The main aim of a product strategy is to make amazing things and sell them to people. But in our experience, that’s usually where the vision begins and ends. What if, from the very beginning, your product strategy was focused on unlocking long-term, sustainable growth? This is often the biggest challenge – and we share our top tips to overcome it.
According to Harvard Business School, over 30,000 products are launched every year. And almost 95 percent of them fail. It’s a scary figure – and a good reason to invest sufficient time and resources into your product launch strategy.
At Simon-Kucher, we help companies make it into the winning five percent. We do this by pressure testing your product roadmap and focusing on the value-add that makes a real difference to commercial success or failure.
We also know that for a business to be successful and sustainable, you have to unlock growth. Everybody wants to build and launch a product that people love – but what next? This is where the even bigger challenge is: Not only acquiring customers but also monetizing and retaining them.
In this article, we share our top tips to ensure a growth mindset throughout your product strategy!
Product positioning: Know what makes your product special
To build an amazing product and position it correctly in the market, you need to understand what customers care about. What are their pain points, and why will your product be the best solution?
- Product attributes: Will your product’s quality, performance, or design surpass your competitors? Can you position your product as cutting-edge, forward-thinking, or disruptive in the market?
- Price: Will you be you positioned as a high-end or luxury option? Can you emphasize affordability and value for money?
- Usage: Will you enable your customers to use your product in a new or unique way?
- Brand values: Will customers associate your product with a set of values or lifestyle?
- Niche focus: Will you cater to a specific target audience that is underserved or has unique needs? Is this a specialized, go-to solution for this market segment?
- Exceptional customer experience: Will you offer personalized support and prompt customer service? Is your interface seamless and more user-friendly interface?
Our recommendation: Put your positioning to the test early on to avoid trial by fire
You don’t have to expose your product to the flames to assess its compatibility with the market. Instead, a test-and-learn approach allows for a more agile and data-driven decision-making so that you can continuously refine your offering and strategy.
It's amazing how many companies wait until the product is finished to do testing. You put the product out there and wait to find out whether the features, price tag, packaging, etc. live up to expectations. By which point it’s often too late.
Wouldn't it be better to build these questions into the ideation phase? Do you like this feature? Do you like it at $10? Do you like it at $15? Do you like it in combination with feature X? You can ask different populations with different versions of the product, creating minimum viable products to test your assumptions. All of this might save you a lot of pain in the long run.
You also need to ensure the right digital capabilities for data-driven decision-making. From data collection and analysis to A/B Testing and experimentation platforms, technology can power up your product strategy by efficiently collecting and analyzing data, automating experiments, and enabling you to collaborate effectively throughout the test and learn process.
Product pricing strategy: Know your value
Pricing is a strategic decision that should align with your product, target market, and business goals.Here it can be difficult to strike the balance between generating profit and delivering value to customers while remaining competitive in the market. There are also different strategies to consider when it comes to how you price your products:
- Competitive-based pricing: Setting prices based on the prices charged by competitors, positioning your product as cheaper, on par, or at a premium, depending on your value proposition and target market.
- Price skimming/premium pricing: Setting higher prices initially to capture early adopters or customers who value innovation or exclusivity, then lowering prices over time as competition increases or to reach a broader market.
- Penetration pricing: Setting lower initial prices to quickly gain market share or enter a competitive market, then increasing prices once a customer base is established or when the product's value is recognized.
- Psychological pricing: Setting prices slightly below a whole number (e.g., $9.99 instead of $10) to create the perception of a lower price.
- Dynamic pricing: Adjusting prices to account for changing demand, or based on different conditions such as time, season, segment, etc.
- Cost-plus pricing: Setting prices based on your production costs, then adding a profit margin. This approach ensures that costs are covered but may not consider market demand or competitive factors. It is also a dicey strategy, especially if you have unpredictable costs. And if your cost is close to zero, there's a big risk that your price gets close to zero as well.
- Value-based pricing: Setting prices based on the perceived value your product delivers to customers. Here you consider the benefits, outcomes, and competitive advantage your product offers and price accordingly.
Our recommendation: Put value at the heart of your product strategy
While there are numerous pros and cons for each pricing strategy, at Simon-Kucher we believe you cannot run a business without having an idea of value. Even if you opt for an alternative pricing strategy, you should be thinking about the value you deliver to your customers.
The question is, is it an idea? Is it gut feel? Or is it measurable? Can you express it in monetary terms?
A gut-feeling around value is pure emotion and is hard to quantity. Whereas companies that craft winning value propositions base decisions on hard facts and use scientific methods. Many assume that pricing is a dark art and it can't be looked at methodically. But what we at Simon-Kucher bring to the table is a science.
Product roadmap: Leave room for growth
A lot of companies pursue a land and expand strategy. This involves initially “landing” a smaller portion of business with a specific product or service and then gradually expanding to capture more customers and introducing additional offerings. However, we find that most companies are only landing, not expanding.
To unlock growth, you need to create room for your next level of innovations so that you can cultivate customer lifetime value. The best way to achieve this is to build it into your product roadmap from the very start.
Here you should take a forward-thinking approach, considering your long-term product vision and how it can evolve to remain competitive and relevant.
- Scalability: Will your product be able to handle increased user demand, higher volumes, or new markets? Will you have the necessary infrastructure, resources, and features to accommodate growth without significant disruptions?
- Flexibility: Will you be able to adapt to changing market conditions, emerging technologies, or customer needs? Can your product pivot to meet new challenges and tap into new opportunities?
- Product Innovation: Does your roadmap allow for future iterations, enhancements, or new features to enhance the product's value proposition?
- Expansion and diversification: Does your roadmap consider the product's trajectory beyond immediate goals and milestones? Will anything in your roadmap restrict your ability to enter new markets or target additional customer segments in future?
Our recommendation: Be ruthless with your entry product
If your plan is to eventually expand through up- or cross-selling, you cannot show all your cards in the first attempt. Not only will you give your customers feature shock (leaving them overwhelmed by functionalities before they’ve gotten used to your product). You will also give your salespeople mission impossible when it comes to selling the add-on. If 80 percent of the value is in the entry-level product, why would a customer pay three times more for the remaining 20 percent?
You may be excited to show your customers all the cool features you’re capable of delivering. But if you really love your customers, don’t give them everything all at once. Instead, provide them with a sustainable business that’s going to serve them long into the future. Otherwise, you’ll leave the companies who don't care as much about their customers thriving and in the marketplace.
How we can help
Planning to launch a new product or looking to take your existing product to new heights? Our team of experts can help you craft a winning product strategy frameworks that drives success.
- Inform your product strategy with data-driven decision-making: We work closely with you to understand your business goals, target market, and competitive landscape, providing market research and deep insights into your target market's needs, preferences, and pain points.
- Harness the power of optimal pricing: We help you determine the right pricing model, analyze market trends, and assess customer willingness to pay so that you can profitability while delivering value to your customers.
- Unlock better growth: We help you navigate the different stages of your product's lifecycle, identifying new market opportunities, exploring disruptive technologies, and developing growth strategies to drive revenue and expand your product's reach.
Don't leave your product strategy to chance! Contact us today to unleash the true potential of your product.