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How to build a brilliant product strategy: a guide
The best strategies help product teams stay on course as they navigate obstacles and changes.
Last updated16 Jun 2023
Without a well-defined product strategy that is aligned with your product vision and company goals even the best teams can succumb to chaos—the product team is pulled in different directions, trying to meet objectives that constantly change depending on the opinions of stakeholders and executives.
What's worse: misaligned product teams are often unable to meet user needs. The result? Products that fail to delight customers or fulfill business goals.
By building a brilliant product strategy, product managers can keep their teams aligned on what the product should achieve—and why. This guide explains everything you need to know about a product strategy, and shows you how to create one to turn your vision into reality.
Use Hotjar to build an impactful product strategy
Hotjar helps you discover and connect with the user needs that form the core of an excellent product strategy.
What is a product strategy?
A product strategy is a high-level plan that defines the unique value proposition of a new product, its target audience, and how the product will meet key goals across its entire lifecycle.
Also known as a product development strategy, this critical foundation links user needs with organizational goals to communicate the real purpose of the product; it's the first step in turning the product vision into action.
A product strategy often goes through several iterations in the early stages as you get more product feedback and test product-market fit—it needs to be flexible enough to meet changing user needs and market conditions.
But once it’s set, the strategy should act as a stable touchpoint, aligned with the company’s core vision. While the product strategy only changes in response to major shifts, the product roadmap, initiatives, and backlog can change as needed.
What are the benefits and importance of a product strategy?
A product strategy offers guidance at multiple touchpoints throughout the product lifecycle, showing how the initial product idea will help realize the company’s overall vision. Incorporating a clear strategy into your business model is a useful asset in the research phase, design process, and an important element of the marketing mix, which ultimately improves overall product management.
The best and most effective product strategies:
Include extensive target market research
Keep the product team focused and aligned
Help PMs prioritize features and direct resources
Answer the problems you solve for your ideal customers
Address methods that will help you achieve your business objectives
Provide guidance to improve your product management team structure
Help other departments understand how the product ties into their business goals
Highlight your unique selling proposition (USP)—in other words, how you’ll differentiate yourself from other market players
Convince investors and other external stakeholders on the viability of the product and organization, securing more buy-in
The product strategy also helps stakeholders understand why you’re developing the product and how you’ll develop it to maximize customer delight, market share, and profitability. With a clear strategy, your business will be able to produce a reliable product roadmap that offers you a competitive advantage.
While product managers (PMs) draw on the product strategy to create the product roadmap, the whole product team should use the strategy to guide day-to-day decisions on backlog management, feature prioritization, and paying down technical debt. The product strategy also offers guidance to other business units, including people working in product design, marketing campaigns, and sales teams.
Having a product strategy means having a clear direction that your team can refer to in order to understand where they should focus their energy and prioritize.
Without a strategy, different opinions on where the focus should be across the team can lead to recurrent conflicts when deciding on the next priorities. Everybody tends to fight for what they think is the top priority based on their reality and what they see or hear.
4 effective product strategies
Deciding on the right product strategy for your company depends on the specific needs of your market and the resources you have available.
Here are some of the most common:
Leader/alpha strategy, which is all about creating a product that leads the market.
Challenger/quality strategy, where your product challenges the current market leader by offering an improved product experience.
Niche/focus strategy, where you tailor your product to meet the particular needs of a very specific segment of the market, rather than aiming to dominate the market as a whole.
Cost strategy, where you focus on highlighting your product through the cost of your offer.
What is the difference between a product strategy and a product vision?
Though product strategy is deeply connected with the goals of the company and product, it is distinct from product vision.
The product vision is a broad, aspirational articulation of long-term business and product goals. It acts as a timeless statement of purpose.
The product strategy starts with the product vision but tailors it to your customer, market, and organizational goals—it’s a high-level description of how the product will achieve the vision.
