behavior of the product in business plan

Products & Services Section in a Business Plan (+ Examples)

• March 21, 2024
• Business Plan , How to Write

In this blog post, we’ll guide you through writing the products and services section of your business plan. We’ll cover how to describe what you’re selling and why it’s important in your business plan.

Whether you’re launching a new startup or creating a business plan for an existing business, this section is crucial for showing the value you bring to customers. Let’s get started!

Why do we include them in a business plan?

The products and services section of a business plan is more than just a list of what a company sells; it’s a vital narrative that tells the story of the business’s core offerings and their significance to the market.

This section is paramount for readers (especially potential investors) to grasp the essence of what the business is about, the unique problems it solves, or the specific needs it addresses.

A meticulously crafted products and services segment does much more than describe offerings. Indeed, it lays the groundwork for comprehensive marketing strategies , informs operational planning, and financial projections.

Moreover, understanding the business’s offerings in depth enables stakeholders to envision the company’s value proposition and competitive edge.

Where should you include them?

In a business plan, the Products and Services section is typically included within the business overview section.

This allows you to first introduce the business model and what it offers to customers. Only after this you can provide more details of the products and services.

The Products and Services section should clearly detail what you are selling, highlight the unique value proposition . It should also ideally explain how it meets the needs of your target market if it isn’t obvious. T

What to include: 2 Examples

Begin with a clear, engaging description of each product or service you offer. For services, describe the process, customer experience, and outcome. For products, discuss the materials, technology, and any unique features.

Services example: a Cryotherapy business plan

Products example: a Brewery business plan

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How to Describe your Product in a Business Plan

The product or products your business intends to produce or offer will have to be described in the product description section of your business plan. This section of your business plan is meant to explain how your product will stand out from comparable items in the market.

You have to clearly explain its concept, coupled with all aspects of purchasing, manufacturing, packaging, and distribution. You should also identify your suppliers, costs, and how the product you are offering fits into the current market.

Note that the product description in your business plan is more than a simple listing of product features. In this section, you will need to highlight your product’s most unique characteristics that will ensure it stands out in the marketplace and attract buyers who won’t mind paying your price.

Note that a properly written product description in your business plan can entice investors and help your business grow. Make sure you describe what you are offering in layman’s terms, to guarantee that someone who isn’t conversant with your business will grasp and be excited about it.

It may also be necessary to provide some basic background if this is an area or industry that people are not so familiar with. While you write up the Products and Services description section of your business plan, always keep your reader in mind.

What to Include in the Products and Services Description Section of Your Business Plan

Just as was noted above, the products and services section of your business plan will have to explain in detail your product or service, its demand in your market, and how it intends to compete with other businesses selling the same or similar products or services. Nonetheless, the product and services description section of your business plan is expected to include:

The Product or Service Description

It is important the product description section of your business plan clearly explains the concept of your product, coupled with all aspects of purchasing, manufacturing, packaging, and distribution. What are your product and service, and how does it work? How will this product benefit your customers? How do you plan to make it or how do you intend to get it made?

Product Comparison

This section of your business plan will also have to explain how your product compares with similar products in the market. What makes this product or service unique or better than what’s already obtainable in the market? Why would anyone prefer your product or do business with you?

You will need to describe how and why you are competitive. How do you stand out, and why do your business and everything it offers have such a viable chance at succeeding? In talking about your product or service, always try to answer why a client would want it and how it can make their lives better or more profitable?

Accreditations/Intellectual Property

For businesses that have had their product tested by industry experts, you must include this information when describing your product. Don’t forget to highlight any certifications, trademarks, copyrights, or patents.

Have it in mind that these added advantages or achievements can give you and your product an upper hand. Verified patents and trademarks can also heighten the value of your product especially since it shows that only your company can manufacture the product for the life of the patent.

Have it in mind that a product’s life cycle includes the idea, prototype, and expansion stages. If you are still in the idea stage, you must buttress in your description how you intend to get the product made and why your product matters.

If you maybe already have a prototype, outline your plans for evaluating the prototype and manufacturing your product. If your business has been making the product but is looking to expand to keep up with demand, ensure you explain this when describing your product in your business plan.

You will also want to include the cost of your product and how that cost aligns with other comparable products on the market. In very concise detail, explain how you came to this price, including the cost to manufacture, selling price, and profit margin.

Sales and Distribution Strategy

Also, take your time to explain how and where you will sell your product. Have in mind that your options may include online stores, brick-and-mortar locations, and vendors. If you already have vendors selling your product, ensure to note who they are and their locations in this section of your business plan.

Fulfillment

When describing your product in your business plan, it is also important you describe your plan to ensure your product gets to the intended customers. This should include manufacturing details and delivery specifics. If you plan to outsource the production of your goods, don’t forget to note manufacturer specifics such as location and production time. Also, remember to include the approximate delivery times and methods.

Requirements

Will you require any special equipment or technology to provide your product or service? Also explain if any specialized technology, materials, or equipment will be required to manufacture your product.

You will also have to explain your plans for product development and introduction especially as your business grows.

Photos or Brochures

Also, make sure that your potential investors can get a good insight into your product through photos and brochures. Don’t forget that your business plan is expected to have an appendix for photos and brochures. Also, don’t forget to refer to them in the product description section.

Tips for Writing a Product Description

To ensure you describe your product thoroughly, here are some vital tips to guide you;

• Always remember the reader. The product description section of your business plan must note your product’s most vital information. Always remember to make this section very easy to read and understand. Consider making it better by leveraging numbered lists and bullets.
• Focus on benefits. When describing your product, you must explain how its features can provide value to consumers. Translate your features into benefits, and remember that the aim is to describe how your product or service will be a solution to a problem or improve a client or customer’s life.
• Highlight the features of your product or service. To attain substantial success in any business, your business will need the ability to set itself apart from other businesses that offer or sell the same products and services. Take your time to analyze key features, such as price point or level of service, or anything that makes your product unique in the market.
• Show off a little. Don’t forget that you are selling a product and also selling yourself as the most viable provider of that product. Ensure to include all vital educational or industry-specific experiences and awards in this section. If you have endorsements or testimonials specific to your product, include them as well.
• Show the need for your product. Also make sure you explain how your product will cater to a need or improve life, showing why your product is very necessary to the consumer. This is very pertinent if your product has no current market.

The product and services description section of your business plan is meant to provide the reader with an explicit understanding of why you are in business, what you sell, how you will compete with what’s already available, or how you intend to fill a niche that no one else is currently meeting. Noted above are things you need to consider when creating the product description section of your business plan to ensure that it will indeed grab your readers’ attention.

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How to describe your product and service in a business plan like a pro

It’s deceiving.

You’d think that this part of a business plan does exactly what it says on the tin–describe your product & service offering– right ?

And yes, you are partially right. 

But there’s a very specific way in which this description should be written to make sure that your business has the best chance of succeeding – in real life and under the eagle eye of a potential backer (if you’re preparing a business plan for external financing purposes).

