Successful product strategies focus on solving real problems for the target audience, instead of showcasing or copying features of other products.
Proactive strategies use problem-driven solutions that customers are willing to pay for, supported by market research, R&D, and innovation (e.g., Apple, Coca-Cola, Google)
Reactive strategies adapt to trends, imitate competitors, or defend market share (e.g., Microsoft, Google Home)
Winning brands (e.g., Nissan, IKEA, Notion) align product vision with user needs and feedback
BigOhTech simplifies product development by handling research, strategy, and execution. Our expert team helps turn your ideas into market-ready products, saving you time and effort.
Have you heard of PALM Inc., once a leading player in the smartphone industry in Silicon Valley before the rise of Blackberry and Apple? Their downfall came when they launched a tablet at a time when mobile and internet penetration were still limited.
The failure wasn't due to the lack of demand for the tablet, but because it was released at the wrong time—when widespread internet access was not yet available
A good product development strategy follows a different approach – it starts with identifying customer pain points, validating product ideas through MVP and scales only when customers adopt it.
Before developing a product, ask yourself – what’s the biggest, most impactful problem that aligns with the company’s mission and vision. Infact, most successful startups succeed because they understand WHY behind customers preferences - why product A is better than product B.
In this guide, we will explore a lot about product development strategy, types of product development strategy, some brand-new examples and how you can create a winning product strategy for your business.
What is a Product Development Strategy?
Product development strategy involves developing a plan for introducing new products to the market or improving the existing ones.
The goal behind implementing a product strategy is to:
Improve product sales
Drive business growth
Enhance the customer experience
It doesn't matter if you have a successful product; having a product development strategy is important for growing your business.
Formulating such a strategy helps businesses to get a competitive advantage because they can place their products in the best possible way.
Why Is It Important to Create a Product Development Strategy?
Product development strategy is the foundational element for every business; it's like a plan that makes your business successful. One research study states that 34% of startups fail because they build a product that nobody likes. This means they find a bad product market fit.
Creating a product strategy can be a lifesaver for startups as they can get directions as to what to do next in the long run, while large organizations need such a product vision strategy to decide the future roadmap, as they've a matured product portfolio.
Running a successful business is possible when you've created a defined product strategy, as it helps to improve your bottom line, expand your product offerings, drive more business growth, and enhance your customer experience.
Once you develop market research plans for different product combinations, you can improve the likelihood of improving existing products in the long run. Ultimately, it helps you grow your business exponentially.
What Are the Different Types of Product Development Strategies?
Strategies for product development are broadly categorized into 2 types-
Proactive strategies
Reactive strategies
1. Proactive Product Development Strategy
It is a strategy where the company identifies customers’ needs and tries to launch innovative products before competitors.
Here, businesses gather information by doing market analysis, customer research, and looking at competitors’ strategies.
Here’s what companies do in proactive product development strategy-
a. Investment in Market Research
Companies using proactive market strategies are performing market research to identify customers’ needs and then developing products that meet the needs of customers.
By observing current trends in the market, businesses gain additional insights into identifying opportunities for creating new products.
Apple, for instance, is one of the leading companies in the technology arena, which conducted overall market research to understand its customer needs and came up with innovative products.
The company tries to fulfill the needs of technology users by having an online community known as “Apple customer pulse.” Such communities help Apple improve its existing products and see whether there is an idea to launch new products.
Need help figuring out where to start?
b. Investment in Research and Development (R&D)
Many product-based companies focus on launching technically superior products.
Adding unnecessary features to a product is not worth it if it does not benefit the end users. Investment in R&D helps companies get various insights into improving existing products and gain a significant competitive advantage.
According to Business Queensland, businesses that invest in R&D development are more likely to succeed in the future than businesses that don’t have.
Creating an R&D strategy results in improved productivity of businesses, improvement in products/services, more efficient processes, etc. Hence, such innovations let businesses earn higher profits in the long term.
For Instance – A spaghetti sauce brand invested in R&D and then came up with introducing original versions of products such as “Chunky Garden,” “Four Cheese,” “Tomato Garlic Garden,” etc.
c. Investment in Entrepreneurship
Another type of product development strategies is investing in entrepreneurship, which is a willingness to take risks. It’s primarily an initiative where startups and established corporations allow employees to work on their inventions.
For Instance – Google actively uses this strategy by allowing its employees to devote 20% of their time to personal development projects and 80% to their work tasks.
To their surprise, the company released 2 successful products – Gmail and AdSense which brought them huge revenue.
d. Alliances
Creating Alliances is a good strategy for businesses to ace their product development efforts. By entering alliances or strategic partnerships, companies can gain a competitive advantage in the industry and access resources or expertise they don’t have.
Apple, for example, enters alliances with other corporations such as LG Electronics, Samsung Electronics, and Panasonic Corporation of North America. Such collaborations help Apple leverage new technologies, create better products, and improve the user experience on devices.
