Today, most companies want to implement their product on time and within a specified budget. However, it is almost impossible to achieve this without developing a product development strategy.
All new projects start with an interesting idea that will appeal to many. Any idea is a hypothesis that needs to be turned into a fact by searching for evidence. Then proving it through observations, expert opinions, and a clear development plan.
Over 90% of businesses fail due to a lack of clear product development strategies. So, this article will discuss product development strategy and why it is essential to prepare a plan for a successful project.
What is a Product Development Strategy?
Business leaders want to figure out what solutions work effectively in a constantly changing business environment that is constantly changing.
Businesses are looking for faster ways to make more accurate product development decisions. In this case, a product development strategy is what they need.
Before choosing the right product development strategy, let’s start with a product strategy description.
Product development strategy includes actions, different activities, and methods used to build a new product and successfully launch it to the market.
A product development strategy is a subset of a corporate strategy. It is often confused with a new product development process. However, confusion arises because of the word “new,” which adds more activities to the process itself.
New product development needs to clarify the goal of creating a project. However, the product development strategy is to gain a competitive advantage for the product. It also involves developing ways to achieve the best business goals for the product:
- sales growth,
- earning a profit goal, etc.
The product development strategy allows the creation of a stream of innovative proposals. It aims to minimize competition and ultimately, please customers.
Why Is Product Development Strategy So Important?
A product development strategy helps businesses gain an advantage over their competitors. This is possible by giving businesses a crucial guide to putting their product in the best possible light.
Previously, companies did not consider creating a product development strategy. This is because there were no visible results from companies that could be trusted.
However, market research became mainstream in product software building.
For example, in 2018, Apple accelerated investments in market research and innovations by spending more than $3B. It allowed the company to create the best and most popular solutions for the rapidly changing technology market.
In 2021, Apple broke its market research record by spending almost $22B on market research and various effective development strategies.
So, it is essential to develop a product development strategy because it helps to:
- study the market and competitors better;
- determine all product development risks;
- choose the best solutions for development;
- form a team of experts to discuss and consider new ideas.
With the help of a product development strategy, companies have great opportunities to build the desired product on time without unnecessary budget expenses.
Having a solid product development strategy is essential to turning an idea into a profitable product that can successfully thrive in the competitive market.
The product development strategy is based on the business strategy. The product development process may differ in methods and tasks. However, if there is no comprehensive, well-founded strategy, the product will be less successful.
When creating a strategy, areas for product improvement are usually identified. After this, the team determines the best methods for improvement. To get the most out of the product development strategy, companies should consider how the techniques will work at each stage.
Advantages of Product Development Strategy
The product development strategy is crucial for several reasons. We have identified three essential points that will help companies create a product development strategy.
Building a Strong Team Around Common Goals and Priorities
A product development strategy helps companies make strategic decisions during development. It helps think through problems and issues in advance that may hinder or delay each stage of development.
Getting Quality Feedback and Recommendations for Each Development Stage
For companies, a created product must carry additional value for its users. However, that value is not always immediately visible, and it may even turn out that the level of interest in the product is lower than expected.
Such bad luck can be avoided if the team works according to a particular strategy. The steps are thought out in advance to prevent a loss of interest from users. It is also a good idea to create a development plan with priority functions. There should also be descriptions of those features that can wait and are not critical.
Creating Efficient Development Without Crucial Failures
By having a specific, clear development strategy, the company knows what resources should be used. It also sets what time frames should be met at each development stage.
In an agile development organization, it will also help to clarify which task-level initiatives have priority at any given time, and which should be included in the upcoming sprint.
Companies developing something new and attractive can take advantage of all the benefits of the internet and media. Media coverage will attract more attention to the business than paid advertising.
If the product is genuinely innovative, advertising platforms will be eager to post stories about an attractive product development strategy to attract more audiences. There is a clear advantage to this – companies get recognition before the project is launched.
Product Development Strategy Examples
Successful product development strategies need to start with marketplace research. With a strong grasp of the market and precise information about the target audience, companies can build solutions or provide services that meet their needs. Let us take a look at how leading brands are breaking into the market and reacting to customer demands.
Netflix home page
Netflix has developed a product development strategy focused on profit and margin from retaining its customers.
The company focuses on providing legal and high-quality content. They go under the slogan “it’s easy to enjoy watching,” winning over many people worldwide. Today, Netflix is the largest streaming service globally. Its main application is subscriptions to its content.
Google home page
Google prefers a scaling strategy. They have created new technological processes that solve big global problems. This is an approach focused on the worldwide market. Google’s goal is to expand its sphere of influence and increase coverage. The company also strives for growth, and later, profit. Thus, in its development strategy, Google is focused on long-term prospects and not on instant results.
Coca-Cola home page
Coca-Cola has a product development strategy entirely based on the customer’s voice. This means that the company is wholly focused on consumers and their needs for drinks. This strategy is always relevant because people’s tastes change, and companies need to follow changing trends.
