8 Product Strategy Tips That Work
What does your product do? Who does your product appeal to? What problems does your product solve? These are all questions that you’ll need to ask yourself to create a product strategy that helps your business achieve its goals.
A product strategy is an actionable plan for marketing your latest product. It should include analysis of your target market, your anticipated profit margin, the best ways to source clients or customers, and other information related to your product.
Don’t know where to start? Don’t worry – creating a product strategy can seem very difficult, but it’s surprisingly easy once you understand how to source the right data for your product and turn it into an insightful, actionable plan.
In this guide, you’ll learn eight practical tips that you can use to learn about your target market, find your product’s top selling points, use your marketing budget efficiently and make sure your latest product is a success.
Do you need help working out your product’s sales potential? Learn how to develop a marketing strategy and business model for your product content with our course, How to Launch a Profitable Product: From Idea to Revenue.
Research your target market before you create your product
How well do you know your target market? If you have decades of experience in a certain market, you might be able to dream up a successful product without doing any research. If not, it’s always best to have the market data on your side.
Before you create your product, research your target market to learn whether it’s really interested in what you’re offering. Look at the issues your target customers are currently facing and ask yourself if your product can solve them.
More importantly, study your target market to see if it can afford to support your product. How much do your target customers currently spend on products similar to yours? When yours becomes available, how likely are they to purchase it?
Market research helps you understand your target customers, and understanding your customers lets you design and build a product they’ll love using. Don’t let the numbers override your judgment, but do let them guide your product strategy.
Have you never done market research before? If you don’t know where to start, join over 500 students in our Market Research Fast Track course to learn how to profile your target customer and learn whether or not they’re interested in your product.
Run online advertising campaigns to test names and designs
Designing and manufacturing a product involves making tough decisions. One of the best ways to know you’re making the right decision is to test both options and learn about the market’s preferences before you make a decision.
Have you ever heard of The 4-Hour Workweek? Tim Ferriss’s hugely popular book on escaping the 9-5 lifestyle was originally going to be called Drug Dealing for Fun and Profit before a simple test – and likely his agent – convinced him otherwise.
How did Ferriss discover the catchier title? Before he made his selection, he made a campaign promoting the book on Google Adwords. He built a simple website with a dummy product page and ran ads using several different title concepts. Ferriss’s strategy is straightforward, inexpensive and easy to replicate. Learn how to run your own data-driven product comparison tests using Google Adwords with Google Adwords for Beginners.
Using a tiny budget and a few keywords related to the book’s title, he found that the ads for The 4-Hour Workweek outperformed all others. Sometimes, the data tells you that your assumptions are wrong and guides you towards a better product idea.
Ask yourself what important problems your product solves
Every great product solves a problem. Coffee solves our lack of energy. Games solve the problem of boredom. Even luxury products solve a problem – in the case of high-end fashion, a need to stand out and be noticed.
When you start developing your product strategy, ask yourself what problems your product is solving. Does it help people save money? Does it give them more time to spend on the things they love doing? Does it help them learn something new?
Knowing what problems your product solves allows you to position it in a way that clients will relate to. When you’re aware of the problems your clients face, you can frame your product as the answer they’ve always wanted but never found.
This is one of the core principles of product positioning, and it’s a vital part of giving your product the purpose it needs to appeal to customers. Learn more about how to position your product for success in our Mastering Product Positioning course.
Compare your product to those offered by your competitors
Very few products are completely unique. Whether you’re selling a consumer good or a business-to-business service, your product almost definitely has some form of competition that it needs to improve on.
Many new entrepreneurs make the mistake of assuming that competition is a bad thing to have. In actual fact, having competitors is a great sign, since it shows that your product idea is already successful for another company.
Instead of worrying about your competitors, study them to learn more about what they’re doing right and wrong. Compare your product to theirs and see where it’s a better choice and where it falls behind.
Remember, your product doesn’t need to do everything better than the competition in order to outsell it. Instead, it only needs to solve the problems that matter to your customers – anything else is often unnecessary for winning their business.