2. Reactive Product Development Strategy
Companies create reactive product development strategies by adapting to changes in the environment. Such responses usually occur when there are technological advances or when new players are entered into the industry.
Here’s what the company does in a reactive product development strategy-
a. Responsive Strategy
It is a strategy wherein the company makes significant product improvements by listening to customer requests and feedback. Because of the close relationship with existing customers, the company knows what’s in demand or what customers request.
Usually, such a strategy for product development might not always work out because customer requests are made for features, they don’t need.
For example – When Microsoft came up with a product called “The Surface RT tablet” the company reacted to Apple’s iPad because such device dominated the tablet market.
Microsoft’s product flopped in the market because it did not have such features as the I-pad.
b. Imitation
Creating strategies by copying competitors is an old-school thought, and it’s also relevant in today’s time.
Generally, people try to underappreciate the concept of imitation in today’s business world.
But did you know that the leading brands such as Coca-cola, MC Donald, Visa, and Mastercard imitated their competitor’s strategy?
Also, such companies surpassed the original products and had tremendous success.
Another example of an Imitation product strategy is that Amazon launched an Echo product in 2016, a personal home assistant where people would ask Alexa questions such as “whether it’s hot outside.”
A year later, Google also jumped into the intelligent assistant game by launching a home assistant product, popularly known as “Google Home,” that lets people listen to everything they do.
Undoubtedly, Google shamelessly copied the concept, and got a huge success.
c. Defensive Strategy
Under a defensive product development strategy, companies intend to protect their market share and actively make it difficult for new players to enter the market.
An instance of this would be that Amazon reduced the price of Kindle Fire tablets from $199 to $159.
Such a strategy makes it challenging for competitors like Google and Apple to enter the tablet market because they were forced to lower their prices. Instead, other companies would try not to compete on prices and concentrate on other areas.
How to Create a Winning Strategy for Product Development?
Turning a GREAT product idea into a successful product requires a product development strategy. A great product strategy doesn't start with SEXY features; it starts with identifying your customer pain points first.
While every company follows a different approach to product development, here are 4 steps you can follow to make your product successful in the market -
1) Ideation Stage
The first step in developing a killer product strategy starts with brainstorming ideas. Here, the product team thinks about new product ideas or improving the existing product.
A product idea is selected not because you think it's GOOD enough, rather it should focus on solving user needs first.
The bigger the problem it addresses, the more people it impacts, and the greater the chances it will become a great product.
Take Google for instance, it has a team of product managers who pick an idea to solve customer needs in B2C Space. It always adopts a user-centric approach in launching all its products.
Let's say Google launched Gmail to solve the problem of a universal inbox for emails, offering powerful search capabilities.
Then, they came up with another consumer facing product called Google translate because they knew people across the globe have difficulty interpreting words. The reason behind that was to remove language barriers.
Similarly, Apple, a renowned technology brand, became successful in creating a product development strategy. Its focus from early days was on user-centric design and continuous innovation.
Apple decided to invest in creating the iPhone following the success of the iPod. They recognized that people were becoming more drawn to gadgets that combined music with personal convenience, leading to a shift toward more solitary experiences.
At the same time, Apple identified a gap in the mobile device market. While BlackBerry focused on improving call quality, security, and battery life, Apple saw smartphones as devices that could cater to consumers who not only wanted to make calls but also enjoy entertainment.
By consistently gathering user feedback, Apple was able to refine its products to better meet consumer demands.
Expert Tip - Before adding a new feature or expanding your product line, rather than just taking feedback, install tools like Clarity and PostHog to analyze customer cues based on product usage.
You may also conduct focus group interviews and ask whether customers believe your product is better than competitors', based on certain hypotheses.
After selecting the best ideas from different departments, the goal is to ensure that those ideas align with business goals.
2) Screening of ideas
Suppose you have 100 different ideas to work on. The key question is: which of these ideas will have the greatest impact on a larger audience and solve more complex problems?
Ask yourself which feasible ideas have market demand, and which ones can generate revenue—ideas that customers would be willing to pay for.
It all boils down to one question: do you have enough funds and resources to turn your idea into a viable product? Building a product isn’t just about development—it also involves marketing, sales, distribution, and ongoing customer support.
Achieving product-market fit often takes time—typically between 1 to 4 years—and requires sustained investment, as Andrew Chen notes in his book The Cold Start Problem. In fact, companies like Zoho and Figma took nearly five years to truly achieve product-market fit.
If you lack the time or capital to endure this journey, it's wise to focus on ideas that align with your current capabilities and can be validated and scaled within your resource constraints.
3) Outline Product Strategy
After the idea screening phase is conducted, the next step is to create a product strategy. A product development strategy includes finding out the WHY behind your product. Why does your product exist, does it consider user needs and was it created through cross functional collaboration.