Keep reading to find out the secret sauce to writing a winning product and service description:

WHAT is the Product and Service Description in a Business Plan?

This business plan section is also known as:

• Product and/or Service Overview

HOW Do You Write a Product and Service Description in a Business Plan?

So, what should a good product/service overview contain?

Here are some items to consider including into this section:

1.     Portfolio:

The range of products and/or services that a business offers to potential and current customers.

2.     Features and benefits (value proposition):

Explain what the product/service does and how it works.

3.     Problem and solution (value proposition cont.):

The problem(s) the product or service solves. Every business needs to solve a problem that its customers face. Explain what the problem is and how the product or service solves it.

4.     Innovation:

If the company is doing something new and different, explain why the world needs the innovation.

5.     Proprietary advantages:

Any proprietary features that contribute to a competitive advantage. This could include: intellectual property (e.g., copyright, trademark, patent filings, trade secret), exclusive agreements with suppliers or vendors, exclusive licenses (e.g., for a product, service or technology), company’s own research and development activities.

6.     Development stage:

Current stage of development of the product / service (e.g., idea, development, testing, prototype, already on the market).

7.     Product life-cycle:

Estimate the life span of the product or service.

Specify whether the product or service under consideration is a short-lived fad or has a long-term potential.

8.     Future:

Mention plans for changes and new additions to the current portfolio of products / services.

Describe any plans to move into new markets in the future (e.g., serving different types or sizes of customers, industries, geographic areas).

Make your best guess at when the business will be ready to address these markets and what it needs to do first to be ready.

9.     Limitations:

If applicable, explain any risks or limitations associated with the product (e.g., liability issues like guarantees or returns), along with any legal advice received regarding these issues.

10.  Visual aids:

Use photos, images, diagrams and other graphics to help the reader visualize and learn about the products / services.

If the business is tackling several distinct problems through different products / services, describe the solutions individually .

However, for a large line of products / services, there is no need to list each one, just identifying the general categories will suffice.

How LONG Is the Product and Service Chapter of a Business Plan?

This part of a business plan can be very short, just a couple of paragraphs, or it can spread over multiple pages, depending on how many products/services you offer and how much explanation they require.

If your products or services are particularly complex , technical , innovative , or proprietary , you will want to provide more information and spend considerable time describing them.

This is especially true if you are seeking funding for a new product or service, particularly one that is not immediately understandable to the business plan readers, and if potential funders are likely to be motivated by the specifics.

In any case, when describing a product or service, provide just enough information to paint a clear picture of what it is and does . A brief explanation of what you will be making, selling or doing is appropriate here.

Excessive detail makes this section cumbersome for a reader to wade through. Reserve detailed descriptions (e.g., production processes) for the Appendix.

In any case, it is a good idea to first summarize the value proposition of each product or service into a one short sentence, and only then continue with a more detailed description of the product or service.

If any images or graphics are available that would contribute to the understanding of the product or service, the writers of a business plan should use them.

Otherwise, include any product or service details , such as technical specifications, drawings, photos, patent documents and other support information, in the Appendix section of the business plan document.

TOP 4 TIPS for Writing a Product and Service Overview

Tip #1: features v. benefits.

Don’t just list the features of the product / service.

Instead, describe the specific benefits it will offer to customers – from their perspective.

Make it clear what your customers will gain through buying your product or service. Include information about the specific benefits of your product or service – from your customers’ perspective.

Features are not the same thing as benefits. And you need to understand both.

Confused? Let’s clarify:

What Is the Difference Between Features and Benefits?

Tip #2: Problem v. Solution

If at all possible, present the information in the Problem >> Solution format.

Start by describing the key problem that your customers have, immediately followed by the solution with which you will address this need for your target market.

Tip #3: Competitive Advantage

You should also comment on your ability to meet consumers’ key problems or unmet needs in a way that brings your product or service advantages over the competition.

For example:

• If you have a common business, such as a restaurant:

Explain why your customers need your particular restaurant. Do you offer lower prices? More convenient hours? A better location? A different concept, such as a vegan ice-cream pop up store? A specialty that is not otherwise available in your area, such as a Peruvian ceviche or Hungarian goulash?

• If your company is doing something new and innovative :

What is it about the existing solutions that is subpar? Maybe you are improving on a mediocre product category, such as creating better medical uniforms for healthcare workers (e.g., more flattering cut, trendy designs, sustainable materials). Or perhaps your new blockchain solution has the potential to entirely eliminate the middle-men in an entire industry.

Although the subject of competitive advantage regarding the business as a whole will be fully explored in the Market and Competitor Analysis part of a business plan, it is advisable to touch on it here also – in the context of the company’s products and service.

Tip #4: Validating the Problem and Solution

Speaking of which, when you are doing market research and analysis for your business plan, remember to validate the problem and solution your product or service is addressing.

There is a plethora of minor issues out there that people are perfectly fine with just tolerating. To build a solid business, though, you need a problem that a sufficient number of people are motivated to solve. That is, that they recognize it as a problem that’s worth paying you to solve. Even if they didn’t realize it was solvable until they were presented with your solution.

So, how do you get evidence that prospects are willing to pay for your solution?

Validation of Problem

Describe what you’ve done so far to confirm that the problem you are focused on is a real problem for your customers.

• Existing Business:

For an established business, this is probably just a matter of recapping your success in the marketplace. Your customers have already voted with their wallets.

• New Business:

For a startup, it is important to survey and have conversations with as many potential customers as possible about where they are having problems, how they solve them today, and validate that they are interested enough in addressing those problems to pay for a good solution.

Validation of Solution

Describe how you have tested your ideas with existing or potential customers to confirm that there is a good market for the products or services you plan to offer. Summarize the positive customer feedback or market traction that you have achieved with your solution so far.

For an established business, the answers probably lie in your paying customer base – their existence itself, combined with their repeat business, word-of-mouth referrals, follow-up customer surveys, and other indicators of customer satisfaction.

For a new business, you can start validating your solution immediately by trying it out with potential customers, even informally or at no charge, to get their opinion. If your product or service does not exist yet, talk to prospects about what you plan to offer and measure their feedback.

In summary, this section should answer the million dollar question:

What makes you think that people will buy, be satisfied with, and recommend your products or services?

Related Questions

What are products and services.

Products and services are items that businesses offer for sale to a market. While services are intangible, meaning that they do not exist in a physical form, products are of tangible nature, in other words – you can touch them.

What is a Product Line?

Product line is a group of related products that are all produced or sold by one entity and typically marketed under one brand name.

What is a Service Line?

Service line is a group of related services that are all produced or sold by one entity and typically marketed under one brand name.

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How to write a business plan (with template)

We all know that as a product manager you’re also the CEO of the product. While you own the product backlog, you’re also responsible for expanding the product and adding new features to increase value for users and the business. Whether you work in a start-up or are a PM in a large organization, creating a business plan is crucial before pitching in any new idea.

What is a business plan?

A business plan is a comprehensive document that outlines the problem, the solution, market outreach possibilities, potential threats, a clear goal, and a measurable return on investment with a year-on-year growth strategy.

