Product Strategy is important because it is the “roots” of the products you launch. It’s an essential guide for entrepreneurs and companies alike to achieve their goals. Because it lays down all your future plans, you should be very careful when making it.
What different types of product strategy do you follow? There are 4 common product strategies that almost every company follows:
Strategy 1: The Marketing Strategy
This strategy focuses more about getting customers than executing on a vision or idea itself. Most startups start off with this one until they’ve grown in size enough to have a bigger plan in mind. You can even make changes in your marketing strategy if something doesn’t work out in order to adapt according to current trends in the market. For example, Google tested hundreds of layouts and versions of its homepage in order to see which ones would be better and how they can make their users go through the conversion funnel. The company is famous for using data and facts to make business decisions. But this strategy has a downside: if your marketing strategy fails, you have no backup plan to fall on.
There are many examples of companies that were very successful in providing some product or service that people needed at some point in their lives. This strategy often happens when founders start with small scale campaigns, then if they prove themselves in this niche they expand into other areas. One great example of this strategy is Barbie Girl, which was originally made to advertise Bulgarian yogurt brand Danone, but soon enough became so popular that they implemented it even outside Bulgaria. On the opposite side of this spectrum, you have startups like Twitter that had huge success straight away because there was no other similar platform online.
Strategy 2: The Technology Strategy
Many companies are started because of an interesting technology or idea that the founder wants to turn into something bigger. A good example of this is Airbnb, who after they realized how many people were looking for someone online so they could rent out their homes came up with the idea behind Airbnb itself. Nowadays, some people might wonder why it took them so long to start this project while there was clearly a market for it, but the truth is that most startups are started by people who see an opportunity and want to turn it into something.
Strategy 3: Product Line Strategy
The third strategy is very similar to the first one, but it requires more market research and common sense. You have to do some thinking about what could be a product that you would want to use yourself. If you’ve already found an interesting product, good for you! But if not, you need to decide which product should be yours. Based on this strategy it’s important that your product can easily expand over time.
For example, let’s say there are three products out there: A, B and C. Product A costs 1 million dollars per unit to produce, while B only costs 100 thousand dollars each and C runs at 10 thousand dollars each.
Strategy 4: Product Differentiation Strategy
Product Differentiation Strategy is all about creating a product which is unique enough to stand out in the market. So, what you need to do here is come up with an idea for your side project that makes it different than everything else on the market.
The best way to do this is by choosing an area that might be too trivial or too complicated for mainstream businesses, but just right for these side projects. For example, you could try developing tools for Internet marketers instead of Google-related products, since there are many websites catering specifically towards them already. Or you could develop some alternative Android app when everyone’s doing iOS apps (Android users love variety).
Now the important part. How are you going to sell your product?
Is it just another item that everyone else sells or is it something unique in some way?
How do you differentiate yourself from your competition?
You won’t win with just having a lower price. That’s pretty obvious, right? If no one wants to buy A because it’s too expensive, they’ll also not want to buy B if B offers the same functionality but is only cheaper. People tend to go for products that offer both quality and low prices. Especially when there are so many options out there (Amazon alone has over 200 million products available).
Product Strategy is thus important if you want to succeed in business. How can you actually create a product that is both great in quality and offers a low price?
And this is where the concept of “skank pricing” comes into play. It’s something I heard about in an episode of Planet Money when they talked about how huge companies like Apple or GM use it. When this term was first mentioned I listened very closely because it sounded interesting but also somehow familiar, like I’ve heard it before somewhere else. But where? After some googling, I found out that people describe skank pricing as an approach that applies psychological pressure to buyers. It means offering a product for just above what the buyer is willing to pay (sometimes even less than that).