Keep in mind: the product strategy isn’t a set of in-depth project actions. It doesn’t detail the execution of specific tasks or features, and it’s different from the product roadmap, which maps out the plan and timeline for achieving the strategy.
Product strategy is a bridge between vision and execution.
The company’s vision statement sets out a lofty ideal linked to the company’s mission in the world.
The product vision then defines how the product (or products in the case of a portfolio company) will make the company vision a reality.
The product strategy lays out how to get there at a high level.
The product roadmap breaks that strategy into tactics and workable increments.
5 key elements of top product strategies
There’s no one way to build a brilliant product strategy.
Your strategy should be tailored to your particular market and the unique needs of your users and organization.
But typically, successful product strategies are:
1. Driven by vision and purpose
A great product strategy communicates the why behind the product. It offers a clear sense of purpose, outlining how the product makes a difference, who it makes a difference to, and where it will position itself on the market.
2. Led by user needs
Successful product strategies begin and end with user needs. Great strategies don’t jump straight to offering solutions. Spend time understanding the underlying problems of your customer base and how you can generate effective solutions that offer an enjoyable user experience.
Product experience insights tools like Hotjar are key here: Session Recordings and Heatmaps help product teams empathize with user needs by seeing what their users experience, and feedback tools offer rich voice of the customer (VoC) data that will serve as a foundation for effective product strategy.
Pro tip: leave space for creative thinking in the early stages of defining your product strategy.
Don’t assume you know what will satisfy your customers—develop user personas to find out how people search for, buy, and use products. Not only will you end up culling non-viable ideas, but discover new, unexpected ways of fulfilling user needs.
3. Developed collaboratively
The best product strategies emerge through ongoing conversations. Hear from as many different voices as possible: a range of product team members, different organizational stakeholders, and, of course, your users.
By leading with cross-functional collaboration, you’ll gather diverse perspectives and get stakeholder buy-in on your product strategy from the start.
Product strategy must be designed in conjunction with design, development, marketing, and sales departments; the contribution of all these departments is what makes a product strategy effective. This allows all stakeholders to speak the same language.
An even more advanced approach involves prospective users in the process to help curate a customer-centric product strategy.
4. Flexible but stable
The product strategy will naturally evolve, especially in the early stages, as you do more research or your user needs shift. Great strategies make space for changes that emerge from continuous discovery.
But you also need to be careful not to chop and change your product strategy constantly. Remember that this form of strategic planning has long-term goals. It’s supposed to be your product team’s foundation, so it can’t shift in response to every new request or need that arises.
The best product strategies find a balance: product managers should make wiggle room for changes and think carefully before updating the strategy to avoid disorienting your team and stakeholders.
Product strategy should be a living thing—not a document set in stone and reviewed once per quarter. It should reflect all emerging insights, changes in user needs, market, or technology. It should be adapted frequently.
5. Able to measure key product, business outcomes
Since the product strategy aims for clarity and efficiency, it doesn’t usually get too detailed with numbers or metrics—most product managers save those for the roadmap and product plans and initiatives.
However, it’s important to define the strategy to offer a clear, measurable benchmark you can test to see whether the product meets key goals. This often means using the strategy’s vision of a successful product to tie in specific time-bound metrics and objectives, like hitting a certain number of daily, weekly, or monthly active users (AU), increasing monthly recurring revenue (MRR), or improving retention rate.
6 steps to build an effective product strategy
1. Deeply understand and describe your customer
The success of your product strategy depends on your empathy for user needs. Discover your user attributes—who your customers are, what they do, what they want, what they need, and what obstacles they face.
Tools like Hotjar (👋) keep you connected with your product experience and let you dig deeper to discover real user needs.
Once you understand your customers’ needs, you need to communicate them. Many product managers recommend creating user personas to make your customers real and add depth to your user knowledge.
Every successful product exists to solve a problem. If your product does not meet a user’s needs, or users don’t understand how your product solves the problem, then your product will not be a success.