Significance of a business plan

All product organizations have started seeing the importance of a business plan before approving a new product idea. A good business plan has numerous benefits, the most fundamental being an opportunity to think through the idea before investing time and resources.

The following are the key traits of a good business plan.

Clarity of vision

Taking the time to write down an idea can bring greater clarity to your vision. It allows you to better understand the problem at hand and reveal all possible solutions. This is because writing forces you to slow down and think everything through, resulting in a more evident thought process.

Strategic guidance

When creating a business plan, including financial projections and forecasts is useful. This helps develop a strategic plan by considering marketing strategies, launch plans, development costs, and expected return on investment. However, conducting proper research and due diligence is crucial to ensure that the predictions are as accurate as possible. This process can lead to gaining more insights, taking necessary steps beforehand, and fostering collaboration.

Risk management

A business plan is crucial as it allows you to identify potential risks beforehand. As part of creating a business plan, conducting a competitor analysis, identifying your target market, performing a SWOT analysis (focusing on strengths, weaknesses, opportunities, and threats), and determining your unique selling points is essential. By analyzing these factors, you can gain valuable insights into potential risks and market trends and create an effective risk management plan to ensure success.

Operational planning

While creating a business plan, it becomes essential to forecast, plan milestones, and produce a roadmap. This involves looking into the development timeline, launch plan, and marketing strategies. By doing so, you can outline an operational plan and calculate the resources required to complete the project within a specified deadline. Measuring the rollout plan and determining the appropriate launch plan is crucial.

Measurable objectives and milestones

In addition to a roadmap and milestones, it’s essential to provide critical metrics to measure success. This will help product teams clearly understand the overall roadmap and milestones and ensure that the key results are defined to determine if the product is successful.

Components of a business plan

The business plan will look different for different products depending on the business, product area, and other factors. Still, a few common elements must be a part of each business plan.

Problem statement

Defining the problem in the right way is the most crucial thing. While defining the problem, always consider backing up the claims by data. Use surveys and user testimonies to construct the problem statement in the most relatable manner:

Solution description / mission statement

When presenting a solution, it’s important to avoid using technical jargon and instead describe it in a way that’s easy to understand for anyone, regardless of their technical background. If specific technical details need to be included, put them in an appendix for those who want to read more.

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Creating a clear mission statement outlining what you aim to achieve with your solution is also essential. Avoid using vague language and be as specific and straightforward as possible. The more specific your goal, the better.

Market analysis

This section requires a comprehensive and detailed analysis of various aspects crucial to any product’s success in the market. The four main areas addressed are product-market fit , target customers, total market share, and unique selling proposition (USP).

Product-market fit is about identifying the gap that exists in the market and how your product can bridge that gap.

Defining target customers includes understanding their demographics, behavior, preferences, and needs. It’s also essential to identify any secondary customer base that can be targeted, which can help expand the product’s reach and appeal:

Total market share, or the total available market, refers to the overall revenue opportunity available for a product or service if 100 percent market share is achieved. It gives a clear idea of the scope of expansion for the product after launch.

Unique selling proposition (USP) is a critical aspect of any product’s success that defines why customers should choose your product over others. It’s what sets your product apart from the competition and makes it stand out. Identifying and promoting your USP can help to differentiate your product and create a sense of confidence among sponsors.

Competitor analysis

When analyzing competitors, people tend only to consider direct competitors. However, a great product stands out by taking customers away from even indirect competitors. For example, TikTok and Reels are taking up viewership time that Netflix and other streaming services previously held. Therefore, Netflix’s competitors are not limited to other streaming services but include other platforms providing quick and engaging content:

Projection and forecast

Creating a comprehensive and effective business plan, including a detailed projection of operational costs and a sales and revenue generation forecast is crucial. You can enhance the plan by providing a summarized version of the roadmap and revenue plan and giving sponsors a quick overview of the expected development time, launch dates, and other essential details. Doing so can ensure that your business plan is constructive and comprehensive, in turn laying out a clear path to success.

This is a section of the business plan where you can finally reveal your expectations towards the sponsor or the investors. You have established a business model and the effect of your product. Now, it’s time to be clear and specific about the investment required to reach the goal, including the expected time frame.

The aim is to clearly outline the expected returns so that any potential sponsor or investor can decide whether the opportunity aligns with their goals. This is a mutually beneficial partnership; you can establish a foundation for a good relationship with transparency.

Business plan template

Here’s a one-pager template for a business plan that suits most products:

Here you can find the full PPT template for the business plan, including all the components.

Final thoughts

A business plan is a crucial document that outlines the entire product lifecycle from inception to launch. It aims to align stakeholders, minimize uncertainties, and increase the likelihood of product success in the market. Effective business plans are those that demonstrate a compelling opportunity backed by thorough research and a clear strategy for execution and growth.

These templates can make your next pitch easier!

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The article provides a good starting point for anyone who is looking to write a business plan. It covers the essential components of a business plan and offers some helpful tips on how to write a clear and concise plan.

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How to create an amazing product portfolio roadmap

Managing multiple products comes with its own set of challenges. Each product develops at its own pace, complicating the task of syncing them with broader business goals.

But what if there was a way to visualize the plan of all your products in one place? That’s where a product portfolio roadmap comes in.

Let’s dive into how to create one with six clear steps, ensuring you cover all the bases for your product portfolio.

What is a product portfolio roadmap?

A product portfolio roadmap provides a visual snapshot of all your products. It outlines the direction each product takes and illustrates how it ties into the strategic objectives of the organization.

Your portfolio roadmap should include the following elements:

• Organizational objectives
• Initiatives for each product
• Dependencies

The roadmap’s purpose is to gather high-level information in a single space. It makes it easier to communicate plans to everyone in the organization.

Benefits of using a product portfolio roadmap

Alignment between objectives and products.

The product’s direction must match strategic objectives for maximum business impact. A roadmap bridges the strategy with product plans across your portfolio, which helps foster alignment across your organization.

Better prioritization

With multiple initiatives across products, it’s important to identify which ones drive the most value. A roadmap can help you organize the initiatives by importance, streamlining planning toward achieving business goals.

Improved communication across the organization

Often, teams focus solely on their own products and are unaware of broader initiatives. Roadmaps share upcoming plans with the whole organization, creating opportunities for team-to-team dialogue and collaboration that can enhance outcomes.

Streamlined tracking of performance and progress

A single source of truth for all product initiatives simplifies tracking progress for decision-makers, which offers a clearer picture than navigating multiple individual roadmaps.

Build a product portfolio roadmap in 6 steps

1. define objectives.

Begin by pinpointing your business goals. These goals will guide the entire roadmap process, from product development to management.

There are three main types of objectives you can use:

• Business-driven: Increase revenue, save costs.
• Market-driven: Increase the market share in your industry or niche, outperform the competition, and expand into new markets.
• Customer-driven: Deliver more value to customers and increase their satisfaction.