If the product vision, team collaboration and market demand doesn't go in the right direction, then things will fall apart.
In a nutshell, a product strategy has a prime focus on 5 things-
Product vision
Features of product
Benefits it provides
Who's the target audience
What sets your product apart from others
Additionally, as per Lean Startup principles, it's crucial to identify and validate the core hypothesis that best aligns with your product vision and addresses the most critical user pain point.
Notion has become the beloved and the most successful product that's used by 20 million people and thousands of teams for organizing things and getting work done. They scaled their product by listening to early users and solved one key problem, that's flexible workspace.
They built a flexible workspace that adapts to how people think, not forcing them to adapt as per tool.
4) Develop a Prototype
After finalizing the product strategy, the next step in the product development process is to create a prototype. A prototype is a dummy version—a type of MVP—that you can test to see whether it fulfils the intended purpose, just like an actual product.
It is recommended to test the core hypotheses identified in the product vision against the MVP to determine whether you’re on the right path. This approach helps the product team focus on what truly matters and ensures the strategy remains adaptive to customer needs.
If you receive customers' feedback that the product had a bad UX, then you could communicate the same to the design and development team, telling them that there were usability issues. Then, you can refine the design that users love interacting with.
5) Launch The Product
At this stage, you’re launching the fully-fledged product to end users and observing how it gains traction. This involves bringing together cross-functional teams—such as sales, marketing, and customer support—to ensure a cohesive go-to-market approach.
You’ll monitor product performance closely, identify who’s buying it, and use that data to prioritize future features based on what’s driving sales.
In parallel, you’ll strategize on how to promote the product across various marketing channels to increase visibility, attract more visitors, and boost conversions.
What Are Real-World Examples of Product Development Strategies?
Let’s understand some of the ways through which you can create a product development strategy. This starts with taking a deep dive into how popular brands are leveraging it-
1. Change in Existing Product or Service Idea
It is a great strategy you can learn from Nissan, wherein the company makes smart moves by differentiating its products from the competition and responding to customer demands.
Nissan performed a market research analysis where they noticed the increasing gas prices and environmental concerns among customers. Then, they introduced an electric vehicle and successfully sold around 4 lakh Leaf vehicles till 2019. This is how this car manufacturer positioned itself.
2. Changing Your Product to Make it More Appealing to Customers
Through market research and customer feedback methods, the company learned that they needed to modify their existing products and work on creating a better version of them.
A popular example of a brand that creates a customer-centric strategy is Coca–Cola.
As Coca-Cola is always concerned about its customers’ needs, it comes up with refining its drinks to align with customers’ taste buds.
They understood that the market was becoming more health conscious, so they launched new variants of products such as Diet Coke and Coke Zero products with minimal or no sugar content.
3. Increase Your Product Value by Offering Better Deals to Customers
Suppose there are 2 players operating in the industry, and both are selling similar products. In that case, they need to distinguish themselves and offer a perceived value for customers by doing 2 things – either offering more variety or lowering the prices of products.
Consider an example of IKEA company, a home furniture brand that provides furniture products at affordable prices to customers. IKEA does so as it deals in bulk buying and selling of products at accessible prices.
What Are the Common Mistakes to Avoid When Creating a Product Development Strategy?
Here are some mistakes that startup founders and entrepreneurs make when creating a product strategy -
You launch a product without talking to users. You know your target audience, but you have never conducted research about them through surveys, interviews and usability tests.
You finally launched the product, thinking it was a final release. Your product is more likely to fail if you've not looked at the data. Supposedly, you created a mobile app, but after 6 months, you found that users abandoned it because the app was never updated. It was too buggy as well.
You don't value MVP. You created a fully-fledged product with too many features might be because you want to compete with high-end luxury products. It seems that your product does everything for everyone, but it serves no one.
Solution - Instead, create a product that focuses only on one killer feature. Once your product gets traction or wins the trust of a few 100 users, you can later roll out more features to it to increase its usage.
How BigOhTech Can Help You in Product Development?
At BigOhTech, we simplify the product development process, allowing you to focus on what matters most, creating a product that solves your customers' biggest pain points.
By conducting in-depth industry research and competitor analysis, we ensure that your product strategy is backed by data and insights. When you outsource product development to us, we ensure that we align your product vision with market demands to help you stand out.
Our team of experts, including Product Owners, SMEs, Designers, and Developers, is ready to support you at every stage of the product development journey.
Whether it's refining your roadmap, iterating on your ideas, or launching your product, we provide the guidance and expertise to bring your concept to life efficiently, without the long hours of strategy formulation.
We recently helped IGX, India's first automated national gas exchange, by developing a trading platform to help buyers and sellers trade gas quickly. The client relied on a third-party gas exchange platform, which was not customized enough, and didn't give real-time trading updates for market orders.
Result? IGX can now own and operate its trading system, and the system handles daily trade volume of 1.6 lakh MMBTU.
