NATIONAL RESEARCH UNIVERSITY HIGHER SCHOOL OF
ECONOMICS
FACULTY OF COMPUTER SCIENCE, ECONOMICS, AND
SOCIAL SCIENCES
BUSINESS ADMINISTRATION
PROJECT PROPOSAL
PRODUCT STRATEGY DEVELOPMENT
Marina Vorobeva, BA-19-3
Supervisor: Associate Professor, Faculty of Computer Science, Economics, and
Social Sciences, Karina A. Alenina
PERM
2023
Recently, a company's competitive advantage relied on a strong supply
chain or innovative production. However, now, the quality of the product is the
sole factor for success. So, nowadays a product strategy underlies company's
strategic development. Taking this into account, this paper is aimed to identify the
main aspects of product strategy formation and to develop a product strategy in
practice. To achieve this purpose, the findings of previous research will be
reviewed definitions of a product and a product strategy, stages of development
of a product strategy. The following methods are required for the study: a survey,
a semi-standardised interview, a Customer Journey Map, a HEART framework, a
RICE method, a Kano model, and a roadmap. It is expected to find out what a
product strategy is, the stages of its development, in order to put this knowledge
into practice later. This work consists of three parts: an introduction, the main
part, and a conclusion.
Introduction
Background. Historically a product strategy has been viewed as an
unreliable or ambiguous concept. Even today some companies approach their
product strategy in an unstructured and haphazard manner. “However, without a
comprehensive structure it is likely that product strategy decisions will be
overlooked, addressed too late or made without sufficient consideration of the
implications and alternatives” (McGrath, Gilmore, 1995). Besides, a chaotic
product strategy can result in diminished profits and early withdrawal of the
product from the market. Therefore, it is crucial to understand how to formulate
an effective product strategy and implement it appropriately.
Problem Statement. The goal of the work is to identify the main aspects
of product strategy formation and to develop a product strategy in practice. To
achieve the main goal, the following tasks need to be carried out:
1. to analyse the appropriate literature to shape an understanding of product
definition and product strategy;
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2. to elaborate a methodological toolkit for identifying the key aspects of
product development, product implementation and its strategy for
achieving business objectives;
3. to conduct a survey and a series of semi-standardised interviews to identify
the current situation in the company;
4. to draw up a backlog based on the results of the findings and prioritise tasks
to develop a product strategy;
5. to shape and implement a product strategy for the product under research.
Delimitations of the Study. This study has several delimitations that
should be considered. The product strategy will be developed for the product used
by the internal customers of the selected company. Because of this, the strategy
developed will be narrowly focused. So, it is difficult to apply this product
strategy to other products.
Professional Significance. The results of this research can be beneficial to
product management and marketing specialists, aspiring entrepreneurs and any
companies involved in product development. This study uses various methods to
conduct the thorough analysis required to develop a product strategy. The
information studied and the methods applied will ultimately allow to determine
the ideal sequence of actions for optimal product strategy development.
Definitions of Key Terms. There are two main definitions in this study: a
product and a product strategy. A product is a package of benefits that customers
buy or use to address a particular issue or need. A product strategy is a plan that
outlines the key decisions and actions necessary for a company to develop, launch,
and manage its products throughout their lifecycle.
Literature Review
This section of the work will analyse definitions of a product and a product
strategy, how they are related and a process of product strategy development.
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The product strategy starts with the product itself. There is no product
strategy without a product. Therefore, it is necessary to consider several
definitions of product at the outset. Philip Kotler defines a product as “anything
that can be offered to a market for attention, acquisition, use, or consumption that
might satisfy a want or need” (Kotler, Armstrong, 2017, p. 675). For Alderson
“product is a bundle of utilities that satisfy the customer’s needs and wants"
(Alderson, 1957). Hitesh Bhasin characterises a product as "a bundle of physical,
chemical and / or intangible attributes that have the potential to satisfy present and
potential customer wants" (Bhasin, 2017). The word "Product" has multiple
interpretations but it usually refers to a package of benefits that customers buy or
use to address a particular issue or need.