The specific goals will depend on the needs and priorities of the organization, and there can be multiple types of goals. Business objectives should be easily accessible to all employees.

If your organization uses Jira to manage work, an app like OKR for Jira can let you connect issues and epics to relevant objectives and track their progress .

2. List products and initiatives

Now, it’s time to gather all your products and create a structured catalog with corresponding initiatives. Each initiative should contribute to the completion of strategic goals.

In most organizations, products are managed in separate spaces. (For example, you might have a Jira project for a given product and epics representing the scope of the next release.) But for a product portfolio roadmap, it’s all about bringing the information across products together. Good news: You don’t have to create this list from scratch.

Each product team should have a list of upcoming features they want to release in the near future. Reach out to product managers and ask them to share their product roadmaps with you. These smaller roadmaps will provide you with details for future plans.

If your organization uses Jira for product management, you can create a cross-project list of initiatives with BigPicture. Create a  box (a flexible data container for portfolios, projects, tasks, etc) and synchronize Jira projects that represent products so that product hierarchy, dates, and scope flow into a single source of information.

Updates made in a project will be reflected in your bird’s eye view, so you won’t have to worry about data reliability.

3. Prioritize initiatives

Not all product initiatives are created equal, and your portfolio roadmap should reflect that. Use business goals as a guide for establishing priorities. For example, if your main strategic goal is to generate more revenue, the initiatives that support it should have a higher priority.

How do you measure the level of priority of initiatives? Those who manage work in Jira Software can use their built-in priority fields (Highest, High, Medium, etc.). But if you prioritize initiatives according to a specific model, it’s better to use an app like Foxly . It enables you to prioritize based on models such as WSJF, RICE, Value vs Effort, and more.

4. Identify resources and distribute the workload

Define who will be involved in each initiative and in what capacity. But to do this, you’ll need to know if the right people have enough time to contribute to the initiatives.

Getting a full view of the workload across teams is a tall order, but you can get a head start by collaborating with product managers to get capacity planning data.

The right software can be a game-changer here. For example, in BigPicture , Agile managers can set and monitor capacities of each team member and entire teams. And they can compare allocation data with capacity limits to see if any team has too much on their plate.

If product teams keep track of capacity and workload data, gathering all the information is easier. Then, it’s all about aggregating the data on a portfolio level.

And BigPicture can also help you with capacity and workload data. The Resources module can display workload information across multiple projects and teams in one place. That way, you can plan the work with a complete set of information for the entire enterprise.

5. Establish timeframes for initiatives

After completing step four, you’ll know who’s available to work on your initiatives and when they have enough time to focus on them. Based on that information, you can set timeframes for the product portfolio roadmap.

Product managers should be involved in setting deadlines and durations of initiatives. Their insight can help you keep the timeframes realistic.

But even with the help of product managers, it can be difficult to accurately schedule the initiatives. And if you consider the number of products in a portfolio, it’s even more complicated. Luckily, PPM software can make scheduling easier.

With BigPicture’s scheduling modes , you can automatically match the duration of parent and related child tasks, ensuring all tasks in a given initiative are scheduled and fit within the initiative’s due date.

For Agile initiatives, there’s the “precise alignment” option. It automatically adjusts task start and end dates in an Iteration or a Program Increment as soon as you assign them.

A lot of organizations use markers to mark a significant event in the life cycle of a project or product.

6. Visualize the roadmap

The final step is illustrating the portfolio roadmap. It’s the final product of your hard work, when all the key pieces of the portfolio fall into place.

It should include a hierarchy of products, target dates, initiatives, and key tasks. Don’t forget about project-level and cross-project dependencies , which will help you map out connections between tasks.

Visualization is the easiest part of the whole process — with the right software. For instance, if you use Jira to manage products, BigPicture allows you to aggregate data from multiple initiatives and visualize it on a timeline.

Creating a product portfolio roadmap is no easy feat. But if you combine objectives, priorities, timeframes, resource availability, and products, you’ll get a full view of your initiatives. Once you have all those ducks in a row, you can visualize and communicate the roadmap across your organization.

Software plays a major role in effective portfolio roadmap creation and management. If you manage work in Jira, a PPM app like BigPicture will visualize multiple projects or products with a neat timeline view that can serve as your portfolio roadmap. Gather, aggregate, and structure data from multiple projects and group programs in one place.

Whether it’s planning, execution tracking, resource management, or reporting, BigPicture has everything you need to manage a complex portfolio of projects and products in a clear and standardized way, letting you create a single source of truth for all your initiatives.

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How effective product strategy drives better business goals.

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Maziar Adl is the co-founder and CTO of Gocious ; a cloud-based SaaS solution for strategic product planning.

Product teams need a coordinated effort to translate their strategy, agree on tactics and gather feedback on a regular basis to make sure wider business goals are on track. When the C-suite outlines the company’s wider business goals, product teams often go to work carrying out their objectives.

When an issue is presented that could derail those high-level goals, product teams must pivot and adjust their strategy, driving up costs, decreasing efficiencies and wasting time. To better align wider business goals with a company’s strategy, C-suite executives should first establish an effective product strategy focused on transparency, communication and strategic planning that creates stronger roadmaps and drives more realistic business sense.

Transparency And Communication Should Be Top Of Mind

Transparency should be top of mind among CIOs. By creating an environment that elevates that level of seamless communication and accessibility, product strategy becomes easier for all levels of an organization to understand.

Put in place a cadence for checking and acting on the feedback teams are receiving on a portfolio level to view the disruptions of the entire business. This creates an environment that delivers transparency and helps teams not only map the strategy for everyone, but also provide feedback on whether the strategy is on track or not.

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This cadence helps teams check and act on any feedback received, ultimately helping all departments understand the company’s wider business goals. If the overall business is impacted by changes or disruptions, like supply chain or changing consumer demands, the product line is bound to be affected by these events as well.

Maintaining an open line of dialogue and encouraging collaboration can help teams tackle business changes while keeping true to wider organizational goals. All these pulse checks start with the product team, responsible for communicating with upper management on company direction and output. Open channels between the product team help organizations react quickly, leading to better problem-solving under a single source of truth that ensures the product and organization goals are aligned.

No Plan Means Planning To Fail

Lack of strategic planning and roadmaps often lead to more expensive projects, which can upend sales targets and projections that, in turn, derail an organization’s vision. For example, take a car company undergoing a massive initiative, like transforming their entire fleet into all-electric. As this is both capital- and labor-intensive, the company plans to spend a lot of money on the project.

Along the way, if market demands change, someone must come in and adjust the strategy to meet customers where they are. Even though the company started the project a few years ago, the organization sustained losses that could set back the team from achieving their wider marketing, sales and overall business goals. A strategic, effective and transparent product plan would help teams pivot quickly, saving limited time and resources.

An entire portfolio should act as a system and not just include one product at a time. Product portfolio strategy allows companies to "see the forest and not just a few trees," giving teams the digital tools to focus on the wider business and ever-changing customer needs while also creating opportunities to have tough conversations to sunset, pivot or create new products when needed. This helps business leaders understand the impact of delays or market changes across the entire operation and avoids spreading company resources too thin.

