What is product strategy?

Product strategy for Product Managers

What is a product strategy?

A product strategy outlines where your product is going, how it will get there and why it will succeed. 

Product strategy is not a product roadmap, project plan, company vision, or mission. It's not a specific goal you want to reach, like a revenue goal. It’s something you should revisit frequently and adapt based on new knowledge, allowing for creativity, adaptability, and flexibility.

A well-defined product strategy includes these elements: 

• Product Vision: The purpose behind your product and the future you imagine for your users once they have access to your product

• Insights: Data insights you can use to help make decisions

• Challenges: Any roadblocks you anticipate blocking the product development you’ve planned out. These can be technical, legal, or market-based.

• Approach: The approach you will take to carry out the strategy. Will you implement a single- or multi-pronged approach? How might you overcome the challenges you’ve identified?

• Accountability: Define key success metrics and make a plan for data collection and analysis.

Ready to build your own product strategy? Take Product School’s free Product Strategy Micro-Certification. 

Why is product strategy important?

Successful products don’t happen by accident; a product strategy is your greatest tool to effectively solve real user needs while meeting business goals. 

Product leaders in particular need to build a strong strategic skillset in order to confidently make decisions and lead their teams towards the long-term product vision.

Here are some of key reasons why having a product strategy is important:  

• Focus: When you make a product for everyone, you’re making a product for no one. Product strategy helps companies focus their efforts on developing and marketing products that meet the needs of the target market.

• Resource allocation: Developing a product strategy enables companies to identify key priorities, define timelines, and budget resources effectively.

• Competitive advantage: Do your product strategy research to identify unique value propositions and stand out in the market.

• Alignment: Product strategy helps ensure that everyone within the company is aligned on the product's objectives, target audience, and key features. This alignment is essential for effective collaboration and communication across different teams, such as product development, marketing, and sales. 

• Customer satisfaction: A customer-centric product strategy ensures that products are developed with the customer in mind, leading to greater customer satisfaction and retention. 

How to create a product strategy

To build a product strategy, you must gain a deep understanding of the market, customer needs, and business objectives. 

1. Identify your target market: Define the target market for your product by understanding who your ideal customers are, their pain points, and their preferences.

2. Conduct user data analysis: How are your customers using/not using your product today? What are they successful or unsuccessful in? What friction might they be experiencing? Pair this usage data with the behavioral/market data to get a full picture of both what is going on today and the opportunities ahead.

3. Conduct market research: Conduct thorough market research to understand the competitive landscape, market trends, and customer needs. This research will help you identify opportunities and gaps in the market, as well as potential obstacles and challenges.

4. Define product vision: Define your product vision by creating a clear statement of the product's purpose, target audience, and value proposition. This statement should guide all product development and marketing efforts.

To get a little help with the structure when building your product strategy, use this product strategy template!

How to implement your product strategy

You’ve created a product strategy. Congrats! Now it’s time to convert your product strategy into action. In the implementation phase, your product roadmap and prioritized feature list will be your guiding resources. 

Now is also when you should define OKRs and create your plan for measuring product success. 

The first step in taking your product strategy from idea to action is prioritizing the product features. Do this based on customer needs, market trends, business objectives, and complexity. This helps you allocate resources effectively and ensures that the product meets the needs of the target market.

Then, with this prioritized list, develop a product roadmap that outlines key milestones, features, and timelines for product development. Make sure to align your roadmap with the product vision and business objectives!

Then deliver on the roadmap you’ve built, using feedback from stakeholders and customers to learn and adapt as you go along. 

Product strategy example: Netflix

The Netflix for Kids product vision is: Make Netflix the number one trusted service that empowers kids to effortlessly engage with their favorite characters and delightfully discover new ones. 

When Disney+ launched in 2019, it posed a huge challenge for Netflix for Kids, prompting an overhaul of their product strategy. 

Based on research, they knew that kids’ consumption of media is character-driven. They stick around because they fall in love with a specific character, and then they watch their favorites over and over. 

So, what did they do when Disney+ took all of their audience’s beloved characters to a different platform? Netflix created their own beloved characters. They doubled down on character engagement and encouraged rewatches.

This new product strategy turned out to be wildly successful, but it didn’t happen on its own. It took a Product Manager to test the hypothesis that the data insights showed and convince stakeholders to take the leap.

Term in Action

“Before, I worked in a company that was basically a feature factory. We created whatever we were told to create. When I moved to my current company, I saw real feature prioritization and product roadmapping based on product strategy. I thought to myself, ‘This is what Product should be.’ The difference in outcomes is astounding.”