Since 2017, Coca-Cola has made a move towards a sugar-free product by customer request, and made a bet on drinks that bring benefits and health, not just delicious water. Some require more small and more convenient packages than the classic Coca-Cola can. Coca-Cola’s strategy is to continue listening to and responding to customers’ voices.
Ikea home page
After analyzing purchasing power, IKEA developed a strategy to focus on low cost with a constant level of quality. The company previously leased equipment to suppliers and conducted the training. It later reorganized its supply chain to cope with the large volume and geographical distribution of its suppliers.
With its core competencies in supply chain management, Ikea can pursue a product differentiation strategy. They offer furniture for any buyer and a flexible system of discounts on samples, products with minor flaws, or products from old collections.
Apple home page
Product development strategies are not always complex maps or activities that companies need to decipher. It may be as simple as rebranding, slightly modifying, and selling an existing product. This adds more value for customers who are tempted to get the rebranded product. Apple is an expert at doing this.
Every year, Apple releases new phones, which are not very different from the previous version. They may just make some slight modifications. Even though these changes are minimal, Apple’s customers are willing to pay the full amount for these newly developed products. Apple uses this strategy to continuously generate income from “the same” product yearly.
Maililchimp home page
Mailchimp, a SaaS company, also executed one of the best product development strategies. They introduced a CRM that integrates with their email software. An application or product’s lifecycle is affected by user requirements and advances in technology.
This online era has tightened the competition among SaaS. That is why they need to be able to quickly respond to customer needs and changes in preferences.
Mailchimp was agile enough to respond to the needs of users who required a more flexible solution for their work by adding CRM functionality.
Spotify & Uber
Spotify home page
Product development strategies can also evolve as a collaboration between companies.
One such collaboration is between Spotify and Uber, which partners to provide a better and more personalized rideshare experience for users. This, in turn, boosted their individual brands and increased the popularity of their services.
Planning product development strategy?
Product Development Strategy Types by Approach
There are many approaches to product development strategies, which are usually focused on building a new product and organizing its development.
Companies often use three categories when choosing a specific development strategy:
- Innovative – high-tech products with no equivalents on the market, such as Apple.
- Competitive – products that differ slightly in components but have a cheaper cost (Crest toothpaste)
- Low price value – products with good quality and inexpensive products
Product development strategies usually enhance project development and marketing promotion. It helps companies create the best solutions for internal and external product development processes. However, let’s talk about the main types of product development strategy by approach:
One of the most common approaches to a product development strategy is to measure the target audience. Market-oriented approaches to research have five different types of product development strategies:
- Innovators who use their development and business resources to create new robust technologies
- Technology investors who acquire projects or companies with research centers
- Researchers who create a product and look for ways to promote it in new markets
- Business as usual for companies that continue to promote existing products to current markets. They also try to compete with other brands due to low-cost, product alternatives, etc
- Mid-level companies are happy to use a step-by-step approach to modifying existing products
This approach is based on the control and timely release of the product to the market, regardless of whether the product is analog or innovative.
Time-oriented product strategies are often described as:
- First to market for innovators and innovative ideas
- Fast follower (if we are talking about companies that create an analog product)
As a rule, companies that are the first to enter the market reap the benefits. Of course, there is fierce competition between innovative and followers of projects. This occurs along with differentiation in the modern world. Innovative products claim to have more expensive research and development efforts. Consistency in these efforts should create additional value and a competitive marketing strategy so as not to burn out.
Building a new product in the form of a platform is a perfect way to have better promotions, optimize existing products and create new ones.
The most significant advantage of the platform is that it maximizes revenue. It also impacts innovation, extending to various new product offerings. This is often best illustrated by showing the product roadmap’s relationships between platforms and derivatives.
The main goal of each product is to satisfy the user’s need by creating additional value attractiveness, or user-friendliness.
When creating a product strategy, it is essential to focus on the target audience’s opinions and pains. In this case, the Discovery Phase will be very effective.
The Discovery Phase is the initial stage of product development. It is created for a deep analysis of the market and competitors, for choosing the best tech stack for growth, producing wireframes, etc.
The product discovery stage is not just a pre-development stage. It’s a vital process when companies can check the product’s competitive power on the market and customer attractiveness with product advantages.
How To Launch a New Product Development Strategy
If companies have already found a reliable provider of software services, then half the work has already been done. All that remains is to implement the strategy in the best way possible.
But before a strategy is created, businesses need to be aware of the steps to create a new product development strategy. Every product development strategy starts with:
To create a vision of the project, it is necessary to answer two main questions:
- What is your purpose for creating a product?
- Which positive change should it bring about?
Product vision is an essential component when creating a strategy and further development. The service provider company and the client have the same vision of the product, value, and perspective. When a team moves in one direction, success will come smoothly.
For a successful description of the whole project’s vision companies can build a business model canvas for their projects.