An effective product strategy tied to business goals can help teams generate a more realistic plan that delivers on customer needs. With a multifaceted approach to understanding how products translate to the wider organization, leadership’s collaboration with the product team is vital to accomplishing the most impact. Whether it’s supply chain hiccups, a changing consumer market or other snarls along the way, agile and forward-thinking leadership can build a more robust and impactful business strategy.

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?

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Mastering Product Strategy: A Comprehensive Guide to Driving Success in 2024

• October 11, 2023
• product management
• 16 min read

In the fast-paced and competitive business landscape, having a solid product strategy is crucial for driving success and gaining a competitive edge. A well-crafted product strategy aligns the organization’s goals with customer needs and market trends, ensuring that the product meets user expectations and achieves business objectives.  In this blog, we will delve into the key elements of an effective product strategy, providing you with actionable insights to develop and execute a winning strategy.

What is a Product Strategy?

Product strategy refers to a high-level plan that outlines how a product will achieve its objectives and fulfill the needs of its target customers. It encompasses the decisions, actions, and approaches taken to position the product in the market , differentiate it from competitors, and create long-term value for both the business and its customers.

A well-defined product strategy serves as a guiding framework that aligns the product’s development, marketing, and business goals. It provides direction for product managers and other stakeholders by clarifying the product’s purpose, target market, value proposition, and key differentiators. Product strategy takes into account market dynamics, customer insights, competitive analysis, and internal capabilities to determine the best approach for achieving success.

What is Product Strategy Roadmap?

A product strategy roadmap is a visual representation that outlines the direction and timeline for the development and evolution of a product. It provides a high-level overview of the strategic initiatives, key milestones, and deliverables that will be executed to achieve the product’s goals. The roadmap serves as a communication tool, aligning stakeholders and cross-functional teams on the product’s vision and the planned steps to reach that vision.

A product strategy roadmap combines the elements of product strategy and a visual roadmap to provide a comprehensive plan for the development and evolution of a product. It outlines the strategic initiatives, key milestones, and deliverables that will be executed to achieve the product’s goals, while also considering market dynamics, customer needs, and organizational objectives.

The product strategy roadmap integrates the following components:

1. Product Vision and Goals: The product vision outlines the desired future state of the product and its purpose. It provides a clear direction and helps stakeholders understand the long-term goals and objectives.  The goals, on the other hand, are specific, measurable targets that the product aims to achieve within a defined timeframe. These goals should be aligned with the overall business strategy and reflect the desired outcomes for the product.

2. Strategic Initiatives: Strategic initiatives are the major projects or efforts that support the product strategy. They are the actionable steps taken to achieve the product goals and move the product closer to its vision . These initiatives can include developing new features, improving existing functionalities, exploring new markets or customer segments, or adopting new technologies. Product managers prioritize these initiatives based on their potential impact, feasibility, and alignment with the product strategy.

3. Timeline and Milestones: The timeline is a visual representation of the expected timeframe for executing the strategic initiatives. It provides a high-level overview of when each initiative will be started and completed. Milestones are specific points or events along the timeline that mark significant achievements or progress. They serve as checkpoints for tracking the product’s development and ensuring that it stays on track with the planned timeline.

4. Key Features and Enhancements: Identifying key features and enhancements is crucial for shaping the product roadmap. These features are prioritized based on their importance to the product strategy, market demand, customer needs, and competitive landscape. Key features should align with the product’s value proposition and provide unique benefits to the target customers. Product managers consider factors such as technical feasibility, resource availability, and market timing when determining which features and enhancements to prioritize.

5. Resource Allocation: Resource allocation involves determining the necessary resources, including budget, personnel, and technology, required to execute the strategic initiatives outlined in the roadmap. Product managers assess resource availability, budget constraints, and skill sets of the team to allocate resources effectively. This ensures that the necessary support is in place to successfully implement the roadmap and achieve the desired outcomes.

6. Dependencies and Constraints: Product managers consider the dependencies and constraints that may impact the execution of the strategic initiatives. Dependencies can include technological requirements, integrations with other systems, or external partnerships. Constraints may arise from limitations in resources, budget constraints, or regulatory compliance. Identifying these dependencies and constraints helps in setting realistic expectations, managing risks, and planning for any necessary mitigations.

7. Communication and Collaboration: Effective communication and collaboration are vital for the successful implementation of the product strategy roadmap. Product managers need to ensure that all stakeholders, including executives, development teams, marketing teams, and other relevant parties, are aligned with the roadmap and understand their roles and responsibilities. Regular communication through meetings, presentations, or workshops helps keep everyone informed, fosters collaboration, and generates buy-in from stakeholders.

8. Iteration and Adaptation : A product strategy roadmap is not set in stone but evolves over time. Market conditions, customer feedback, technological advancements, or changes in business priorities may require adjustments to the roadmap. Product managers regularly review and update the roadmap to incorporate new insights, address emerging opportunities or challenges, and adapt to changes in the market landscape. This iterative approach ensures that the roadmap remains relevant, responsive to customer needs, and aligned with the overall product strategy.

By combining the elements of product strategy with a visual roadmap, product managers can effectively communicate the strategic direction of the product, align stakeholders, and guide the development and evolution of the product over time. The product strategy roadmap provides a holistic view of the product’s journey, ensuring that the product’s development, marketing, and business efforts are coordinated and focused on achieving the desired outcomes. It provides a clear path forward and serves as a framework for decision-making and resource allocation throughout the product’s lifecycle.

What are the key elements of an effective product Strategy?

1. understanding the importance of product strategy.

In today’s competitive business landscape, product strategy plays a crucial role in driving success and achieving long-term growth. Let’s delve into the importance of product strategy by exploring its role in business success, and the benefits it brings to organizations.

a. The Role of Product Strategy in Business Success:

Product strategy is essential for business success as it provides a clear direction for the entire organization. Here’s how product strategy contributes to the achievement of business goals:

i. Alignment of Stakeholders: Product strategy ensures that all stakeholders, including executives, product managers, marketers, and developers, are aligned with the same vision and objectives. This alignment fosters collaboration, improves communication, and minimizes conflicts, leading to more efficient and effective product development processes.

ii. Guiding Decision-Making : A well-defined product strategy helps in making informed decisions at every stage of the product lifecycle. It provides a framework for prioritizing features, allocating resources, and evaluating trade-offs. By aligning decisions with the product strategy, organizations can focus their efforts on initiatives that have the highest impact on business goals and customer satisfaction.

iii. Meeting Market Demand : Product strategy enables organizations to identify and address market demand effectively. By conducting market research and analyzing customer needs, organizations can develop products that resonate with their target audience. A strong product strategy considers market trends, competitive analysis, and customer feedback to ensure that the product meets or exceeds market expectations.

