Product Strategy: Importance, Examples & Step-by-Step Guide

Dayana Mayfield

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You want to develop a product that people will actually buy—without having to guess or hope it will sell.

Enter product strategy.

It’s what separates cash cows from money pits.

If you want to increase the likelihood that your product will be profitable, you need to leave little to chance.

You must stop operating from assumptions and start using existing product strategy frameworks that put the focus on customer needs.

If you tie your product to customer value creators and pain alleviators, you can win market share.

In this guide, we offer proven frameworks and steps to help you craft your own product strategy. Plus we offer real examples to help you analyze the success of popular products.

What is a product strategy?

A product strategy is a high-level plan that outlines the direction and goals for a particular product. It serves as a roadmap that helps a company define how it will source customer feedback, create, deliver, and position its products to both capture and create market demand. A well-defined product strategy is essential for making informed decisions about what products to develop, how to prioritize features, and how to market and sell those products effectively.

4 essential elements of a product strategy

At the most simplest form, your product strategy really consists of four main elements. So long as you have a target customer in mind, a problem to solve, a price point that reflects this value, and a competitive advantage, you can develop a product that will deliver profits.

4 Essential Elements of Any Product Strategy infographic

1. Target customer

You need a clear target audience. If you’re building a B2B startup, you should be able to describe them in terms of their roles and responsibilities. For B2C companies, the target audience might be demographics-based or hobby-related.

2. Problem and solution

Regardless of your industry, you’ll need to clarify the problem you’re trying to solve and how you plan to solve it. The product strategy frameworks we share below offer tips on how to tie value gains to specific pain points.

Solving problems is especially important when it comes to B2B products, but even in the world of fashion and beauty, products typically solve a particular need, trend, or issue.

3. Revenue model

Your pricing structure is a key part of your product strategy. Will you charge a one-time fee or a monthly subscription? Will you bundle everything up into a single product, or have one core product with optional add-ons or accessories?

Of course, you can always test different revenue models later, but you’ll need to make an initial decision during the strategy phase.

4. Competitive differentiation

Your product needs to stand out in the market and differentiate from your competitors’ offerings. Otherwise, there won’t be a reason for customers to choose your product.

You can differentiate on price, feature set, quality, branding, user experience, or other factors.

While these four elements are essential, you’ll want to iron out even more details before you plunge forward into product development. So keep reading for our step-by-step guide and favorite frameworks to cover all possible factors of product strategy.

Why is product strategy so critical to success?

Product strategy is critical to business success because it contains your plan for satisfying a real market need.

Whether that market need is fun branding in a boring industry, better features, cheaper pricing, or a completely new and innovative product, you have to offer something to customers that is going to make them excited to whip out their credit cards and hand over their money.

Of course, there’s ton of business jargon to wade through when developing your product strategy, but at its crux, it’s so important because it contains your pathway to developing meaningful and long-lasting relationships with your customers.

12 popular product strategy frameworks

To excel at product strategy, use existing frameworks. Experienced entrepreneurs have already distilled their success into clear templates and pathways.

Below, we’ve hand-picked the very best product strategy frameworks to help you refine your concept and launch your product.

1. Jobs to be Done

jobs to be done

Jobs to be Done is a framework and book created by Tony Ulwick. This framework advocates away from traditional demographic-based customer personas and instead encourages entrepreneurs, strategists, and marketers to think about what their audience is trying to achieve.

The easiest way to explain the framework is this: people don’t buy a hammer because they want a hammer, they buy a hammer because they want to hang a picture on their wall. Figure out what your audience wants to “get done” and you’ll have perfect clarity when it comes to strategizing, building, and selling your product.

2. The 1-Page SaaS Blueprint

The 1-Page SaaS Blueprint was created by Phil Alves, the founder of DevSquad and DevStats. This is a product strategy and business plan framework created specifically for B2B SaaS entrepreneurs. With this framework, you can determine the pillar feature that will drive revenue and focus on building it quickly and efficiently.

