Product strategy – how to create it?
Effective marketing is based on well-thought-out actions, which would not be possible without the appropriate product strategy. Therefore, in this article, we will examine how to create an optimal plan that will improve the business results of your company.
What is a product strategy?
Product strategy involves closely matching the offered product to customer requirements as closely as possible.
It is necessary to focus on every stage – from creating a product outline, through its development, promotion, sales, and even the decline phase, which is disappearing from the market.
In product strategy, you plan how to develop your products so that customers will choose them.
To develop it, you must plan all the actions that will address customer needs and drive purchasing decisions.
For this purpose, we use marketing models, as they enable a detailed analysis of the sales process that the product must go through. Let’s discuss the most popular one, which is the marketing mix, also known as the 4P concept.
Basic assumptions of the strategy
In this scheme, we consider four basic pillars that influence the relationship between a company and a potential client.
- Product – which means its utility, quality, attractiveness, recognizability, and all other characteristics strictly related to the product itself. This is your starting point, without which effective sales are not possible.
- Price – in this aspect, it is necessary to consider an adequate price for the offered product, as well as possible discounts that will encourage customers to make a purchase.
- Place – refers to distribution, or planning optimal solutions for how the product can reach the customer. It is necessary to answer questions such as the transaction process, availability issues, etc.
- Promotion – determines the methods of advertising the product, such as copywriting, content marketing, or social media actions.
It is worth noting that there are many related alternatives to the 4P model. An example is the 8P model, which enriches the scheme with four additional pillars (people, process, physical evidence, pleasure), or the 4C model, which requires looking at the product strategy from the customer’s perspective (cost, communication, convenience, consumer).
However, for the sake of conciseness, we will stick to the basic scheme. We will examine the product strategy based on practical examples according to the presented guidelines.
Product strategy – how to develop it?
To prepare a strategy, we need both a detailed assessment of our resources and an external market analysis. Let’s start with the former.
Product
Specifying the features that distinguish a product from the competition is an important aspect for future promotion. Furthermore, it allows for the detection and elimination of flaws, as well as focusing on the advantages that will attract customers.
Above all, you must be certain of why you want to create a particular product and how it will benefit potential customers. This knowledge should be acquired before its development. The purpose of a product is to meet the needs of the audience, not just to make sales.
That is why it is crucial to be aware of who you are creating for and for what reason.
When selling orange drinks, one should consider, among other things:
- Taste – is the product sweet enough? What can be improved in it?
- Appearance – does the drink have the right, saturated color? How can it be improved?
- Packaging – does the appearance attract attention? What makes it stand out – shape, or perhaps ease of opening? Is information about vitamins or reduced sugar content highlighted on it?
Of course, this is only a fraction – the more characteristics we analyze, the better the final product strategy will be planned.
Price
Pricing policy is a flexible matter and, contrary to appearances, it should be carefully considered. The purchase price is not only dependent on production costs. It also includes financial investments in promotion, distribution methods, margin, and the profile of potential customers.
The company, which sells freshly squeezed juices from selected oranges, will offer its product at a higher price. However, this does not mean that it is at a disadvantage compared to popular drinks from the market. It simply targets a different group of consumers, and its product has a completely different nature than the mass-produced liquids found on store shelves.
As you can see, less doesn’t necessarily mean better, and a high price also has its application in product strategy. The key is adequacy, as potential customers will only incur expenses if they see a corresponding value in the purchased product.
Place
Planning distribution channels is another milestone in shaping product strategy. After all, the customer can only acquire it through a specific intermediary, such as a branch or online store. The choice does not remain without an impact on price and further business policy.
The online store is a shot in the foot for a company that advertises juices as freshly squeezed. The narrow definition of the product and target group requires a completely different choice from it, as the two-day shipping eliminates the main advantage of the offer. A better distribution method may turn out to be, for example, a small stand in a shopping centre, where the customer will receive the product within three minutes of ordering, and at the same time will be able to observe the entire juice preparation process.
This shows that the right decision is largely influenced by the nature of the offer. Therefore, it is necessary to determine the optimal solutions from the available options in order to maintain good quality at attractive prices.
Promotion
The last, but not less important pillar, is the promotion method. A great product and low price will be useless if the information about the offer does not reach potential customers. How to deal with it? Again – choose the best method from many possibilities. It sounds general, but in every business there is a different answer.
If a company sells fresh juices in a shopping mall, a television advertisement would be dearly expensive, and the results – questionable. People from all over the country don’t need to know that there is a booth blending oranges in some city after all. After all, the target group is people located in the mall, not in another province. Therefore, considering the impulsive nature of purchasing decisions, it would be better to focus on local promotion, such as an attractive appearance of the sales place or sensory marketing.
Therefore, let us remember that every promotional method is associated with specific costs and work. It is necessary to use methods that are closely appropriate to the selected target group, so that the actions are economical and effective.
In today’s times, it is difficult to find an industry where you will not encounter strong competition, and at the same time, high customer expectations.
That is why you must prepare a product strategy that will encompass every stage of the product – its concept, shaping its features and functions, market distribution, any improvements that need to be made, but also a plan for the time when the product will incur losses and its lifecycle will be coming to an end.
Summary
- Product strategy is the creation of a plan that allows for aligning the product with customer expectations and needs.
- One of the ways to create it is by utilizing the 4P marketing concept.
- The strategy should encompass all stages – from inception, through development, to the end phase of the product’s life.
- This process will look different for every business, so it is worth analyzing the internal capabilities of the company as well as external market requirements.
- An appropriate product strategy translates into more effective actions and higher sales results – which is the primary goal of every enterprise.
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