iv. Competitive Advantage: A well-crafted product strategy helps organizations gain a competitive edge in the market. By understanding the unique value proposition of their product and positioning it effectively, organizations can differentiate themselves from competitors. Product strategy guides the identification of competitive advantages, such as innovation, quality, price, or customer experience, and shapes the positioning strategy to effectively communicate those advantages to the target market.

b. Benefits of an Effective Product Strategy:

Implementing an effective product strategy brings numerous benefits to organizations:

i.  Increased Market Share: A strong product strategy aligns product development efforts with market demand, enabling organizations to capture a larger market share. By understanding customer needs and developing products that address those needs, organizations can attract new customers and retain existing ones, leading to increased market penetration.

ii. Improved Customer Satisfaction: Product strategy focuses on delivering value to customers by addressing their pain points and providing solutions. By aligning product features, user experience, and pricing with customer expectations, organizations can enhance customer satisfaction. Satisfied customers are more likely to become advocates, leading to increased loyalty and positive word-of-mouth referrals.

iii . Higher Revenue Generation: A well-executed product strategy drives revenue growth by ensuring that products meet market demand and deliver value. By identifying opportunities for product expansion, upselling, or cross-selling, organizations can increase their revenue streams and maximize customer lifetime value.

iv. Enhanced Brand Reputation: A product strategy that consistently delivers high-quality products and exceptional customer experiences contributes to building a strong brand reputation. Positive customer perceptions and favorable reviews strengthen the brand image and foster trust and credibility in the market.

v. Adaptability to Market Changes: A flexible product strategy allows organizations to adapt to changing market dynamics, technological advancements, and customer preferences. By continuously monitoring market trends, analyzing competitor strategies, and gathering customer feedback, organizations can make proactive adjustments to their product strategy, ensuring relevance and competitiveness in the market.

2. Market Research and Analysis

Market research and analysis are critical components of developing a successful product strategy. By conducting thorough research and analyzing key factors such as customer needs, competitor landscape, and industry trends, organizations can gain valuable insights to inform their product strategy. Let’s explore each aspect in detail:

a. Conducting Market Research:

Conducting market research is the foundation of a well-informed product strategy. It involves gathering data and insights about the target market, industry dynamics, and customer preferences. Here are key steps involved in conducting effective market research:

i. Defining Research Objectives: Start by clearly defining the objectives of your market research. Determine what specific information you need to gather and the questions you aim to answer. This clarity will guide your research efforts and ensure you focus on the most relevant areas.

ii. Collecting Primary and Secondary Data: Market research involves collecting both primary and secondary data. Primary data refers to information gathered directly from your target market through surveys, interviews, or focus groups. Secondary data includes existing research reports, industry publications, and public data sources. By combining both types of data, you can obtain a comprehensive understanding of the market.

iii . Identifying Target Market Segments: Segment your target market based on relevant characteristics such as demographics, psychographics, or behavior. This segmentation helps you better understand the diverse needs and preferences of different customer groups, enabling you to tailor your product strategy accordingly.

iv. Analyzing Customer Behavior and Preferences: Use qualitative and quantitative methods to analyze customer behavior and preferences. Conduct surveys or interviews to gather feedback and understand their pain points, motivations, and expectations. Analyze customer data and behavioral patterns to identify trends and patterns that can inform your product strategy.

b. Identifying Customer Needs and Pain Points

Understanding customer needs and pain points is crucial for developing products that address specific problems and provide value. Here are key steps to identify customer needs:

i.Conducting Customer Interviews: Engage directly with your target customers through interviews to gain insights into their challenges, goals, and desired solutions. Ask open-ended questions to encourage detailed responses and uncover underlying needs and pain points.

ii. Analyzing Customer Feedback and Support Channels: Study customer feedback received through various channels such as customer support tickets, online reviews, or social media comments. Look for common themes, recurring complaints, and areas where customers express dissatisfaction or unmet needs.

iii . Observing Customer Behavior: Observe how customers interact with existing products or alternative solutions. Pay attention to their struggles, workarounds, or areas of inefficiency. This observational research can reveal valuable insights into their pain points and help identify areas for improvement.

iv. Using Customer Journey Mapping: Map out the customer journey to understand the touchpoints, emotions, and pain points experienced throughout their interaction with your product or service. Identify critical moments where customers face challenges or experience friction, and use these insights to improve the overall user experience.

c. Analyzing Competitors and Industry Trends:

Analyzing competitors and industry trends provides valuable insights into the competitive landscape and helps identify opportunities for differentiation. 

Here’s how to conduct effective competitor and industry analysis:

i. Identify Key Competitors: Identify your main competitors by researching organizations offering similar products or services in your target market. Analyze their offerings, market share, pricing, distribution channels, and marketing strategies.

ii. SWOT Analysis: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) for each competitor to understand their unique advantages, vulnerabilities, and potential areas for differentiation. Identify gaps in the market that your product can fill or areas where you can outperform competitors.

iii. Monitor Industry Trends: Stay updated on industry trends, technological advancements, and emerging customer preferences. Subscribe to industry publications, attend conferences, and participate in relevant communities to gather insights into market shifts and anticipate future opportunities or challenges.

iv. Benchmarking: Benchmark your product against competitors to evaluate your performance and identify areas for improvement. Compare features, pricing, quality, customer support, and user experience to identify areas where you can differentiate and deliver superior value to customers.

d. Utilizing Data and Analytics for Informed Decisions

Leveraging data and analytics is crucial for making informed decisions in product strategy. Here’s how to effectively use data and analytics to support your decision-making :

i. Data Collection and Analysis: Collect relevant data through various sources such as website analytics, customer surveys, user behavior tracking, and sales reports. Use data analytics tools to analyze and derive actionable insights from the collected data. Identify trends, patterns, and correlations that can inform your product strategy.

ii. Key Performance Indicators (KPIs): Define and track key performance indicators that align with your product strategy objectives. These KPIs may include metrics such as customer acquisition cost, conversion rates, customer satisfaction scores, and revenue growth. Regularly monitor and analyze these KPIs to assess the effectiveness of your product strategy and make data-driven adjustments.

iii . A/B Testing: Conduct A/B testing to compare different versions of your product, features, or marketing campaigns. By analyzing user behavior and performance metrics, you can determine which variations yield the desired outcomes. This iterative testing approach enables you to optimize your product strategy based on real-time feedback and data.

iv. Predictive Analytics: Utilize predictive analytics techniques to forecast future trends, customer behavior, and market demand. By analyzing historical data, market trends, and external factors, you can make informed predictions that guide your product strategy decisions.

