Write a production plan that outlines how much raw materials, labor, manufacturing space, and capital you’ll need to develop the new product. This can highlight any opportunities to cut costs and speed up production.
Risks
Before you commit to a project, identify any potential risks and outline a plan to overcome them. This might include supply chain delays, legal compliance issues, or financing concerns.
Metrics
Metrics, which measure how successful your goals are, are an important part of product strategy. Common product strategy metrics include monthly recurring revenue, customer lifetime value, and retention rate.
5 types of product strategies
Different types of product strategies emphasize distinct elements of the development process. A successful product strategy might focus primarily on one of these categories, or companies can simultaneously pursue multiple strategies.
Here are five types of product strategies to consider:
1. Cost strategy
A cost strategy attracts customers by offering the best prices in a product sector. To lower prices, businesses must evaluate their processes and find ways to be more productive and efficient with resources. For example, negotiating with suppliers can help reduce costs.
2. Quality strategy
You can win market share with a quality strategy by delivering a unique, reliable, well-designed product. For instance, consider the quality difference between a pair of handcrafted leather shoes and those made on a mass-production assembly line.
A shoe brand might use quality as a way to market its product, focusing on how handmade leather shoes are longer-lasting and need to be replaced less frequently than factory-made synthetic shoes.
3. Service strategy
A service strategy prioritizes responsive customer service. You may ask your customers to compromise on price and selection in exchange for first-rate interactions with your company.
Think of American Express. Although its credit cards can be pricey and fewer retailers accept them than leading competitors, Amex maintains its customer base by offering impeccable cardholder service and perks.
4. Differentiation strategy
In a differentiation strategy, you offer products and features that no competitor offers. For example, think of a lawnmower with a proprietary mulching blade or a cooking spatula with a patent-protected nonstick coating.
5. Focus strategy
With a focus strategy, also known as a market-oriented strategy, you gain leverage by developing product and marketing campaigns targeting a specific audience. Though your products may not appeal to the general public, they can win over the narrower markets you select.
Take Manscaped, which offers grooming products for men. Its focus strategy cuts out about half of the population. However, this allows the company to explicitly cater to the grooming needs of people who identify as men and effectively communicate its unique selling proposition with its target audience. The company advertises heavily on sports podcasts with primarily male audiences.
How to create a product strategy
- Identify your target audience
- Understand the problem
- Establish your product vision
- Define the current state and target condition
- Outline product design principles
- Develop a product roadmap
- Define success metrics
- Execute and iterate
Here’s the step-by-step process on how to create an effective product strategy:
1. Identify your target audience
Understanding your target audience not only helps you create a product that meets their needs but also fosters a sense of connection and empathy, making your product team more invested in their work.
To understand your potential users’ needs, make user research an integral part of the product design and development life cycle. Conduct field studies and user interviews to understand who your users are and what they want. Use this information to define personas—archetypal models that reflect the most critical information about your target users.
2. Understand the problem
Before working on a solution, develop an understanding of the problem. As part of your strategy, conduct product research to identify the problem and ensure it’s worth solving—that your target audience really needs a solution for this problem and is willing to pay money for it.
You must understand the reason why you want to build a product (your business motivators) and then evaluate your product decisions in terms of the value they bring to your users (potential conversion).
3. Establish your product vision
A well-defined product vision helps everyone think big when working on a product. For example, for SadieB, a personal care brand, the vision isn’t to create a better version of yourself. “Walk into your bathroom in the morning and the landscape of products is often ‘fix-me’ products,” Abby Bowler, cofounder of SadieB, says on an episode of the Shopify Masters podcast.
“They are products that need to be applied to be ready to go out for the day. Our vision is to reconstruct that experience so that it’s less about fixing yourself or being good enough to go out into the world, but really taking that time to take care of yourself.”
Here are a few things to consider when defining product vision:
- Identify long-term goals. Long-term goals for what you want the product to look like in two or three years can help your team feel motivated and inspired.
- Inspire your team. It’s vital to get emotional buy-in from team members because they can also feel connected to the goal. That’s why your product vision should win the heart with emotions.
- Align stakeholders. Identify your product vision and ensure everyone on your team understands the global goal.
4. Define the current state and target condition
For many organizations, it’s possible to define two states: the current state of your product experience and your target condition (the ultimate user experience toward which you’re aiming).
