Product development strategy

Launching a new product or giving an old one a makeover can be nerve-wracking for product teams. Will it be a total hit or a big flop?

This is where a solid product development strategy comes into play. It’s the key behind products that don't just hit the market but dominate it. 

Stick around and we'll explain everything you need to know about product development strategies – why they’re so important and how to build one that will set your product up for success. We’ll also look into a popular tech company’s product development strategy in action. 

Why create a product development strategy? 

Before we delve into the why, it makes sense to understand what a product development strategy is. 

A product development strategy is your game plan for creating new or improved products. When developing a strategy, you have to consider what your customers want, what the market offers, and how your product will stand out. 

Now, why do you need to make one? 

Without a strategy, product development can feel like wandering through a maze – lost, confused, and burning through resources. It's a recipe for missed chances and developing a product that doesn't live up to the hype.

For example, when Apple develops a new iPhone, their product development strategy wouldn't just outline the technical specs and design features. It would delve deeper, addressing questions like:

• Market pulse: What are the current demands in the smartphone market? What features are customers looking for? What are competitors offering?

• Customer needs: Who are we targeting with this product? What problems are we solving for them? How will this product enhance their lives?

• Business goals: How does this product align with our overall business objectives? How will it contribute to our growth and profitability?

What’s the difference between a product development strategy and a product development process?

A product development strategy is often confused with the product development process. Although they’re two sides of the same coin, they're distinct concepts. 

The product development process is a set of steps (brainstorm, design, build, test, launch). A product development strategy is the big picture – the why, the what, and the plan that guides those steps.

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Product development strategy benefits

Investing time in a solid product development strategy brings clarity, minimizes surprises, and keeps you on track. Here are some of the benefits it can bring. 

1. Clear direction

A solid product development strategy helps everyone understand the goal and work together. As a result, you'll have a unifying vision for everyone involved, which guides every decision – from design to marketing.

2. Fewer surprises and wasted resources

Creating a product development strategy helps you spot problems early, which allows you to pivot or adapt before investing in resources. For example, a thorough competitive analysis might reveal that another competitor already offers your proposed product feature. With this knowledge, you can find ways to differentiate your planned features or shift your focus to a more unique offering. This saves you and your team valuable time and resources.

3. Happy customers

When you build things people‌ want, you create products that solve real problems, which makes for happier customers! 

For example, you might discover that your target audience prefers a mobile-first experience. This insight could lead you to prioritize mobile app development over a web-based platform, which in turn increases customer satisfaction and adoption.

4. Helps you stay on track (and within budget)

When milestones are clear, you're more likely to finish on time and within budget. This also helps you allocate resources where they’re most needed, prevent bottlenecks, and keep projects on schedule.

5. Successful launches

A well-executed strategy increases your odds of launching a product that resonates with your target audience, leading to higher adoption rates, customer loyalty, and a boost in revenue. 

6. Staying ahead

A strategy also helps you adjust to market changes. For example, after launching a new software product, you might receive feedback that a particular feature is confusing or difficult to use. A flexible product development strategy allows you to quickly iterate on the product, improving the user experience and keeping your users engaged. 

7. Motivated teams

Finally, having a product development strategy in place unites your product managers and product teams to work toward a common goal, fostering a sense of purpose and boosting morale.

Product development strategy approaches

No single product development strategy will fit all your needs. The best approach depends on your product, market, and existing resources. The most common product development paths you might want to explore are:

• New product development: Introducing a new product that fills an unmet need. For example, a startup transforming language learning with a personalized AI-powered app.

• Redesigns or improvements: Redesigning or improving an existing product to stay competitive and meet evolving customer needs. For example, a photo editing software adds a magic wand tool to zap out unwanted photobombers.

• Market expansion: Taking your winning product to new territories or audiences. A good example is when an American fashion brand conquers Europe and Asia, adapting designs for local tastes.

• Diversification: Branching out into new product categories to spread your wings and reach wider markets. For example, a productivity software company venturing into mobile gaming to tap into a different customer base.

