Product Strategy: Concept & Elements

Kristen Rogers, James Carnrite, Sean Harrington
  • Author
    Kristen Rogers

    Kristen has her Bachelor of Arts in Communication (cum laude) with certificates in finance, marketing, and graphic design. She is a small business contributing writer for a finance website, with prior management experience at a Fortune 100 company and experience as a web producer at a news station. She's covered a variety of topics including news, business, entrepreneurship, music, and graphic design.

  • Instructor
    James Carnrite

    James has an MBA in IT Management.

  • Expert Contributor
    Sean Harrington

    Sean has two master's degrees from the University of Arkansas in Operations Management and Engineering. He has ten years of teaching experience.

Understand what product strategy is by learning the product strategy definition. Explore key elements of product strategy. Discover a product strategy example. Updated: 03/22/2022

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What is Product Strategy?

Marketing generally refers to the processes of communicating about products and services and activities focused promotional efforts; however, it also includes the strategies for creating new products. A strategy refers to the methods or the ways in which a goal is achieved. Before marketers can focus on one of their main tasks of promoting a product, they must first implement a product strategy to develop the product.

The product strategy definition is the processes and methods of developing a new product or service. It is similar to a roadmap as it lays out the direction of how the product is created and ultimately placed in a market. A product strategy is used to introduce a new or improved product or service and provides the guidelines for the development process that help to reach the vision. Before products are introduced to a market, several factors must be considered.

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Elements of Product Strategy

The key elements of a product strategy closely mirror the elements of the marketing mix, known as the four Ps. These include product, customer value, price, and place.

Product or Service

The product element, or service element, focuses on the actual product itself, its development, and how it will be presented to the public. Marketers consider what exactly they seek to sell, the purpose of the product, and how it will be perceived. Features or qualities of the product should be highlighted to show how it is unique. Positioning the product into a market will require additional research and testing, but the development of the product will focus on some of the basic aspects. Marketers should consider answering common questions, such as:

  • Is this product convenient?
  • What are the benefits of this product?
  • What makes this product unique?
  • How will it be viewed in the market?
  • Why is this product better than competitor products?

Customer Value

The customer value element refers to how the customers will perceive the product and its worth. This element of product strategy focuses on the values and benefits that are offered by the product or service. Customer value includes determining if the product can provide an unmet desire or solve an issue for the customer. Finding the target market is crucial to ensuring products can reach potential buyers. A target market refers to the consumers that are considered having interest in purchasing the product. This group is chosen as the focus when promoting the product. By identifying this market segment, the business can make decisions on promotional efforts based on their preferences.

Price

The price element of product strategy places the cost on the item. The price of a product or service is based on how it is perceived in the market, as well as other factors depending on the industry. In businesses where prices can be set, it is important to evaluate the benefits and value of the product and to consider how they are perceived by consumers.

Other factors may impact the price element. Some prices can be determined based on the going rate in certain markets where this isn't room to control the price. Competitors can also have an influence on similar products, which can affect the pricing methods.

Place

The place element of product strategy refers to how the product is distributed. It is an important part of product strategy since it consists of the methods and various channels the company uses to offer the product in the market. Businesses may opt to use a vendor or sell directly to customers. They may have a retail store where consumers can buy the product, or they may sell it online. The place will depend on the product and the abilities of the business.

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Product Strategy Exercise

In this lesson, we learned how companies ensure products can be brought into markets with a competitive position. Products must be priced appropriately, and demand must exist for the product. Answer the following questions to further demonstrate your mastery of this subject.

Section 1: Product Strategy Definition

  • What strategies can companies use to differentiate their product?
  • What are the advantages and disadvantages of bringing a higher quality product to a market?

Section 2: Product or Service

  • Why is it important for a company to define the product or service it intends to sell.
  • What are the potential consequences of not adequately scoping the product or service?

Section 3: Customer Value

  • What determines customer value?
  • Do all customers value items in the same way?
  • Do all customers desire the same quality in a product? How does this affect how companies may enter a market?

Section 4: Price and Place

For this section, consider a specific product sector that a company may wish to enter. Examples of products you may use include cellphones, takeout pizza, women's' shoes, or bicycles.

  • What is the range of prices that consumers would be willing to spend?
  • Where do the majority of consumers break out on this range?
  • What do you believe is the best place to enter this market based on this range and distribution to maximize profit? Are there multiple competitive positions?
  • What are the appropriate methods to sell the goods or services? Are there multiple options for store location, such as internet stores and brick and mortar stores? If there are multiple options, what are the advantages and disadvantages of each?

What is in a product strategy?

A product strategy consists of several elements used to introduce a new product or service. The key elements include product, customer value, price, and place.

Why is product strategy important?

A product strategy is important when introducing new or improved products. Implementing a product strategy can help businesses to reach the vision of the product and can help to establish a successful new product in a market.

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