As a product manager, it’s your responsibility to identify the most important problems to solve and to make informed decisions on how best to solve them. What informs the prioritization of the problem and the efficacy of your solution is the quantitative and qualitative feedback that you receive from your users.
Always keep in mind that you do not necessarily want your customers telling you what to build, but their insight into the problems to solve is invaluable.
2. Ensure you have a well-defined product vision
Start with the why of your organization. Ensure you fully understand your company’s overarching purpose, then align your product vision with the organizational vision by synergizing user, market, and business goals.
Pro tip: use tools and templates to help you define the vision by visualizing how your product mobilizes organizational resources to meet user needs.
Roman Pichler’s product vision board is one popular option for mapping out the product’s features, target group, and business goals to determine the vision.
3. Find your product’s unique selling point
Product differentiation is a crucial aspect of a successful product strategy. This step helps you determine how your product will stand out from the crowd and compete on the marketplace in terms of:
Run a SWOT analysis and competitive analysis to better understand the landscape and determine your product market. Then, use these insights to inform your strategy.
4. Collaborate with different stakeholders
Get product team members and exec-level stakeholders involved in the strategy's inception and development stages.
This will help you understand your organization's broader landscape of needs and concerns, which contributes to a more robust product strategy. Engaging different organizational stakeholders also helps them get behind your product development process and business strategy from the start.
5. Test and adjust
At the early stages of strategy building, it’s important that you test, adapt, and evolve your product. Get general user feedback on your product ideas as soon as possible and use it to refine the strategy.
Once you’ve built a minimum viable product (MVP), learn how users are experiencing the product and, especially, which needs aren’t being met.
Hotjar’s website feedback tools show you how users interact with your product and where they experience obstacles or drop off. You can also gather VoC feedback to understand what your users are thinking and feeling as they use your MVP.
The next step is to channel all of these insights into the product strategy. Frequently ask customer feedback questions to engage in continuous discovery, connecting with users regularly, and testing whether your product strategy is still relevant.
6. Make a plan to execute
Once you’ve defined the strategy based on the product vision, user needs, market differentiators, stakeholder inputs, and feedback, it’s time to put it into action.
Create a product roadmap
The product roadmap is your key to bringing the product strategy to life. It’s a high-level plan for how your product will achieve its strategic goals and what the product priorities are.
It should give a clear overview of how the strategy will be translated into action, provide a timeline for product development, and put key metrics in place to measure success.
Take a look at Hotjar’s public product roadmap, which highlights the features and improvements it has added to its software, to get an idea of how to create your own.
Use the product strategy to inform your product initiatives
Product initiatives are big-picture product themes or ideas, which describe customer value—i.e. the jobs to be done framework (JTBD) that helps your team discover what people are trying to accomplish when using the product. Each product initiative is then split into concrete plans and actions.
For example, if your initiative is to make your product more attractive to social media users, you’ll break that down into the specific features and projects required to make that happen, like adding share buttons or integrations.
The product strategy should inform long-term themes and smaller projects and tasks.
Refer back to the product strategy when prioritizing the backlog
The product backlog is a dynamic list of product development tasks and initiatives, including features, updates, optimizations, and bug fixes.
The product strategy should be a key touchpoint that helps you manage the day-to-day tasks on your backlog. Use the key themes in your product strategy to inform the decision-making frameworks you use to prioritize features and fixes.
Why a brilliant product strategy is key to product success
Leading a product team with an ill-defined product strategy is a bit like taking one step forward and three steps back. Product managers lose valuable time and resources to indecision and uncertainty and move forward in stops and starts, if at all.
But a brilliant product strategy helps you make confident decisions to turn your product vision into a reality. With an aligned, connected product team, and a clear sense of your strategic priorities, you’ll be well on your way to developing a product that truly solves user problems and brings about customer delight.
Use Hotjar to build an impactful product strategy
Hotjar helps you discover and connect with the user needs that form the core of an excellent product strategy.