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Product strategy defines the high-level plan for developing and marketing a product, how the product supports the
business strategy In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessmen ...
and goals, and is brought to life through product roadmaps. A product strategy describes a vision of the future with this product, the ideal customer profile and market to serve,
go-to-market Go-to-market or go-to-market strategy is the plan of an organization, utilizing their outside resources (e.g. sales force and distributors), to deliver their unique value proposition to customers and achieve competitive advantage. The end goal is ...
and
positioning (marketing) Positioning refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors and different from the concept of brand awareness. In order to position products or brands, compa ...
, thematic areas of investment, and measures of success. A product strategy sets the direction for
new product development In business and engineering, new product development (NPD) covers the complete process of bringing a new product to market, renewing an existing product or introducing a product in a new market. A central aspect of NPD is product design, along ...
. Companies utilize the product strategy in
strategic planning Strategic planning is an organization's process of defining its strategy or direction, and making decisions on allocating its resources to attain strategic goals. It may also extend to control mechanisms for guiding the implementation of the s ...
and
marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
to set the direction of the company's activities. The product strategy is composed of a variety of sequential processes in order for the vision to be effectively achieved. The strategy must be clear in terms of the target customer and market of the product in order to plan the roadmap needed to achieve strategic goals and give customers better value.


Goals of product strategy

Product strategy aims to provide context for what the product and business intends to achieve, the target customers and market, and the work to accomplish. ''Vision'' provides the big picture of what the company is trying to achieve. Without vision, it will be difficult for stakeholders to understand its direction and it will lack connection to a broader picture. ''Execution'' is defined by the product roadmap. While the product strategy outlines the elements of the product and the company's target market, the product roadmap explains how you will do it. ''Big picture context'' provides the background of each feature and how it relates to larger goals. It also include details in which certain features will be built, and in what order. ''Initiatives'' are the high-level efforts that will help you achieve your goal. For example, performance improvements and expansion of markets.


Elements

* Design - What exactly do you want to sell to potential customers? What will you design to make it stand out from other companies? For example, attractive product design draws more customers towards your product. * Features - What features will you add to increase the benefits offered to your target market? How does your product differ from the others? "Marketing is not about providing products or services, it is essentially about providing changing benefits to the changing needs and demands of the customer" Product features differentiate amongst competitors. * Quality - A product's quality should be consistent to make sure that the product meets the expectations of their target market. Thus, strengthening the firm's reputation. * Branding - Brands have the power of instant sales and they convey the message of confidence, quality and reliability to their target market. It is also used a tool for companies to differentiate itself from their competitors. * Target Market - Identify whom you're selling to. Whom to aim your product at? How will customers view your product in the marketplace? "The organization's marketing task is to determine the needs, wants and interests of target markets and to achieve the desired results more effectively and efficiently than competitors, in a way that preserves or enhances the consumer's or society's well-being." * Positioning - How does the company plan to position its product in the market? Different factors will need to be considered when you position your product in the marketplace as it will impact on consumer's perceptions about your product and brand. For example, how you will price the product and the quality of it.


Process

# Generating - Using
SWOT analysis SWOT analysis (or SWOT matrix) is a strategic planning and strategic management technique used to help a person or organization identify Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning. It ...
(strengths, weaknesses, opportunities, threats) and current market trends to generate ideas. The company may want to develop several different roadmaps to suit different types of projects along with risks management involved. # Screening the Idea - Set specific criteria for the product ideas in terms of if it should be continued or diminished. Will customers in the market benefit from this product? # Testing the Concept - Using quantitative or qualitative responses to assess consumer responses to the product idea before introducing the product to the marketplace. # Business Analytics - A detailed marketing strategy will be included in terms of whether the product will be profitable in the marketplace. This will also include the reactions from the target markets and product positioning to evaluate if there's demand from the market. # Marketability Tests - Prototype product will be introduced followed by a test of the product along with the proposed marketing plan. Modification can be made when necessary. # Technicalities and Product Development - Prototype will be created in the marketplace allowing exact and real life investigations, product specifications and any manufacturing methods. This stage also includes the process of logistics plan, supplier collaboration, engineering operations planning and quality management. # Commercialize - Product will be launched into the market alongside advertisements and other promotions. # Post Launch Review and Perfect Pricing - Review of the market performance in order to assess the success of the project on the entire product portfolio. This stage will also include product costs and the forecast of future profit and revenue, differing price and using competitive technologies for competition in the market.
Value chain A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., good and/or service) to the end customer. The concept comes through business management and was f ...
analysis will be useful for this stage of the process.


Pros

* Basis - The product strategy forms the basis of implementing a product roadmap. It allows the company to manage and measure for success, minimize the risks and to focus on a specific target market. * Creates value - A strategy that focuses on specific target markets highlights the cost and durability of a product compared to other products, which adds on value towards customers and potential customers. It can also win businesses with improved performance, thus increasing reputation and revenue. * Non-price competition - Allows businesses to compete in other areas other than price. For example, taste and design. * Customer-centric approach - The company will be able to keep up with changes in the marketplace as it approaches to targeting customers. Thus, the company will know how to advance products tailored to a way that it satisfies consumers expectations.