It offers 10 essential columns to fill out to plan your SaaS:

  1. Unfair advantages

  2. Funding

  3. Target users & early adopters

  4. The problem

  5. The solution

  6. Existing alternatives

  7. Pillar feature & story map

  8. Revenue model, average deal size, and GTM channels

  9. Annual expenses

  10. Revenue projections and break-even point

Download the 1-Page SaaS Blueprint template, financial spreadsheet, and course.

3. Design Thinking

5 Steps of Design Thinking Process in horizontal colorful flow chart with emphasize, define, ideate, prototype, and test

Made of up 5 distinct stages, the Design Thinking framework was popularized by IDEO’s CEO Tim Brown. Those 5 phases are:

  1. Empathize - start by researching user needs

  2. Define - clarify and define user needs

  3. Ideate - eliminate assumptions and brainstorm solutions

  4. Prototype - design different solutions

  5. Test - conduct user testing to get feedback

Design Thinking is a great framework for product strategy because it encourages you to work very closely with your target users and reiterate your solution until it’s perfect. Only then do you build it.

4. Lean Startup

While it started off as a book, Lean Startup is now a consulting firm that helps businesses employ their framework to make smart decisions quickly. The framework ensures that products and projects are only funded as they demonstrate progress (instead of all at once). It also employs relies on tight build-measure-learn loops. With Lean Startup, you can use their framework as is or partner with them to develop a customized product development framework that matches your unique business.

5. Blue Ocean Strategy

You can make your life as an entrepreneur a lot easier by using the Blue Ocean Strategy. Instead of competing in an existing, crowded market space, you create uncontested market space. This is more than just giving an old idea a new name. You truly need to find a market need that has not been met yet.

Without existing solutions available, customers will be clamoring for your product, making it easy to create demand, capture it, and build a hyper-profitable businesses. Some entrepreneurs swear by this product strategy so much, they’ll only launch a new business in a “blue ocean.”

6. Ansoff Matrix

Created by mathematician and business manager H. Igor Ansoff, the Ansoff Matrix was published in the Harvard Business Review in 1957. The Ansoff Matrix provides a framework for companies to assess and choose growth strategies based on their risk tolerance, available resources, and market conditions. It offers a structured way to consider different growth options by examining two key dimensions: products (what a company offers) and markets (where a company operates).

You’ll assess risk based on new products, existing products, new markets, and existing markets. This is a super simple matrix that can help you understand the risk you’re undertaking with any product strategy.

7. Product/Market Fit

Coined by Andy Rachleff, the term product-market fit is now a very popular framework for new entrepreneurial ventures. This framework helps entrepreneurs focus on what really matters—delivering a product to a market that wants to buy it. You don’t get too wrapped up in a specific product or a specific market. Instead, you continuously morph both the product and market until you’ve got the perfect combo.

8. Value Proposition Canvas

value proposition canvas

With the Value Proposition Canvas, you can directly map your solution to customer problems. List out customer jobs that need to get done, value gains, and pain points. Then list out how you will create gains for customers and relive their pain.

This is the perfect product strategy framework when you’re in the early stages and still working on your problem/solution and value propositions. You can then employ one of the other frameworks on our list to bulk out your strategy with pricing, competitive advantages, and other key elements.

9. Business Model Canvas

The Business Model Canvas is a strategic entrepreneurial tool that’s great for startups. The template comes from the book Business Model Generation. It covers important product and business strategy elements for new companies, from key partnerships and resources to value propositions and customer segments.

Fill it out to get a glimpse of your strategy in a single view.

10. The Innovator’s Dilemma

The Innovator’s Dilemma is a book and innovation framework ideal for legacy and incumbent companies. How can you continue to innovate your product strategy so that new startups don’t disrupt your market and destroy your business? You have to be willing to abandon old ideas and business processes (even if it seems like they’re working).

This book offers a set of rules for helping you capitalize on disruptive innovation no matter your industry.