Competitive analysis is the secret to creating a product that stands out as the best in your industry. Learn more about studying your competitors and building a superior product to Design a Best-In-Class Business.
Create a mock-up online store to test different price points
How much will your product cost? Working out the right price for your product can be challenging. If your product is completely unique and new to the market, it can be almost impossible – after all, you can’t study competitors that don’t exist.
One of the best ways to work out the right price for your product is by developing a mock-up online store and testing several price points. This gives you proven data on which price point achieves the highest conversion rate and return on investment.
Using a platform like Magento Go or Shopify, create a basic online store that you can use to sell your product. Instead of selling your product, send customers an email to tell them you’re out of stock and refund their payment after they make a purchase.
This strategy gives you far more reliable data than simply running an Adwords test campaign to analyze the clickthrough rate different price points achieve. Since your customers really were going to buy the product, your sales data is 100% reliable.
Not all products can be tested using this strategy. If you’re selling a niche product or a professional service, use the tactics in our course, How to Price Your Product With Confidence, to discover the most profitable price point for your product.
Think about where the product sits in your product lineup
Does your business sell more than one product? If so, it’s important to work out the position your latest product occupies within your range. Positioning your product in your lineup lets you make more informed decisions about pricing and marketing.
The reason this is important is because pricing a certain product too low or too high might negatively affect your other products. If one product offers better value than a similar one, it could result in fewer people buying one of your existing products.
This is known as cannibalization, and it’s deadly to businesses with a wide range of products. Highly optimized businesses focus on offering products that complement each other instead of products that compete with and cannibalize each other.
A great example of a product lineup designed to minimalize cannibalization is that of Porsche. Each car in Porsche’s lineup – the Boxster, Cayman, 911 and Cayenne – has a target market that’s clearly defined, distinct and unique.
Apple also has a product lineup that’s devoid of cannibalization. The iPad delivers a very different experience from the iPhone. Likewise, the MacBook Pro is aimed at an entirely different market to that served by the MacBook Air.
Before you launch a new product, ask yourself if it could cannibalize sales of one of your existing products. Sometimes, the problem of cannibalization makes it a better choice to update and refine an existing product than launch a completely new one.
Do you want to learn more about building a product range that complements itself and maximizes sales? Join over 2,000 students and learn the secrets of designing a super profitable product with 7 Steps to Creating a Successful Product.
Determine the metrics that make your product a success
How many products do you need to sell in order to break even? At what point does your product go from “good enough” to “massively successful?” Before you launch a product, you need to have metrics that determine whether or not it’s successful.
These metrics are called key performance indicators (KPIs), and knowing them is vital for running a successful marketing campaign. Common KPIs include revenue, average profit margin, return on investment, total sales and market share.
Not all businesses have the same goals when they launch a new product. Some sell their product at a loss in order to capture market share. Others price their product as high as possible in order to generate huge profits from a small niche market.
Once you’ve planned your product strategy, work out which metrics you’ll monitor to track its progress and determine its success. From market share to revenue, any KPI can determine success if it helps you track, monitor and achieve your goals.
Working out your key performance indicators is one of the most important parts of developing a great marketing strategy. Learn how to create a successful marketing strategy for your latest product with our Marketing Strategy instructional course.
Brainstorm growth hacking opportunities to boost sales
Are you launching a product with a limited marketing budget? Instead of focusing on traditional customer acquisition techniques, use creative growth hacking tactics to generate buzz about your product on a shoestring budget.
Growth hacking is the art of creating products that market themselves. An example of a growth hacked product is cloud storage website Dropbox, which encourages its customers to invite their friends in exchange for additional free storage space.
Another example of growth hacking is the email signature included by default at the end of all Hotmail messages. Instead of paying for advertising, Hotmail marketed its email service by turning every message into a discrete but effective advertisement.
Every product, from an online service to a fashion accessory, can be growth hacked to success with the right strategy. Learn how to use growth hacking to sell your new product organically with Growth Hacking: An Introduction.
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