Cons

* Marketing and Sales Demands - Tailoring products to certain target markets requires increased administration efforts, thus a higher number of staffs required. * Higher Costs - Cost to customise and research into certain products in terms of a certain target market is expensive, as well as the increase number of staffs hired. * Consistency Challenges - If the company fails to provide an efficient and effective product to a certain market, there maybe a negative damage to the brand's image. Thus, the company needs to maintain a consistent standard of quality of its product. * Product-Centric Focus - The company can get too focused on a certain product's research and development aimed towards a certain market and fail to response efficiently to changes in customers demand and interest. * Risks - Market and customer research may not be sufficient, leading to product development that do not meet the needs of potential customers. Thus, failure in delivering benefits of the product to customers.


Example

Product differentiation In economics and marketing, product differentiation (or simply differentiation) is the process of distinguishing a product or service from others to make it more attractive to a particular target market. This involves differentiating it from co ...
occurs when you have to distinguish a certain product in the marketplace as you're competing for a product that bring about the same need (e.g. tea) amongst different firms. In order to do so, your aim is to make the product more attractive to the marketplace compared to other competitors. This does not only include price, but also features of your product, quality, packaging, benefits and services. Successful product differentiation creates a comparative advantage for the firm. For example, your competitor in the market sells Tea A but you sell Tea B, you will then have to focus on producing Tea B so that your customers find your product to be more appealing (in terms of price, taste and services) compared to your competitor.


Product Life Cycle Concept

The product life cycle concept consist of 4 stages: introduction, growth, maturity, obsolescence. It outlines the stages the product was first introduced into the market until it is finally removed from the market. The length of the life cycle, duration of each stage and the shape of the curve vary widely for different products. Not all products reach the final stage and some may continue to rise or even fall.


Introduction

* Critical Factor - Product Development and Design * Researching, developing and launching the product. * Product passes through a low volume introduction phase where unit
profit margin Profit margin is a measure of profitability. It is calculated by finding the profit as a percentage of the revenue. \text = = There are 3 types of profit margins: gross profit margin, operating profit margin and net profit margin. * Gross Pro ...
is low and sales volume starts to rise.


Growth

* Critical factor - Advertising and Distribution * Sales increasing at a faster rate. * Volume and profit both starts to rise.


Maturity

* Critical Factor - Marketing Effectiveness * Unit profit margin at its highest but the rate of sales volume is slowing down. For example, there are now new competitors in the market.


Decline

*Reducing sales *Constant cost *Reducing profits.


Obsolescence

* Critical Factor - Cost Efficiency * Sales and profit began to fall. * Declining volume pushes costs up until all profits are eliminated. * This may be due to the need of disappearing or a better and cheaper product has been developed in the market. To extend a life of the product, techniques include advertising, price reduction (attract new customers), adding value to the product (new features), explore new markets (selling your product overseas) and new packaging (freshen up old packaging).


Product Platform Strategy

Beyond individual-product strategy is platform strategy, where the focus is on multiple products. There are two very different types of platforms: digital platforms in technology, and physical platforms in other fields. A digital platform is an ecosystem designed to enable different groups to co-create value through “plug-and-play” capabilities. The technology infrastructure of the platform touches customers and developers beyond the firm's boundaries. LinkedIn, Facebook, Google and Amazon—in fact most technology businesses—have platform-based business models. Physical platforms in other industries refer to product family or product portfolio platforms intended to reduce manufacturing and development costs for new products. In this case a platform is a common architecture, collection of assets, component designs, subsystems, or other elements shared by several products. Given that the components and subsystems have already been debugged and tested, the resulting products should have higher quality. Since platform development occurs less frequently than product development, major platform decisions do not need to be made as often. This has the potential to foster lean product development. However, there are downsides: high upfront costs, risk of platform obsolescence, risk of platform recall affecting numerous products, and potential duplication of effort.


See also

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Product management Product management is the business process of planning, developing, launching, and managing a product or service. It includes the entire lifecycle of a product, from ideation to development to go to market. Product managers are responsible for ...
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Product planning Product Planning, or product discovery, is the ongoing process of identifying and articulating market requirements that define a product's feature set. It serves as the basis for decision-making about price, distribution and promotion. Product pla ...
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Strategic planning Strategic planning is an organization's process of defining its strategy or direction, and making decisions on allocating its resources to attain strategic goals. It may also extend to control mechanisms for guiding the implementation of the s ...
*
Marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
*
Design strategy Strategic design is the application of future-oriented design principles in order to increase an organization's innovative and competitive qualities. Its foundations lie in the analysis of external and internal trends and data, which enables desi ...
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Product design Product design as a verb is to create a new product to be sold by a business to its customers. A very broad coefficient and effective generation and development of ideas through a process that leads to new products. Thus, it is a major aspect of ...
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Philip Kotler Philip Kotler (born May 27, 1931) is an American marketing author, consultant, and professor emeritus; the S. C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University ...
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New product development In business and engineering, new product development (NPD) covers the complete process of bringing a new product to market, renewing an existing product or introducing a product in a new market. A central aspect of NPD is product design, along ...
*
Concept testing Concept testing (to be distinguished from pre-test markets and test markets which may be used at a later stage of product development research) is the process of using surveys (and sometimes qualitative methods Qualitative research is a type of ...
*
Product life-cycle management (marketing) Product life-cycle management (PLM) is the succession of strategies by business management as a product goes through its life-cycle. The conditions in which a product is sold (advertising, saturation) changes over time and must be managed as it ...
*
Product differentiation In economics and marketing, product differentiation (or simply differentiation) is the process of distinguishing a product or service from others to make it more attractive to a particular target market. This involves differentiating it from co ...


Further reading

* Jr. Donald K. Clifford (1981). ''Corporate Strategy and Product Innovation'' (Second Edition ed.)


References

{{DEFAULTSORT:Product strategy Business terms Product management