11. Three Horizons

three horizons framework

The Three Horizons Framework was created by consulting firm McKinsey to help businesses manage current and future growth opportunities. This is a great framework for existing businesses working on product strategy for current or potential products. Should you optimize your existing product or build something new? How much should you invest in both options?

This framework helps you analyze potential across three horizons: your core business, emerging opportunities, and disruptive ventures. It also gives you the metrics to measure, the people to engage, and the capability requirements for each horizon.

12. Pragmatic Framework

pragmatic framework

The Pragmatic Framework is a product and business development framework created by the Pragmatic Institute. It separates 37 key activities into a few distinct categories: market, focus, business, planning, programs, enablement, and support.

While it appears a little overwhelming at first, the goal of this framework is to help businesses build products that their customers want to buy.

The company offers online and in-person courses to help you complete all of the activities required to invent and implement winning products.

How to create your own product strategy

Now let’s dive into the step-by-step process for developing your own product strategy that will increase your chances of developing a profitable offering.

Step 1. Research your market

The first step is to research your market.

You can use a variety of methods including:

  • Surveys

  • Focus groups

  • One-on-one interviews

  • Social listening

  • Competitor research (explore products and read reviews)

During your research, you should be hunting for the following information:

  • What pain points is your target audience struggling with?

  • What are the most challenging pain points, in terms of importance and impact?

  • Which pain points are the most common?

  • Which pain points are currently not being addressed by existing companies, or not being addressed well?

  • How badly does your target audience want to resolve these issues?

  • How willing is your target audience to try new solutions, and pay for them?

Remember, you’re looking for product-market fit. So if a great target audience presents a better problem to solve, go for it. And if you learn that your target audience is content with the status quo, move on to a customer segment willing to make changes and purchase new solutions.

During the research stage, it’s smart to develop personal relationships with a few target customers. This will help during later stages when you need to collect feedback on your prototype and start building a waitlist.

Step 2. Write a description of your target customers

Now that you’ve researched your market, you’re ready to write a description of your target customers.

The format for that description will depend on your industry. It’s wise to combine old-school customer personas (like job titles or demographic data) with new-school frameworks like Jobs To Be Done.

Here are a couple of examples, the first B2B and the second B2C.

Target customer description example 1 (B2B):

  • Role: Content marketer

  • Responsibilities: Strategize, create, publish, and measure marketing content across channels

  • Relevant job to be done: Repurpose content

  • Pain points: Time consuming to repurpose content across formats and channels

  • Goals: Use AI to repurpose content, saving time and money

Target customer description example 2 (B2C):

  • Demographics: Female, ages 15 to 50

  • Relevant job to be done: Curl hair

  • Pain points: Time consuming to curl hair, hates hair damage caused by hot tools

  • Goals: Curl hair faster and without heat damage

Step 3. Define the problem and your solution

The next step is to define the problem you’re solving.

It’s best to identify the top two to four pain points that you want to solve. If you attempt to tackle too many, you’ll dilute your focus, build a product that’s too big, and struggle to define a clear minimum viable product (MVP).

With the top problems chosen, you can craft a short and sweet solution statement. Here’s an example from our sister company DevStats:

Software developer analytics tool that gathers data from GIT and Jira to help engineering leaders remove roadblocks, 10X results, reduce burnout, and achieve high performance.

Step 4. Create a user story map

The next step is to create a user story map that ties problem-solving to real user tasks.

The base format for a user story map is as follows:

As a < type of user >, I want < to perform task > so that < outcome >.

Your user story map should have three to seven of these types of statements (you shouldn’t tackle any more with the first version of your product).

For each statement, you’ll then write out the subtasks required to achieve those tasks and outcomes.

Make sure to only include user tasks that are essential to solving the key problem your product will solve.

This user story map template from Miro offers a great way to map out what users want to achieve and how your product features will support those aims.

You can sign up for the 1-Page SaaS Blueprint Challenge to see an example of the user story map for our sister company DevStats.

If you’re not building a software company, you can still use this format and write out the most important customer to-dos and goals.