• Cost reduction: Reevaluating your existing processes to cut costs without compromising quality. As an example, a smartphone manufacturer discovers a lighter, cheaper material that doesn't sacrifice style or durability.

How to create a product development strategy

Now that you've learned about the benefits and approaches to developing a product development strategy, your next step is to create one! Here are the essential steps you should consider. 

1. Set your vision

Before you start developing your product development strategy, create a compelling vision that outlines the problem you’re solving, the impact you want to make, and the ideal future state you envision for your users. 

Key considerations when defining your product’s vision:

• Be specific and ambitious, but also realistic.

• Make sure your vision aligns with your company's overall mission and values.

• Communicate this vision clearly and passionately to your team and stakeholders.

Here’s an example of a well-crafted vision:

"Our vision is to create a productivity app that transforms how remote teams work, fostering a culture of collaboration, efficiency, and joy. We envision a future where remote work isn’t just feasible but thriving, thanks to the tools we provide.”

2. Get started with market research

Your next step is to research your target market. This is where you try to grasp their needs, pain points, preferences, and behaviors. You might also need to analyze your competitors to identify gaps, opportunities, and potential challenges.

Key considerations during market research:

• Use a mix of qualitative and quantitative research methods (e.g. surveys, interviews, focus groups, data analysis).

• Go beyond surface-level data and uncover the underlying motivations and emotions driving customer behavior.

• Stay up-to-date with industry trends and emerging technologies.

In our productivity app example above, the team might conduct in-depth interviews with remote team leaders and members to understand their frustrations with current collaboration tools and their need for a more integrated solution. They could also analyze user reviews of competitor apps to pinpoint areas for improvement. Plus, they could validate customer needs through a jobs-to-be-done (JTBD) survey.

3. Dig deeper with user research

While market research paints a broad picture of your target customers’ preferences, user research zooms in on the individuals who'll use your product. It's like the difference between looking at a map of a city versus walking its streets and talking to the locals.

With user research, you gather valuable insights directly from your target customers and stakeholders through various user research methods. You have conversations with your users and listen to their feedback, observe their behavior, and understand their needs and motivations on a deeper level.

When conducting user research, remember to:

• Be specific: Define clear research objectives and questions to guide your investigations.

• Choose the right methods: Select user research methods that align with your goals and budget (e.g. interviews for in-depth insights, surveys for broader data collection).

• Focus on quality: Recruit participants who represent your target audience and make sure diverse perspectives are represented. For example, our saved demographic groups feature makes it easier for you to find and recruit participants for user research. 

• Active listening: Pay close attention to what users say and don't say, observing their behaviors and emotions.

• Analyze and synthesize: From the data you gather, identify patterns, themes, and key insights to inform your product development decisions.

• Iterate: Refine your product using user research insights to make sure it meets user needs. 

4. Develop your value proposition

Your value proposition answers the burning question potential customers have: "What's in it for me?" It's a concise, compelling statement highlighting the unique benefits your product delivers. 

Key considerations when developing your value proposition:

• Problem: Clearly define the customer's pain point.

• Solution: Explain how your product uniquely solves it.

• Benefits: Quantify the value customers receive (e.g. time saved, money earned).

• Outcome: Focus on how your product improves the customer's life or work.

• Unique edge: Highlight what sets your product apart from competitors.

• Simplicity: Keep it short, clear, and impactful.

Here's an example: 

"Our project management tool boosts collaboration, automates tasks, and delivers real-time insights, enabling teams to hit deadlines and budgets."

5. Create a prototype

This step is where your product takes shape. A prototype is a preliminary version of your product. It can be a clickable mockup of an app, a 3D printed model of a physical product, or a basic software program with core functionality. Your goal is to create something tangible that users can interact with and provide feedback on. 

Key considerations during prototyping:

• Purpose: Clearly define what you want to learn from your prototype. Are you testing usability, validating a concept, or gathering feedback on specific features?

• Fidelity: Choose the right level of detail for your prototype. Do you need a simple sketch, an interactive mockup, or a functional model?