Before a product enters the market, it goes through several stages, from idea
generation to market launch. The most commonly identified stages in the
development of a new product are seven. These will be described below.
1. Idea generation. The stage is the systematic search for new product ideas.
“The basic goal of this step is to gather many ideas that can set a foundation
later” (Glintch, 2022).
2. Idea screening. The objective of this stage is to narrow down the options of
ideas to the ones that are truly worth pursuing.
3. Product concept. The best idea must evolve into a consumer-friendly
product concept that offers insight and helps anticipate potential obstacles
in the development process.
4. Marketing Strategy Development. To ensure product success, create a
strong marketing strategy consisting of three parts. The first part is a target
market, product positioning, sales goals. The second part is price,
distribution and a marketing budget. The third part is long-term sales and
profit goals, a marketing mix strategy.
5. Product Development. This stage involves the start of product
development.
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6. Market Testing. “The stage at which the product and the marketing program
are introduced to a more realistic market setting” (Bhasin, 2021).
7. Commercialization. This stage involves bringing the product to market.
The launch timing and location must be determined by the company.
This is the journey a product takes before it hits the market.
A product passes through several stages from development to retirement.
The product lifecycle concept is used to explore the product's journey in the
market in more detail. The lifecycle usually consists of four phases: introduction,
growth, maturity and decline. “Some authors add an initial phase of development,
and others add a final phase of cancellation” (Tibben-Lembke, 2002).
Figure 1. Phases of the product lifecycle*
Life after death: reverse logistics and the product lifecycle, 2002, p. 6
The Development phase involves the search of a product idea, the creation
of a business model for its commercialization, and initial test market launches.
The Introduction phase marks the commencement of product promotion. Active
promotion of the product continues during the Growth phase. During the Maturity
phase, market saturation occurs as the product and its competitors are widely
available to customers. The Decline phase is typified by dwindling customer
numbers and declining profits, and necessitates a decision on the product's
withdrawal from the market. The final stage of the product lifecycle is
Cancellation, which marks the ultimate removal of the product from the market
(Konopatov, 2020).
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For a product to succeed in a changing world, it needs a suitable
development strategy. This strategy outlines opportunities, goals, and future
directions. To be effective, a product strategy must fit the product's current
lifecycle phase. To understand what a product strategy is, several definitions need
to be considered.
Table 1
Definition of "a product strategy" by the Russian authors
Author
Klavdieva E. V.
Definition
“Product strategy is the process of optimising
the range of goods and determining the most
effective one for successful market operation
and overall efficiency of the enterprise”
(Klavdieva, 2014).
Petrov A. N.
“The product strategy involves long-term
decisions on the types, volumes, and sales of
products or services produced by a company,
including
specific
decisions
for
each
product” (Petrov, 2005).
Russian authors tend to associate a product strategy primarily with
improving the product range and its primary metrics, while the foreign authors
tend to define a product strategy in a more extensive way. This includes
considerations such as a target audience, a product lifecycle, and business
objectives of the company. The definitions of the foreign authors are in the Table
2 below.
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Table 2
Definition of "a product strategy" by the foreign authors
Author
Definition
“Product strategy is about imagining the
Pichler R.
future of your product: What offering will it
become? Who will it benefit? How will it
create value?” (Pichler, 2015). “It includes
the product’s value proposition, market, key
features, and business goals” (Pichler, 2016).
Hojar,
the
website
of
behaviour analytics tools
heatmaps
and “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” (Hojar, 2022).
The structure of a product strategy should also be considered. A product
strategy can be structured into four levels: strategic vision, product platforms, a
product-line strategy, and individual products. Clear strategic vision sets the
direction for the company and defines how it will succeed. Product platforms are
crucial to determining success, and separating them from a product-line strategy
allows senior executives to focus on important decisions. A product-line strategy
is a time-phased plan for the sequence of products developed in a product line,
and individual products flow from this plan.