Step 5. Determine your pillar feature

With your user story map complete, you need to choose your pillar feature.

This feature is your north star. Build it, and you’ll have something you can sell. It’s the crux of your MVP.

It’s a great idea to determine this key feature, so that you don’t lose sight of your goal during the product development process or get distracted by shiny objects.

Step 6. Clarify what you’ll do differently than competitors

How are you going to set your business apart?

Make sure you offer some form of differentiation. Give your target audience a reason to get excited about your product.

Here are some important options for product differentiation:

  1. Unique features or technology

  2. Quality and durability

  3. Price

  4. Future-proofing or longevity

  5. Design and aesthetics

  6. Branding and brand identity

  7. Customer service

  8. Customization and personalization

  9. Niche specialization

  10. Convenience

  11. Product bundling

  12. User experience

  13. Product performance and reliability

  14. Guarantees and warranties

  15. Educational content or implementation support

You can of course mix and match them, but as the initial part of your product strategy, you should focus on just one to three ways you plan to beat your competitors.

Step 7. Design your user interface

The next step is to design the UX of your product and create a high-fidelity prototype.

The prototype should offer the exact look and feel of your finished product. Users should be able to click through the screen to get a feel for what your product will help them achieve.

Here’s an example we created for a client during our signature Sprint Zero process, which is our service for product strategy and real user validation.

high fidelity product prototype example

Step 8. Collect feedback from target customers

Now it’s time to show your product to real target users.

You can set up user testing sessions with User Interviews, which allows you to upload your prototype files so users can click around through the different screens.

Don’t explain your prototype. Instead, let them explore it independently and ask questions. This will make it easier to determine whether or not the interface is intuitive.

We recommend testing your prototype with at least 10 target users. You can test it with target users you know personally, or with people you recruit from User Interviews.

Based on their feedback, you might need to revamp your prototype before moving on with development.

Step 9. Determine your revenue model

As part of your strategy, you also need to determine your pricing model.

How will you charge?

The ideal revenue model will allow you to deliver value to users, while opening up the opportunity for increasingly higher payments per year, using a land-and-expand model.

pricing models

The most common pricing models are:

  1. Freemium

  2. Per user

  3. Per active user

  4. User tiers

  5. Storage-based pricing

  6. Feature-based pricing

  7. Flat rate pricing

  8. Volume-based pricing

  9. Per item

  10. Free, ad supported

  11. Free, transactional

  12. Free or paid, with add-on services

  13. Pay as you go

  14. One-time free for lifetime access

Don’t expect to get it perfect the first time. You’ll need to optimize your pricing in the future. But at least begin by choosing something that makes sense for your target audience, represents a payment strategy they’re familiar with, and allows you to drive revenue and support further product improvements.

Step 10. Choose your go-to-market channels

Some people might argue that go-to-market strategy isn’t a part of product strategy.

But as an entrepreneur, it’s essential to map out your GTM strategy as soon as possible. If you’re not sure how you’ll sell or market your product, you’ve got a big problem.

Choose one or two GTM channels that will help you drive your first customers. Here are the most popular channels:

  1. Affiliate marketing

  2. Offline ads (billboards, bus stops, airports, etc.)

  3. Existing platforms (for example the Shopify app store)

  4. Word-of-mouth / referrals

  5. Offline events

  6. SEO

  7. Speaking engagements

  8. Conferences

  9. Cold outreach

  10. Community building

  11. Content marketing

  12. Social & display ads

  13. Search ads

  14. Unconventional/digital PR

  15. Traditional PR

  16. Email marketing + marketing automation

It’s smart to choose these channels during the product strategy phase, because you can work simultaneously on marketing and product development. You can start building an audience or reaching out to partners and continue to get their feedback and input on your product. You can also ensure that as soon as your product is built, you have a customer base.

Step 11. Write a list of early adopters or start a waitlist

You should also write a list of people who will purchase your product when it’s done. This isn’t a description of your target customer, but a list of real people who want to buy your product.

