Implement a good product strategy in marketing as well as effective use of maps. You first need a destination, then you can plan your own route and destination. Just as a business has a strategic vision of what it wants to grow, a product also has its own strategy and destination. Product strategy is the basis for implementing a roadmap for the product and other future product releases. Product strategy is a guideline that helps a company focus on the right audience, at the right time, on a specific target market.
Besides, it also helps company leaders better understand the market context and guide businesses to accomplish their goals.
Product strategy aligns the organization to a shared vision and keeps people focused on the work that matters most.
Currently, forming a product strategy in marketing is still something new for newly established businesses and small and medium-sized enterprises. So this article will provide a detailed, overview of this issue.
What is product strategy?
A product strategy is a high-level plan that describes long-term actions to align products with consumer needs. It includes a variety of solutions for the entire product lifecycle, from development to market launch, growth and finally decline. A product strategy needs to answer key questions such as:
- What kind of product;
- Who are the target customers?
- How to market each product stage
Product strategy is also an important management tool that determines and guides the development of many modern businesses.
The importance of building product strategies in marketing
A good product strategy produces the following results:
- Agree on business goals and objectives. Confirm that the company is spending time on the right tasks.
- Tell the development team what product you’re building and what metrics you want to change.
- Help other cross-functional teams begin preparing (money, time, and people) to support your product throughout its lifecycle.
- The main thing is that it makes your business move forward and reach the finish line quickly.
Develop product strategy (brand, packaging design…)
Key elements in building a product strategy often involve:
- Product brand: name, banner, sign, symbol
- Product functional parameters (qualitative composition, physical properties);
- Packaging (design, color, compactness), attractive appearance of the product;
- Volume of pre- and post-sales service (set of measures for installation, adjustment, installation, elimination of deficiencies, etc.);
- Forming a group, which includes the selection of groups, types, varieties of products, taking into account consumer needs and to satisfy it;
- Logistics and planning for the product life cycle, including market opportunities and competition;
- Create new needs, develop a new product based on internal and external sources of ideas (strengthens existing position, allows you to conquer new market segments).
Product strategies in each stage of the product life cycle
A product’s life cycle is the time from when the product first appears in the market until the product is finally sold in the target market.
The life cycle is described by the change in sales and profit indicators over time and includes the following stages: sales initiation (market introduction), growth, maturity (saturation). ) and decline.
Product introduction phase
The company’s product strategy at this stage is that the product is brought to market and offered for sale. Sales are growing slowly, because the product is new to the market and buyers are starting to get used to it or are not even aware of its existence. However, it focuses the attention of young people who are innovative and like to take risks. Therefore, marketing at this stage is necessary to provide consumers with information about the product and its intended use, the benefits of using the product and where the product can be purchased.
The product development strategy in the growth stage is to have a strong increase in sales through penetration and distribution in the target market. The level of market acceptance of a new product depends on the reaction of competitors trying to enter the market with similar varieties, which affects its expected lifespan.
Regarding product strategy at this stage: Manufacturers need to focus on product diversification, modernization, technology development and distribution expansion.
Pricing strategy: Can keep product prices unchanged to ensure sales. Should develop slight discount policies for loyal customers.
Marketing: Still needs to be promoted to introduce products widely and attract the attention of more customers.
Maturity includes the time period during which product sales peak and begin to slowly decline. The level of sales depends on the scale of demand, the repeated purchases of this product by the same buyer. For companies, this is the most profitable phase of the entire cycle, so they often try to prolong it. This is done through actions aimed at market expansion, i.e., stimulating sales growth both in the global market and in new segments (attracting new customers, finding more demand for products, increasing the frequency of purchases) or product expansion (improvement of packaging, quality and service, differentiation of offers, for example, other types, sizes, addition of other units under same brand).
The decline is characterized by a decline in sales due to the emergence of new, more efficient technologies and trends to which consumer preferences have shifted. At this stage, organizations seek to reduce costs and leverage market position by adopting one of three corporate product strategy options:
- strive to maintain a leading position, hoping that competitors will leave the industry sooner;
- operate and maintain current sales levels, while reducing costs mainly related to promotion and sales;
- product recall, including cessation of production and sale or resale of the license to another company.
When developing a product strategy, you should always understand what stage of the product cycle it is in, because the acceptable course of action depends on it.
What are the criteria for a good product strategy?
A successful strategy must be flexible, adapting to every change, business goals and customer needs. It always gives excellent results if:
- confirm that the business’s goals and objectives are set correctly;
- describe the proposed product, indicating what the company wants to change in it;
- facilitates cross-functional interaction, helping to prepare for ongoing support of this product across lifecycle stages;
- Motivate members to move forward.