Business Model Canvas
A canvas is a strategic planning tool used to describe business models suitable for both startuppers and A-level entrepreneurs. This is a one-page diagram showing all the business processes of the enterprise.
Source: Business model canvas
This element also helps businesses check the various areas in which they operate. One of the main goals of creating a canvas is to focus during development to allow the company to become better. This product’s success can be achieved by analyzing the following vital elements:
After the strategic product development plan companies should think about their product roadmaps. A product roadmap is a helpful business guide. It guides work on the product with detailed descriptions.
Product roadmaps are essential for companies because they create a clear vision of the product. Also, it significantly reduces misunderstandings within the team. According to 2021 statistics, software that creates roadmaps and analytics is the main thing that successful startups spend money on.
Over the past five years, there has been an increase in product roadmap tools. This roadmap activity is multiplying because there are many ideas that entrepreneurs want to translate into a successful business project every day.
Need a product roadmap for your business?
Strategic Product Development Plan
A product development plan contains the necessary steps vital to achieving the desired goals for the future product.
Planning is significant for any project. Companies should make sure that each goal of the plan describes:
- each step’s achievements
- who will be responsible for the results
- what unexpected difficulties may arise and how to solve them
If companies have multiple departments, these three vital elements can then be connected to the annual budgeting process to secure all possible product development resources ahead of time.
Sloboda Studio has been helping to create startups that raise millions for 12 years. We are actively involved in improving existing small and medium-sized businesses.
We know that it is almost impossible to get a quality product without creating a product development strategy.
Foody, an American startup for global chefs. Experience with building Foody showed how important it is to create a product development strategy. Foody company turned to us for help at the idea stage to create a marketplace.
During our cooperation, we predicted possible development risks and found helpful tech solutions.
As a result, we built the Foody marketplace and the company raised $1.5M in pre-seed round funding to scale up its platform.
Salita is a B2C marketplace that gives users access to different interpreters over phone. It also offers video conference on a number of platforms (web, mobile apps, etc).
Our client came to us with an idea of the project which led to the creation of a platform that could connect interpreters with governments, businesses, and individuals, and provide private meeting rooms with in-person assignments. In short, we’ve built the platform from scratch.
The initial goal was to build a Minimum Viable Product (MVP) that would showcase the most important features to the first users and investors. As with any startup, time was of the essence. We had to analyze project goals, risk, and core functionalities to ensure success.
As a result, Salita has raised more than $1M in two rounds of seed investments. The first in October 2016 by StartupLab and the second in February 2018 by Tharald Nustad.
Salita is now a member of StartupLab, the biggest startup incubator in Norway. It was featured by the PUBLIC.io Team in their list of the most startups set to transform Europe’s GovTech market.
Artur’In (AI) is a social media management and online community manager tool. It launches targeted campaigns, such as newsletters and personalized content specific to your network. Using this product, people can also track and measure engagement. It also helps give you a precise picture of your marketing efforts.
This product allows users to create mini-sites for their company. It can also manage different social media accounts, plan campaigns, and auto-post newsletters and other personalized content to potential and existing customers, selecting any date and time.
The client wanted to create an MVP that would showcase the main benefits of the product. So, we took the client’s idea and transformed it into a fully-functional MVP.
On September 9, 2016, we successfully released our MVP. This is the same month we launched our Private Beta. In October, we went live with our Public Beta.
Three months after launch, Artur Inside and Sloboda increased sales by 110%.
Conclusion: What Makes a Successful Product Development Strategy
Many people think a great idea is already half the work of a successful product. However, this opinion is inaccurate since the concept is only a starting point. Any further development of the product depends on its development strategy.
Product development strategy is essential for any project in an existing company to:
- assemble a qualified team of experts
- receive recommendations at each stage of development
- work out possible risks and ways out of difficult situations
In cooperation with an experienced company, a business can perform various development strategies. However, creating a product development strategy is impossible without a global vision of product development.
It is difficult to create a successful product. Especially without a detailed development plan and a roadmap with development stages.
Frequently Asked Questions
Product development strategy enables product organizations to create a stream of innovative ideas and offerings to delight customers.
Product development strategy is a subset of corporate strategy, which sets the direction for new products by establishing goals, building a development plan, and making funding decisions.
A product development strategy is a set of various actions to help businesses bring new products to the market or existing products to a new market.
The three key elements to creating an effective product development strategy are:
- market needs
- product capabilities
- product reliability and reputation in the market.
Every great product development strategy is comprised of three parts: Global Vision, Strategic development plan, and product roadmap with each step feedback and desired goals to achieve:
- global vision needs to describe the market landscape, who the customers are, and what they need
- a strategic product development plan describes goals and initiatives for the first three years of the company’s existence
- the creation of a unique product roadmap that describes both product vision and strategy, as also tech requirements and development stages.
Product strategy is a great way to identify new opportunities, assess the effectiveness of a company’s product, and help develop its long-term strategic plans. Usually, the role of the moderator of the product strategy is performed by a product owner or project manager.