It can be tempting to put money first when you’re developing a product. In fact, it’s easy to fall into the trap of thinking about how much you want to make in sales within the first quarter or year. But you won’t get anywhere if you lead your product strategy discussions with dollars.
Instead of focusing on the types of product strategy that center on money, concentrate your high-level product strategy—or product relaunch strategy—discussions on creating a vision, brainstorming product solutions, defining your target audience, performing competitor reconnaissance and setting goals. At that point, you can dive into product pricing strategies.
You can’t sell to everyone. No company can. Rather, you need to narrow your target audience to the people your product will actually help.
Generating a Product Strategy Vision
The initial step to constructing an airtight product strategy is to understand your “Why?” In other words, why is your product important? Why is your company the right one to bring it to the public? And why should you do it now?
Having an overarching vision of the “Why?” behind your product development will serve as a guide through every later stage. It’ll also help get stakeholders’ buy-in later. Don’t take this step lightly. Spend time on it with your team members. It’s important for everyone who’s working on the product to understand its core value and purpose.
Coming Up With a Product to Develop
This part of the product process strategy normally involves ideation workshops and brainstorming sessions. Whenever possible, bring together people from different departments. The more voices, the better—just don’t have too many individuals at one meeting. Around eight to 10 should be enough to foster ideas.
After a few of these sessions, you can come up with solutions that dovetail with your “Why?” For example, your “Why?” might be to make life easier for 20-something single moms who live in rural areas. Consequently, all your team’s ideated products should fit that “Why?” Ultimately, the products you end up moving into development will be in line with your corporate vision.
Narrowing Your Market
You can’t sell to everyone. No company can. Rather, you need to narrow your target audience to the people your product will actually help. This is where the “Why?” comes in so handy. Knowing your “Why?” will lead you to generate buyer personas who would find your product useful or desirable.
You’ll want to conduct market research to come up with audiences most likely to purchase your product and become fans. Many companies create names for the different personas and dive deeply into their target markets’ characteristics, right down to granular levels like favorite television programs or their dream vacations. Get creative here: You might come up with markets you didn’t originally consider during your ideation sessions.
Checking Out the Competition
No matter what your product is, you will always have competition. Even the first car had competition: the horse and buggy. Not only should you know your competition, but you should understand how to be different from competitors.
Don’t underestimate the need for a thorough analysis of all potential competitors. Understanding the true nature of the marketplace you’re about to enter is vital to building momentum and avoiding sales stalls. Plan to keep evaluating competitors throughout your product’s lifecycle so you aren’t surprised by up-and-coming disruptors.
Establishing Goals
You know your “Why?” You’ve defined your product and your target audience. You have a handle on the competition. Now, it’s time to set up measurable goals or “key performance indicators” (KPIs) so everyone on your team stays on track. Your KPIs will serve as important parts of your product strategy. (And this is where you can start diving a bit into pricing.)
For example, you may want to establish revenue goals: “We should see a 20% boost in product sales month-over-month for the first six months.” These goals aren’t attached to a price, per se. Nevertheless, they allow you to begin using figures and formulas to gauge success. As your product hits the shelves virtually or in actual stores, you may need to adjust your original goals. However, resist moving your goalposts too quickly because you’ll skew your results.
Building and Launching Your Product
Perhaps the most exciting part of any product strategy is seeing it come to life in the form of your new product. You’ll need at least a prototype to test, or possibly even sell. And that’s where price comes into play.
At each stage of your product’s life cycle, you’ll want to rethink its value to consumers, as well as what the market’s willing to bear. Do your homework and set your price points—including sales, discounts and bundles—as needed.
Above all else, pricing isn’t as essential when you’re first constructing a product strategy. Rest assured, though, that it will come into play later.
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