How do you build the right strategy for your product?
What are the different tools or knacks to better understand your competition and stay on top of the game?
These are some of the questions that PMs are constantly battling with. Answers to these are given by Joao, from his rich experience working at Google. He describes the several components that are crucial to developing the right product strategy and provides tips on how to quantify your competitor’s value proposition and business performance to gain an advantage in the market.
From Oxford to Google
Joao Fiadeiro is currently the Product Manager in Google’s AI division, working on Kernel which is a new program that applies cutting-edge research to create world-positive products and businesses that transform how people live, work, and play.
Previously, he was the PM in YouTube’s Music team responsible for initiatives aimed at fostering a productive, creative and rewarding relationship between Google, the music industry and artists. Before joining the music team, he was a data scientist in YouTube’s Strategy (BizOps) team. Joao has an MSc degree in Social Science of the Internet from the University of Oxford.
Developing a Winning Product Strategy
The first step to developing a product strategy is spending a good amount of time in defining what your vision is. The vision of your product needs to be at the bounds of what’s imaginable, while still catering to the customer needs. Make sure that your vision is not too specific and there is enough room to iterate. For example, IKEA’s vision “to create a better everyday life for the many people” is not specific to the product they offer today thereby giving them room to expand their products and services.
The second step is to identify an efficient strategy that will help create a pathway to realize your vision. Your strategy needs to describe the target market for your product and the method to achieve those goals. Coming up with an effective strategy involves taking into consideration, the four major components:
- Customers: Identify who your customers are and have a strong understanding of their requirements. You must also be willing to accommodate any feedback from your customers into the product. It is also important to do some research about why your customer is using your product, how they are using it, and extract specific usage patterns to better align your product strategy.
- Competitors: It is important to position your product to your customer, keeping in mind the competition that exists in the market. Identify your competitors and spend time understanding their product, distribution, business model, strategy and history. This will help you add more features or defining a more relevant product strategy for your customer.
- Business: The next important aspect is to identify how the product will make money and achieve business goals for your organisation. Understand the trends of, and the trade-offs between business-models and define how you will make money in a realistic way.
- Macro Environment: The macro environment accounts for the economic, technological, political, and cultural forces that may affect your market and your product over short and long-term. It is important to understand:
- Emerging markets where your product may have demand.
- Emerging technologies that may impact your customers.
- Economic forces that may impact your customers’ budgets or needs.
- Evolving customer needs and behaviors.
Iterating on Your Product Strategy: If you go out with an immovable plan, your plan is almost inevitably going to fail. And if you spend too much time developing your strategy, it may be outdated before you get to the market with the product.
Here are a few tips to keep in mind while creating a product strategy:
- Once you find the product-market fit, your strategy should be focused on growing within your market and exploring adjacent markets.
- Adapt your product to the unique needs of customers as you scale to new markets across the world.
- Get feedback from your customers throughout the product life-cycle.
- Run surveys, interview users, and build and test prototypes.
The Benefits of Product Competitive Strategy
As companies grow, they often lose sight of the entrepreneurial practices that helped them get to where they are today. It is critical for companies to maintain these entrepreneurial capabilities throughout and analyze the competition around them. One can understand their competition either by using traditional methods like surveys, interviews, and questionnaires or using digital tools like eMarketer, App Annie, Crunchbase, etc.
Below are a
- Understanding Customer Needs/Behaviours: Many companies are making their data public through social APIs. One can leverage these APIs to extract user information and usage patterns. For example, Joao utilized the publicly available APIs on Instagram to understand the demography of the users like age, geography, gender, etc and later compare it with the data he had collected from YouTube. Another way of understanding the customer behaviour is through online tools like eMarketer and App Annie.
- Quantifying Competitor’s Value Proposition: When companies don’t provide sufficient information through APIs, you can smartly observe the http requests that are being made when you navigate the website, write Python scripts that will iterate and capture the different JSON responses, and organize and analyze the data according to your business use. For example, Joao scraped the entire Netflix catalog by writing a simple Python script that made http requests and captured data for the different categories of movies.
- Quantifying Competitor’s Business Performance: Analyzing the competitor’s annual reports/financial reports can help you understand what features/products of theirs are bringing in more/less revenue. Another approach to quantifying the competitor’s business performance and one of Joao’s favorites is the bottom-up/top-down approach. In this approach, he breaks down and segments his users and concentrates only on the target user who is most likely to use the product.
These are the key principles behind a successful competitive analysis. Every Product Manager needs to have a degree of business acumen: you can have the most solid product framework in the world, but without a solid business plan you will never be able to launch with success.
This post was adapted from content summarized by Varsha Jayaraj