3. Defining Clear Goals and Objectives

Defining clear goals and objectives is a crucial step in developing an effective product strategy. By establishing a product vision, setting SMART goals, aligning business objectives with product goals, and defining key performance indicators (KPIs), organizations can create a roadmap for success. Let’s delve into each aspect in detail:

a. Establishing Product Vision:

A product vision serves as the guiding light for the entire product strategy. It defines the long-term purpose, direction, and desired impact of the product. Here are key considerations for establishing a compelling product vision:

i. Understand User Needs: Gain a deep understanding of your target users’ needs, pain points, and aspirations. Identify the problems your product aims to solve and the value it brings to customers. A clear understanding of user needs helps shape the product vision and ensures it aligns with customer expectations.

ii. Define a Unique Value Proposition: Identify what sets your product apart from competitors and articulate its unique value proposition. This should encompass the benefits, features, and experiences that differentiate your product and make it compelling to customers.

iii . Align with Business Strategy: Ensure that the product vision aligns with the overall business strategy and objectives. It should contribute to the organization’s growth, revenue goals, and competitive positioning. Consider how the product vision supports the broader goals of the company to ensure strategic alignment.

iv. Communicate the Vision: Effectively communicate the product vision to stakeholders, including the product team, executives, investors, and customers. Use clear and concise language to articulate the purpose, impact, and value of the product. A shared understanding of the vision fosters alignment and inspires the entire team to work towards a common goal.

b. Setting SMART Goals:

Setting SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals is essential for driving progress and ensuring clarity in the product strategy. Here’s how to set SMART goals effectively:

i.   Specific: Define goals that are clear, specific, and well-defined. Avoid vague or ambiguous objectives. For example, instead of setting a goal to “improve user experience,” define a specific goal such as “reduce page load time by 20%.”

ii.  Measurable: Establish measurable criteria to track progress and assess goal attainment. Define specific metrics or key performance indicators (KPIs) that can be quantified and monitored. This enables you to gauge success and make data-driven decisions.

iii .  Achievable: Set goals that are realistic and attainable within the given constraints. Consider the available resources, capabilities of the team, and market conditions. Unrealistic goals can demotivate the team and hinder progress, while achievable goals instill a sense of accomplishment and drive momentum.

iv.   Relevant: Ensure that the goals align with the product vision, customer needs, and business objectives. Each goal should contribute meaningfully to the overall product strategy and support the organization’s mission.

v. Time-bound: Establish a timeframe or deadline for each goal to create a sense of urgency and accountability. This helps prioritize tasks, allocate resources effectively, and track progress over time.

c. Aligning Business Objectives with Product Goals:

Alignment between business objectives and product goals is crucial for the success of a product strategy. Here’s how to ensure alignment:

i. Understand Business Objectives: Gain a deep understanding of the overall business objectives, growth targets, and strategic priorities. This includes revenue goals, market expansion plans, customer acquisition targets, or profitability targets. Alignment with these objectives ensures that the product strategy supports the overall business strategy.

ii. Identify Product Contributions: Identify how the product can contribute to the achievement of business objectives. Determine how the product can generate revenue, increase market share, improve customer satisfaction, or drive operational efficiency. Clearly articulate the value proposition and the role of the product in fulfilling business objectives.

iii . Collaborate with Stakeholders: Engage with key stakeholders, including executives, sales teams, marketing teams, and customer support teams, to align the product strategy with business objectives. Collaborative discussions and feedback sessions can provide valuable insights and ensure that everyone is working towards a common goal.

iv. Continuously Evaluate Alignment: Regularly assess the alignment between business objectives and product goals. As business priorities evolve or market conditions change, it is important to reevaluate and realign the product strategy accordingly. This ensures that the product remains relevant and contributes to the overall success of the organization.

d. Defining Key Performance Indicators (KPIs):

Key Performance Indicators (KPIs) are measurable metrics that indicate the progress and success of product strategy. Defining relevant KPIs helps track performance, measure the impact of the product, and make data-driven decisions. Consider the following when defining KPIs:

i. Identify Key Metrics: Identify the key metrics that align with your product goals and objectives. These could include metrics related to revenue, customer acquisition, user engagement, customer satisfaction, or operational efficiency. Choose metrics that provide meaningful insights into the performance and impact of the product.

ii. Establish Baselines and Targets: Determine the current baseline for each KPI and set realistic targets for improvement. Baselines serve as reference points to track progress, while targets provide a clear direction and goal for the team to strive towards.

iii . Track and Analyze Data: Implement systems and processes to track and collect relevant data for the defined KPIs. Utilize data analytics tools to analyze the data, identify trends, and gain insights. Regularly review the KPIs and analyze the data to assess performance, identify areas for improvement, and make informed decisions.

iv. Communicate KPIs: Ensure that the KPIs are effectively communicated to the product team and stakeholders. Transparently share the performance data, progress towards targets, and insights derived from the analysis. This promotes visibility, accountability, and a data-driven culture within the organization.

4. Target Audience Identification

Identifying and understanding the target audience is a crucial aspect of developing a successful product strategy. By gaining insights into the target market, creating user personas, analyzing user behavior and preferences, and tailoring the product strategy to the target audience, organizations can effectively meet customer needs and drive product adoption. Let’s explore each of these components in detail:

a. Understanding the Target Market:

To effectively identify the target audience, it is essential to gain a deep understanding of the target market. Consider the following factors:

i. Demographics: Analyze demographic information such as age, gender, location, education level, and occupation. This helps in understanding the characteristics of the target audience and tailoring the product strategy accordingly.

ii. Psychographics: Dive into the psychographic aspects of the target market, including values, interests, attitudes, and lifestyles. Understanding the psychographics helps in crafting targeted messaging, positioning the product effectively, and creating a connection with the audience.

iii . Market Segmentation: Segment the market based on common characteristics, behaviors, or needs. This allows for a more targeted approach in addressing specific segments of the market and tailoring the product strategy accordingly.

iv. Market Trends: Stay updated on market trends, industry developments, and emerging technologies. This knowledge helps identify opportunities and anticipate changes in customer behavior, enabling organizations to stay ahead of the competition.

b. Creating User Personas:

User personas are fictional representations of the ideal target audience. They are created based on real data, market research, and user insights. Here’s how to create user personas effectively:

i. Gather User Data: Collect data through surveys, interviews, user analytics, and market research to gain insights into user behavior, needs, pain points, and preferences. This data forms the foundation for creating accurate and representative user personas.

ii. Identify Patterns and Commonalities: Analyze the collected data to identify patterns, similarities, and common characteristics among users. Group users with similar traits into distinct segments to create personas that represent different user types.

iii . Define Persona Attributes: Define key attributes for each persona, including demographics, behaviors, goals, motivations, challenges, and preferred communication channels. This helps create a comprehensive profile that guides the product strategy and decision-making process.

iv. Humanize the Personas: Give each persona a name, photo, and personal background to humanize them. This makes it easier for the product team to empathize with the target audience and understand their needs on a deeper level.

c. Analyzing User Behavior and Preferences:

Understanding user behavior and preferences is crucial for tailoring the product strategy to meet their needs effectively. Consider the following approaches to analyze user behavior and preferences:

i. User Surveys and Interviews: Conduct surveys and interviews to gather direct feedback from users. Ask questions related to their usage patterns, preferences, satisfaction levels, and pain points. This qualitative data provides valuable insights into user behavior and preferences.

ii. User Analytics: Utilize user analytics tools to track user behavior within the product. Analyze metrics such as user engagement, conversion rates, click-through rates, and retention rates. This quantitative data helps identify usage patterns, popular features, and areas for improvement.