Recommended reading: Head on over to our prototype testing guide and comprehensive list of prototyping tools you can try.

6. Test and iterate

This step is when you gather feedback from potential users throughout the development process. Use this design feedback to refine your product, fix bugs, and make sure that it truly meets customer needs.

Key considerations during testing and iteration:

• Start testing early and often, even with rough prototypes.

• Be open to criticism and willing to make changes based on user feedback.

• Use a variety of testing methods (e.g. usability testing, A/B testing, beta testing).

In our productivity app example, the startup releases a beta version of their collaborative tool to a select group of remote teams and seeks their feedback through surveys, interviews, and bug reports. They use this feedback to improve the app's usability and address any technical issues.

Did you know? You can collect rapid feedback on specific design elements with our simple five second test template.

7. Launch and promote

After rounds of testing and iteration, your next step is to develop a comprehensive marketing and launch plan to create awareness, generate excitement, and drive adoption of your product.

Key considerations during launch and promotion:

• Tailor your marketing messages to your target audience's specific pain points.

• Use various channels (e.g. social media, content marketing, paid advertising) to reach your audience.

• Build a community around your product to foster engagement and loyalty.

For example, our startup launches a multi-channel marketing campaign, showcasing the app's benefits through videos, blog posts, and social media content. They also offer early-adopter discounts and create a community forum for users to connect and share tips.

8. Monitor and measure

Launching isn't the final step! You still need to track key metrics like user engagement, retention, satisfaction, and revenue to assess your product's performance. With this data, you can make informed decisions, identify areas for improvement, and drive continuous innovation.

Key considerations when tracking metrics: 

• Choose metrics that align with your business goals.

• Review and analyze your data regularly to identify trends and patterns.

• Use feedback to prioritize updates and new features.

In our example, the startup closely monitors user data and discovers that a particular feature is underutilized. They conduct further research to understand why and decide to redesign the feature to make it more intuitive and valuable.

Product development strategy in action: Spotify

Spotify's rapid growth to 60 million users in 2015 can be attributed to its strategic product development decisions focused on user engagement and personalization. According to Victoria Young, who's currently a product marketer at Meta, Spotify has built a product that keeps users coming back (and has impressive growth) by focusing on these five key areas.

1. Keeping users hooked

Spotify hooked users with personalized playlists, saved favorites, and custom radio stations. Once a user is hooked, they might have second thoughts about leaving the platform and trying a competitor because they’ve already “invested” a lot of time in building their playlists. 

2. Social features

Early integration with Facebook and features like collaborative playlists created network effects. The more friends a user has on Spotify, the more valuable the service becomes. 

3. Strategic pricing and promotions

Discounted student subscriptions benefit from university networks, growing faster through word-of-mouth and social sharing within these communities.

4. Data-driven personalization

Spotify employed user data to understand "aha" moments or actions that boosted user engagement and conversion. It allowed them to personalize the user experience and incentivize behaviors that led to paid subscriptions.

5. Win-win for artists

What’s more, Spotify provided artists with valuable analytics and insights. As a result, it strengthened relationships with creators and ensured a steady stream of high-quality content.

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Build data-driven product development strategies with Lyssna

Creating your product development strategy isn't a one-and-done deal. It's an ongoing process of learning, adapting, and improving. When you sign up for Lyssna’s comprehensive suite of research tools, you can build a product development strategy based on real user data and feedback. 

 With Lyssna, you can: 

• Validate product concepts

• Recruit your ideal participants

• Make informed design choices

• Get to know your users and customers

• Gather feedback fast

For example, Milo, a fintech company, used our Interviews feature to gain crucial cultural insights and inform their product development strategy for financial solutions in Latin America. Read their story.

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Kai has been creating content for healthcare, design, and SaaS brands for over a decade. She also manages content (like a digital librarian of sorts). Hiking in nature, lap swimming, books, tea, and cats are some of her favorite things. Check out her digital nook or connect with her on LinkedIn.