You can plan your route toward the target destination by focusing on precisely what you need to build. By setting a shared goal, you can adjust the direction of your product efforts. Investing time in analyzing, measuring, and quantifying challenges is essential before your team starts to work on your project.
5. Outline product design principles
Making product decisions is a risky business. No matter how hard you try, there will always be some degree of uncertainty that makes you doubt your choices. However, you can simplify decision-making by introducing a simple, yet potent tool: product design principles.
Product design principles help you define what good design means in your organization. Well-defined principles are genuine—they reflect your product design philosophy.
For example, one of the design principles of popular blogging platform Medium is “direction over choice.” The Medium design team relied on this principle to ship a product that would encourage writing. It purposely traded user interface (layout, type, and color choices) for a stripped-down product that helped its audience begin writing sooner.
6. Develop a product roadmap
While some product roadmaps are date-specific, others use general time frames like quarters or seasons to indicate when teams should develop or launch features or initiatives. Effective roadmaps also include the required resources and milestones that mark significant progress toward your product’s launch.
Say you’re launching a new healthy soda pop. Your roadmap might look something like this:
Year 1, Q1-Q2
Goal: Develop and finalize the product formula and brand identity.
Initiatives:
- Conduct ingredient research to identify natural, low-calorie sweeteners and flavors that align with health trends like organic and non-GMO.
- Develop initial branding concepts, including logo, packaging design, and brand messaging emphasizing health benefits.
Milestones:
- Complete the initial recipe formulation and internal tasting by the end of Q1.
- Finalize packaging design and branding materials by mid-Q2.
- Begin necessary health and safety certifications by the end of Q2.
7. Define success metrics
It’s not enough to set a direction—it’s also essential to measure how you move toward the goal. Metrics help a team measure how their product is performing.
8. Execute and iterate
When you build a new product, you have a threshold of knowledge. You must include any missing information to establish an ideal product strategy on day one. But starting with solid goals and a willingness to experiment will help you create a well-defined plan.
Start simply and build from there. Introducing your product strategy lets you collect early feedback and iterate quickly. Product managers should also revise the product strategy systematically. When you learn what works and does not, revise your metrics and adjust your tactics.
Product strategy example: case study
Brian Berger founded menswear brand Mack Weldon because of an experience he had when shopping for underwear and socks. He hated going to a department store and sifting through a never-ending sea of products. He could never find the products he liked, so he was determined to reinvent the experience of buying men’s basics.
Identifying a real problem that affects the market is a strong foundation for a product strategy. Brian started by focusing on two core issues:
- Making the shopping experience more convenient and predictable.
- Building men’s basics with thoughtful features and high standards. Innovation wasn’t just for novelty; it was carefully targeted to address his target audience’s requirements and preferences.
By starting with informal conversations and moving on to structured surveys, the team at Mack Weldon validated the broader appeal of its solutions beyond the founder’s experience.
At launch, Mack Weldon invested in a full product line and robust marketing efforts to build a strong brand. That helped build brand recognition and trust quickly. Brian understood that a brand isn’t just about products; it’s about customer perception, loyalty, and emotional engagement.
“It’s multifaceted. It’s a brand strategy. It’s a narrative. It’s a point of view. I would say we probably spent the least time on that piece,” Brian says on an episode of the Shopify Masters podcast. “We’re actually spending a lot of time on it right now. We’re coming to market with an evolved brand strategy that will position Mack Weldon as the [top menswear] brand and why it’s important for customers to associate with us from an emotional perspective.”
Product strategy FAQ
What are the steps to develop a product strategy?
The steps to develop a winning product strategy include:
- Identify your target audience.
- Understand the problem.
- Establish your product vision.
- Define the current state and target condition.
- Outline product design principles.
- Develop a product roadmap.
- Define success metrics.
- Execute and iterate.
What are the five types of product strategies?
The five types of product strategies are:
- Cost strategy
- Quality strategy
- Service strategy
- Differentiation strategy
- Focus strategy
What are effective product strategy business models?
Cost and quality are both effective product strategies for ecommerce businesses. They help differentiate your product either through affordability or superior quality.
What should a product strategy include?
Every product strategy should include:
- Strategic goals
- Product vision
- Market research
- Buyer personas
- Competitive analysis
- Product roadmap
- Risk identification and mitigation
- Resource allocation
- Production plans
- Defined success metrics
How often should a product strategy be reviewed or updated?
You should review a product strategy at least once per quarter to ensure alignment with customer needs and market trends. In rapidly evolving industries, updates may be needed more frequently.
