PRODUCT STRATEGY

People purchase products to improve their lives or business. The more a product can drive the value equation by improving benefits (both rational and emotional) over price versus the competition, the more the product will retain customers and attract new customers.

Products that dramatically improve the customer value equation are the foundation for explosive growth. If a product company is struggling, always start the turnaround with an improved product strategy.

In 2006, these were the top-selling "smartphones." The market was around 60 million smartphones, which primarily competed on email, messaging, performance, battery life, memory, and application integration. The smartphone market was growing at 30% and consolidating, but lacked differentiation, relying more on feature and performance incrementalism.

In 2007, Apple launched the iPhone. Many of the new innovative features solved the unmet needs of customers, such as a large screen, simple UI, native web browsing, integrated iTunes, multi-touch navigation, and widescreen video. Instead of a phone trying to be a mini-computer, the iPhone was an Apple mini-computer with a telephony app.

By improving the lives of customers and providing superior value versus competitors, the iPhone now sells 200+ million units a year, driving Apple's sales of almost $400 billion a year, and market capitalization from around $40 billion in 2006 to over $2.5 trillion in 2023.

If you want your product to win, then focus on growing the customer value wedge. How will your product increase customer benefits? At the same time, how will you reduce product costs? If you cut costs, you can either improve product margins or lower prices for customers.

Deeply understanding the vital met and unmet customer needs makes it easier to prioritize the product dimensions to improve to maximize customer value and competitive differentiation. Every product competes on eight dimensions, including features, usability, performance, durability, reliability, serviceability, conformance, and aesthetics. From a product strategy standpoint, it is critical to understand what is important to your target customers, how your product(s) compare to the competition, and what needs to be improved, which you should codify into a product roadmap.

While it is essential to drive the value wedge by improving the important product dimensions, a long-term product strategy also creates sustainable competitive advantage. The eight sources of competitive advantage are below. Competitive advantage creates barriers around the products and business model that are difficult for competitors to reproduce. The barriers can be in the form of customer value (i.e., brand loyalty, innovation, network effect), financial value (i.e., scale, proprietary information), or limited resources (i.e., locked-up supply, locations, intellectual property).

Apple develops all eight types of sustainable competitive advantage creating a competitive barrier around its products and business model. The switching costs alone for customers to switch from the Apple ecosystem to another product are prohibitively high, given the proprietary information Apple has with iTunes, iPhoto, iCloud, and other apps. Apple has also developed a formidable network effect as users can inexpensively communicate through iMessage and FaceTime with other users. Apple has also created a competitive advantage through innovation and intellectual property, along with its marquee locations and scale. These sources of sustainable competitive advantage have led to Apple's pricing premium, customer loyalty, financial performance, and market capitalization.

A product roadmap outlines the product development goals and the necessary actions to make the product vision a reality. It represents the "what" of a product strategy.

The product development lifecycle strategy outlines the goals and actions (initiatives) to improve the development of products. It represents the "how" of a product strategy.

As you develop a product roadmap, you need to determine whether to rationalize the product portfolio, improve existing products, or develop new products.

What improvements will…
- differentiate the product(s) from competitors?
- drive better customer value?
- create new use cases, open up new segments?

What new products will…
- change the game?
- help sell more of the current product(s)?
- fill in current holes in the product portfolio?

Which products should be eliminated (rationalized) to…
- free up resources to focus on higher-value products?
- better align the business model (targets, go-to-market, org)?

To create killer product ideas, you need to immerse yourself in insights about the products, market, competition, and customers. As you or your team conduct various analyses, always focus on turning insights into product ideas or opportunities. Product insights often focus on the fundamentals that current products need to address. Market and competitive insights can help you create the context of the future to architect competitive differentiation. Customer insights help prioritize the met, and unmet customer needs that a product can address.

What are the trends and opportunities in the product performance, sales, warranty, economics, supply chain issues, etc.?

Typical analyses include:
- Trend Analysis – Sales, Economics
- Product Performance & Reviews Analysis
- Warranty Claim & Customer Service Analysis

What are the trends and opportunities in the market, with competitors and their products, innovations, etc.?

Typical analyses and tools used include:
- Porter’s 5 Forces, Adoption Curves, PESTLE Analysis
- Competitive Benchmarking
- Innovation Scan

What are the trends and opportunities in customer segments, needs, behaviors, use cases, etc.?

Typical customer research tools include:
- Customer Surveys / Polls
- Ethnography
- Focus Groups

The best product development teams have an evergreen list of product ideas they are continually mulling, developing, and prioritizing. When it is time to develop these opportunities, flesh them out with customer use cases, requirements, innovations & features, and synthesize the details in a product snapshot.

Customer use cases and requirements identify who is going to use the product, and how and where they may use it. What are the new and existing use cases and requirements the product is going to address?

Typical analyses include:
- Trend Analysis – Sales, Economics
- Product Performance & Reviews Analysis
- Warranty Claim & Customer Service Analysis

Identifying innovations and prioritizing the core features is an important next step in developing a product idea. What are potential innovations and features that will create a step-function improvement in customer value and/or product cost?

Typical analyses include:
- Tech & Innovation Research
- Competitive Product Teardowns
- Analogy Brainstorming
- Patent Analysis

In the latter stages, every product idea needs a snapshot identifying the target customer and their needs, features, economics, differentiation, synergies, high-level development plan, supply chain implications, and overall ROI or size of the opportunity. At this point, it is critical to validate the concept.

Typical analyses include:
- Customer Surveys, Focus Groups
- Concept Testing, Rapid Prototyping
- BOM (bill of materials) & Capital Needs Analysis
- ROI & Synergy Analysis