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Figure 2. The structure of a product strategy*
Achieving growth, competitive advantage and increased profits, 1995, p. 12
After all the basics have been covered, it is necessary to understand what
the process of developing a product strategy looks like. This process consists of
six steps:
1. Defining functions of a product,
2. Selection of the main features of the product which the consumer needs,
3. Launch of the product in the market,
4. Decision-making about changes,
5. Creation of the product range structure,
6. Gathering information before launching the product on the market.
To make a process of developing a product strategy easier, these steps can
be followed. However, each product is different, so the process of developing a
product strategy can vary from product to product.
The literature review reveals that a universal approach to defining a product
and its strategy does not exist. Rather, creating a product strategy necessitates
examining a unique product, its consumer base, and the broader environment.
While there are general notions about what a product strategy should entail, the
specifics are contingent on the product in question.
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Methods
This part of the proposal will explain the methods used in carrying out the
study. There are many methods that can be used to develop a product strategy.
However, this study will use the methods described below. For a more in-depth
analysis both qualitative and quantitative methods have been chosen.
In the beginning, a survey and a semi-standardised interview will be
conducted to collect information on the current situation of the product. The
survey will provide information and gather opinions about the product from a
large number of the users. As for the interview, it will provide more in-depth
information from both users and the product developers.
Moreover, the customer experience with the product needs to be explored.
The Customer Journey Map and the HEART framework will be used for this. The
Customer Journey Map is a guide to understanding and further improving
customer experience. Using this method, it is possible to understand what
problems the users are most concerned about, what are the benefits and drawbacks
of the product, and what it is clear to pay attention to developing a product
strategy. The HEART framework is a set of user-experience metrics. It will help
to measure the quality of user experience and react to the users' feedback in real
time.
In addition, a backlog should be compiled from the acquired information.
After that, the compiled tasks need to be prioritised. The RICE method and the
Kano model will be used for this purpose. The RICE method recons for the
mathematical calculation of the indicators and the reliance on metrics. As for the
Kano model, it implies the use of a survey. So, prioritisation does not depend
solely on the opinion of the development team. The emphasis in the selection of
the work track comes initially from the consumer.
In order to develop a product strategy, all available information must be
brought together. A roadmap will be used for this purpose. It will list the project
objectives, the key stages, the milestone dates and more.
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A combination of the represented methods allows to gather all the necessary
information about the product, its users and its key performance indicators.
Applying all methods will help to see what needs to be done to develop a product
strategy.
Results Anticipated
The final part of the proposal will report on the results which are likely to
be obtained with the methods mentioned.
Conducting the survey will provide primary information about the current
situation of the product. This will help to identify the problems arising from use,
the advantages and disadvantages of product features, and the users' preferences
about changes. In addition, the survey will be necessary to apply the Kano model.
The Kano survey will help to determine which features of the product are worth
improving and refining first, which can be changed later, and which can be
removed.
As for the interview, more in-depth information on the use of the products
is expected. As well as information from the developers on the actual situation,
their plans for the future of the product and requirements for developing the
product strategy.
The Customer Journey Map will help determine how different users interact
with the product, how user-friendly the product is at different stages of interaction,
what emotions the user experiences on the way to their goals, what barriers they
encounter.
The HEART framework is a set of user-experience metrics. The method
helps to investigate the consumers' reaction to the product and to find out the
success level of the product.
The RICE method and the Kano model are expected to prioritise tasks in
the backlog.
Finally, the roadmap will combine all the information into a single space.
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Consequently, the research results will form the basis for developing a
product strategy.
Conclusion
To summarise, a product strategy is an integral part of companies which are
engaged in product development. The process of its development will change
depending on a product and the environment. It casts doubt on the applicability of
this process as a universal one.
However, there are relatively few studies directly focused on examining the
process of developing a product strategy. Therefore, it is assumed that this
research could be used as some support in developing a strategy for one's product.
References
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Bhasin, H. (2021). New Product Development – Process and 7 Stages. A
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