Write down your early adopters so that as soon as your product is done, you’re ready to call them up and start selling it.

You could also start a waitlist with an email marketing platform like Mailchimp or ConvertKit and drive traffic to the waitlist with your GTM channels.

Some entrepreneurs even presell their products and start collecting revenue to fund product development.

Make sure to use one of these options. If you find that it’s too difficult to presell your product or add people to your waitlist, that’s a surefire sign that you need to do more work on your product strategy.

How to validate your product strategy

Once you’ve come up with a clear product strategy and used one of the above frameworks to document it, the next step is to validate it.

As part of your product strategy, you should’ve already gotten real target customer feedback on your offering, making it easy to answer the following questions:

  • Are you solving a problem that needs to be solved?

  • Are you solving the most critical problem for your target audience?

  • Is your target audience willing to purchase your product for a reasonable amount?

  • Does at least 30% of your target audience contacts want to join your waitlist? (Or does at least 30% of your digital traffic convert into waitlist subscribers?)

If you answer “No” to any of these questions, that’s a clear sign that you need to do some more work before moving forward with product development.

Maybe you need to solve a different problem for the same audience, tweak your product features to better solve the issue, or move onto a completely different target audience.

4 product strategies for SaaS companies (with examples)

What does your product strategy look like?

For SaaS companies, most strategies come down to just a few main types. Below, we present the best product strategies with an example for each.

1. Fulfill a simple to-do item (task-based)

You can help users from any industry or walk of life to achieve a simple task. Make it quick and easy for customers to manage something and cross it off of their to-do list.

Unlike comprehensive platforms, these types of SaaS apps are simpler and more task focused.

Example: GoLinks

For example, GoLinks is a link management platform. Companies can use GoLinks to set up short links like go/hr or go/kpis. Whether at home or in the office, employees will then be redirected to the correct link according to the redirects set up in the platform. These simple, intuitive links help people work faster.

2. All-in-one platform for one type of user or industry (vertical)

Another common product strategy is known as the all-in-one platform. With this product strategy, you’re consolidating as many tasks and to-do items for one specific industry, company type, or user type.

Example: BoosterHub

BoosterHub is a booster club management software. Coaches and parents can use it to manage students, schedules, t-shirt sales, concession stands, accounting, and so much more. It replaces dozens of different apps.

Read the case study: Learn how we helped BoosterHub strategize & launch their product in under 6 months.

3. Streamline work across one area (horizontal)

This product strategy is very similar to the one above, but instead of consolidating work for one industry (vertical), you consolidate work for one area of business (horizontal). There are aspects of running a business that are similar regardless of the industry.

Example: TravelPerk

With TravelPerk, businesses of any size and type can manage business travel. Admins can set policies and budgets in place. Business travelers can book trips, request approval for bookings, and get travel support on the go. Meanwhile, finance managers can get all of the invoices and reports they need.

4. Manage one area of business for a specific industry (vertical + horizontal)

The final product strategy is a combination of vertical and horizontal product strategy. Instead of solving an area of business for everyone, you solve an area of business for a specific industry. This can be very helpful in crowded marketplaces where you need to really speak to a specific target audience in order to get their attention, or if one industry has slightly different needs than other types.

Example: Swell

Swell is a customer feedback management platform for medical practices. Rather than focus on feedback management for every industry, Swell offers medical-specific features across patient experience, feedback requests, and more.

Read the case study: Learn how we helped Swell strategize & launch their product in under 3 months.

Partner with DevSquad for product strategy and development

DevSquad offers product strategy through our signature Sprint Zero process. We kick things off with a workshop (virtual or here in Utah) to come up with a user story map with the key tasks your user wants to achieve. Then we develop a low-fidelity prototype, get your feedback on it, turn it into a high-fidelity prototype, and test it with your users.

If the concept is validated, we move on to product development. If not, we can help you define a different set of features to test.

Learn more about partnering with DevSquad on product strategy and real user testing.

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