When preparing to develop a new product, it is imperative that you answer three critical questions: what, who and why?
- Does your new product address an observable problem in the market?
- Does your target customer want what you’re about to create?
Building a proof-of-concept and generating early feedback can help ensure you are driving in the right direction, developing competitive advantages and differentiating through key strengths. Ensuring that the “why” of your product follows a consistent narrative with other products your organization has created and that your vision justifies the existence of the product is core to a successful product strategy. Additionally, successful product strategies should describe what the business hopes to accomplish and a vision for doing so. This should answer essential questions like who the product will serve, what the product offers/solves (including goals for future iterations) and why the company wants to launch this product.
Product strategy framework
To help lead new product development, WWT’s Business and Analytics Advisors (BAA) team has developed a reusable strategic framework to serve as a baseline for developing your product strategy. While all organizations have different needs, this baseline allows you to validate a given product concept using reliable first- and third-party data and enables you to successfully and efficiently execute on your vision.
The problem, or the why, is at the core of any product’s development and is a critical starting point: strong products are created out of necessity rather than ideation. Consumers buy products that have compelling/new features that resonate with them. We think a strong product is comprised of three interdependent and essential parts: vision, competitive features and core product team.
- Vision – A powerful description of what the product is seeking to accomplish and an overview of the primary benefit(s) to the customer.
- Competitive Features – Unique value proposition, key features and benefits provided to customers over existing offerings in the market (differentiation).
- Product Team – Identifying the right team based on their values and skillsets will make or break your product.
For example, a leading technology company is interested in launching a new enterprise communication software, similar to Zoom, but exclusively for the healthcare industry. If we were to analyze the product component of the strategy framework, we might expect to see the following:
- Vision – A platform providing videotelephony services for hospital systems to treat existing patients, which integrates with Electronic Health Record (EHR) systems.
- Competitive Features – EHR integration, encrypted videotelephony, powerful API for hospital app integration, cloud-based, call analytics and custom design capabilities.
- Product Team – Multiple options can be made available for a limited budget team or a full-fledged expansive team can be proposed and can include various, specifically chosen resources including product managers, platform and application architects, security engineers, delivery managers and subject matter experts; most importantly, the identification of skill gaps within your potential team will enable you to best plan for the future.
A great product can get your team fired up and generate buzz in the industry, but nearly all product success stories include well thought out and clear product/market fit.
An amazing product without product/market fit can fail and teams often pay the price for skipping this crucial step in the strategy process. Product/market fit is not a mystery but does require extensive due diligence along the following three areas: analyzing your competition and the broader industry, accurately identifying and understanding your target customer (the who) and determining the best way to acquire your target customers. If at all possible, surveying and interviewing potential customers will allow for higher quality insight generation and substantially augment the market analysis.
- Competitive Analysis – An analysis of the competitive landscape, including core competencies, value propositions and partnerships.
- Industry Analysis – An analysis of the industry outlook, including projection and market data, to help define product niche.
- Target Customer – Size and demographic data for segmenting customers to further define the ideal consumer.
- Customer Acquisition – How customers/users will be acquired with a hypothesis on what marketing strategy they will most strongly respond to.
Revisiting the white-labeled telehealth enterprise software example, consider the following hypothetical market component as part of the overall product strategy:
- Competitive Analysis
- Industry Analysis
- Market Size: $7 billion
- CAGR Forecast (2021-2028): 43%
- Segmentation: Local PCP practices, large healthcare institutions, university health and wellness centers, cosmetic surgeons.
- Reasons for Growth: Increased demand for remote care, advancements in at-home treatments, rapidly evolving prescription delivery of pharmaceuticals.
- Target Customer – CIO or mid-level information technology leadership with authority to make decisions regarding internal communication technologies
- Customer Acquisition – potential approaches for acquiring customers are referrals, organic and paid search, email marketing, and specific creative strategies for maximizing conversation rate
A properly priced product can attract and retain customers and can make all the difference in determining if a product is a hero or a zero.
Optimal product pricing takes fixed and variable costs into account, calculates a healthy margin which generates cash flow for future product development, and contributes to the company’s overall bottom line. Understanding baselines that your competition has already set in the market will be key to how your product is marketed and perceived.
- Revenue Generation – Comparison of approaches for monetizing your product, while also accounting for industry best practices.
- Product Cost Structure – Overview of costs associated with the product including labor, materials/infrastructure, etc.
You’ve developed a product vision, refined the product/market fit and have considered the implications of cost on your revenue generation model. The last step is bringing it all together to ensure a successful execution.
Relying solely on a strong product can be tempting, but it’s essential that you establish a clear and easy to navigate execution strategy, including an implementation, go to market and iteration plans. Creation of clear objectives within the implementation plan will develop transparency around milestones for your offerings. These milestones will ultimately feed into your go to market plan and lead to better decision-making regarding when key benefits can be marketed to your target customer.
- Implementation Plan – Provide potential offensive and defensive implementation strategies and highlight major pitfalls other competitors have historically faced.
- Go to Market Plan (Ship/Launch) – Evaluation of your ability to successfully go to market, differentiate and compete.
- Iteration (Post-Launch) – System for learning from users and creating a short feedback loop to continuously measure success and improve upon the initial offering.
Coming full circle
Development of a product strategy should enable better decision-making for investing in potential product opportunities. By considering product, market, pricing and execution, you can best organize and plan to effectively achieve a highly successful outcome — and be best positioned for the eventual design and implementation stages of the product lifecycle. As such, these four contributing parts to a lucrative product rollout should not be left up to chance.
With proper research and a carefully thought-out strategy, you can de-risk any idea or actual product before moving ahead. Don’t skip steps, you’ll thank yourself later.