When to start building a product strategy?
In fact, strategy development begins from the moment an idea emerges. Before approval, you must:
- Research current trends in the market, identify and weigh all the pros, cons, and potential threats.
- Create a roadmap (preferably several, for different products).
- Test the idea (find out if it’s worth continuing or needs to be reduced, what benefits it brings).
- Then, present its content. To do this, you can plan, and then go directly to development.
Three essential questions when building a product strategy
Building a conditional strategy is divided into three components. Each of them requires answering 3 questions. Let’s look at each in more detail.
The first question is: What do we have? This includes:
- The company’s goals and problems at the present time;
- consumer requirements and needs;
- what happens during this period in the market;
- advantages and disadvantages of the product.
The second question is: what are we planning, what are we striving for?.
Here it is necessary to predict the future, describe possible prospects based on information about consumers and the market obtained during the initial analysis. Key questions:
- how the product appears;
- a plan of action to profit from it;
- degree of product differentiation;
- main parameters for which changes are expected.
The third question is: how will we achieve our goals? It shows what needs to be done, including:
- description of each stage;
- all company initiatives and goals;
- perceived risk;
- integrated processes;
- type and quantity of resources needed.
Stages of building and initiating product strategies
Let’s look in more detail at the three components (phases) of the strategy building process. Each of these factors involves a large amount of analysis work. It affects not only the product itself, but also the situation on the market, in specific segments, the position and actions of competitors.
Phase 1: Start simple and gradually build more details.
The first stage describes the product idea. Usually, to get effective results from this stage, businesses often use the Elevator Pitch method to introduce and describe the product, also known as “internal advertising”. elevator/ elevator speech”. This is a way to introduce and describe the product quickly and concisely, making it understandable to any listener in a short period of time. Applying this technique, you only need to quickly and briefly describe the product but still ensure clarity about the nature of the product (service). The description is built according to the following condition diagram:
- Consumer problems and needs
- Product related solutions
- Business goals
Then you can start testing your assumptions using simplified product strategies.
Phase 2: Develop a comprehensive strategy
The transition from the research phase to the idea implementation phase is accompanied by: assessment of possibilities. To develop a comprehensive overall strategy, you need to answer 10 questions:
- What and whose problem are we solving?
- What are the opportunities?
- Why are we dealing with it better now?
- What products will be on the market?
- How will we measure success (product monetization)?
- What factors are important for success?
In practice, the theory is applied essentially: they take the specified questions as a basis, then add their own questions or eliminate unnecessary ones.
Stage 3. Collect feedback on the strategy at different stages
During the process of creating your strategy, you should periodically “test it in your circles,” and preferably at each stage. To do this, it is enough to collect feedback from the team involved in its creation. The more information you collect, the better your performance will be. Keep the strategy in its complete form in one place that’s easy to access and keep up to date.
Examples of product strategies of brands
The Vietnamese dairy market was previously dominated by two businesses, Dutch Lady (also known as the Dutch girl) and Vinamilk. But in recent years, many dairy businesses have appeared in the national market, typically TH True Milk Group with outstanding product strategies.
Since appearing on the market, TH True Milk’s “clean milk” products immediately attracted the attention of many consumers. TH has built a clear and effective product strategy in all aspects such as:
Vision and mission:
Vision to become Vietnam’s leading manufacturer in the clean food industry of natural origin. Become a classy brand trusted by everyone.
Mission with the spirit of being close to nature, TH Group always tries its best to nourish Vietnamese body and soul by providing products originating from nature, clean, safe, fresh and nutritious. .
The target market is built in accordance with many product characteristics
The product catalog is diverse and easy to choose from. Currently, TH’s products include many typical flavors such as: Pasteurized fresh milk (sweetened, low sugar, unsweetened), fruit-flavored milk drinks (strawberry, blueberry, banana, mango), nut milk , yogurt products, drinking yogurt…
Packaging of paper boxes is 180ml and 110ml and plastic boxes. In order to stand out from other dairy businesses, design and packaging are always emphasized in the marketing strategy. The packaging, although not simple, follows the usual path of milk models with a cow printed on the shell. box, but the packaging design is in harmony with TH’s brand identity, the label is beautiful and professional. Giving customers a fresh, green feeling that no other dairy company on the market at that time could do.
Product strategy in marketing is a guideline for a business, it helps you prepare for the future of your product and give it appropriate goal direction. When you have a combination of many products and many different product combinations, product strategy becomes very important. To have a meaningful product strategy and be able to initiate appropriate tactics for each product, factors need to be studied carefully. The article provides a comprehensive overview of building product strategies in marketing.
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