iii . User Testing and Feedback: Conduct user testing sessions to observe how users interact with the product and gather feedback on their experience. This hands-on approach provides real-time insights into user behavior and preferences, allowing for iterative improvements to the product strategy.

iv. Social Media Listening: Monitor social media platforms, online forums, and customer reviews to gather indirect feedback and insights into user sentiment, preferences, and pain points. This helps in understanding user behavior outside the product and identifying emerging trends.

d. Tailoring the Product Strategy to the Target Audience:

Once the target audience is identified and user insights are gathered, it is crucial to tailor the product strategy to meet their needs effectively. Consider the following strategies:

i.  Feature Prioritization: Prioritize features based on user needs, preferences, and pain points. Focus on delivering value to the target audience by addressing their most critical requirements.

ii. User Experience Design: Design the product user interface and user experience to align with the preferences and behaviors of the target audience. Ensure that the product is intuitive, easy to use, and provides a seamless experience that resonates with the target audience.

iii . Communication and Messaging: Craft marketing messages, product descriptions, and communication materials that resonate with the target audience. Use language, tone, and visuals that align with their preferences and effectively communicate the value proposition.

iv. Personalization and Customization: Incorporate personalization and customization features that allow users to tailor the product experience to their individual preferences. This enhances user engagement and satisfaction, as users feel that the product caters to their specific needs.

v. Continuous User Feedback: Establish channels for ongoing user feedback and actively seek input from the target audience. Regularly incorporate user feedback into the product roadmap to ensure that the product strategy remains aligned with their evolving needs and preferences.

5. Differentiation and Competitive Advantage

It is essential for organizations to differentiate their products and establish a competitive advantage. By identifying a unique selling proposition (USP), assessing the competitive landscape, leveraging competitive advantages, and positioning the product effectively, companies can carve out a distinct position in the market and attract customers. Let’s delve into each of these components in detail:

a. Identifying Unique Selling Proposition (USP):

The unique selling proposition (USP) is the factor or combination of factors that sets a product apart from its competitors and makes it compelling to customers. To identify the USP, consider the following:

i. Value Proposition: Determine the unique value that the product offers to customers. This could be in terms of features, performance, quality, pricing, convenience, or any other aspect that differentiates it from competitors.

ii. Customer Benefits: Identify the specific benefits that customers derive from using the product. Focus on how the product solves their pain points, fulfills their needs, or enhances their experience in a way that competitors cannot.

iii . Differentiation Factors: Analyze the product’s features, functionalities, technology, design, customer support, or any other attributes that distinguish it from competitors. Highlight these differentiating factors in the product strategy to create a compelling USP.

iv. Emotional Appeal: Consider the emotional connection that the product can establish with customers. This could be through branding, storytelling, or aligning with customers’ values and aspirations. Emotional appeal can be a powerful USP that resonates with target customers.

b. Assessing Competitive Landscape:

To develop a strong product strategy, it is crucial to have a clear understanding of the competitive landscape. Consider the following approaches for assessing the competition:

i. Competitor Analysis: Identify direct and indirect competitors in the market. Analyze their products, features, pricing, marketing strategies, distribution channels, and customer base. This analysis helps in understanding the strengths, weaknesses, and positioning of competitors.

ii. SWOT Analysis: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for each key competitor. This analysis provides insights into their competitive advantages, vulnerabilities, and areas where your product can differentiate itself.

iii . Market Trends: Stay updated on market trends, emerging technologies, and industry developments. Assess how competitors are adapting to these trends and identify opportunities to differentiate your product in response.

iv. Customer Feedback: Gather feedback from customers who have used both your product and competitors’ products. Understand their perceptions, preferences, and pain points related to both options. This helps in identifying areas where your product can outperform competitors and fulfill unmet needs.

c. Leveraging Competitive Advantages:

Once the competitive landscape is assessed, it’s important to leverage competitive advantages to strengthen the product strategy. Consider the following strategies:

i. Highlight Unique Features: Emphasize the unique features or capabilities of the product that competitors lack. Communicate how these features provide value to customers and differentiate your product in the market.

ii. Pricing Strategy: Develop a pricing strategy that takes into account the value proposition of the product and its positioning in the market. This could involve pricing the product competitively or offering unique pricing models that give customers a compelling reason to choose your product.

iii.Customer Support and Service: Invest in exceptional customer support and service to differentiate your product. Provide prompt and helpful assistance to customers, demonstrate responsiveness, and build a reputation for outstanding customer care.

iv. Partnerships and Alliances: Seek partnerships or alliances with complementary products or services that enhance the value proposition of your offering. This can create a unique value chain and a competitive advantage that is difficult for competitors to replicate.

d. Positioning the Product in the Market:

Positioning is the process of creating a distinct identity for the product in the minds of customers. Effective positioning ensures that the product occupies a unique and favorable space in the market. Consider the following steps for positioning the product effectively:

i. Target Market Segmentation: Identify the specific market segments that are most likely to benefit from the product. Segment the market based on demographics, psychographics, behaviors, or other relevant criteria. This helps in tailoring the product strategy and messaging to resonate with the target audience.

ii. Value Communication: Clearly communicate the value proposition of the product to the target audience. Highlight the unique benefits, features, and advantages that differentiate it from competitors. Craft persuasive messaging that communicates the value in a compelling and memorable way.

iii. Branding and Identity: Develop a strong brand identity that aligns with the positioning of the product. The brand should evoke the desired emotions, values, and perceptions that resonate with the target audience. Consistently apply the brand identity across all touchpoints to create a cohesive and impactful brand experience.

iv. Market Penetration Strategy: Determine the market penetration strategy based on the positioning of the product. This could involve targeting early adopters, niche markets, or specific geographic regions to establish a strong foothold before expanding further.

6. Road mapping and Prioritization

Effective road mapping and prioritization are crucial aspects of product strategy that enable product teams to plan and execute product development in a structured and efficient manner. A well-designed product roadmap provides a clear direction for the product’s evolution, aligns stakeholders, prioritizes initiatives, and ensures that resources are allocated effectively. Let’s explore the key components of road mapping and prioritization in detail:

a. Creating a Product Roadmap:

A product roadmap is a visual representation of the product strategy and the planned development initiatives over a specific time period. It serves as a strategic blueprint that outlines the product’s vision, goals, features, and major milestones. Creating a product roadmap involves the following steps:

i. Define Product Vision and Goals: Start by clarifying the long-term vision and goals for the product. This involves aligning the product strategy with the overall business strategy and identifying the key objectives that the product aims to achieve.

ii. Gather Stakeholder Input: Engage with stakeholders, including customers, internal teams, executives, and other relevant parties, to gather input and insights. Understand their needs, expectations, and priorities to ensure that the roadmap reflects a collective understanding of the product’s direction.

iii . Conduct Market Research: Continuously monitor the market trends, industry dynamics, and customer preferences. Incorporate market research findings into the roadmap to ensure that the product remains relevant and competitive.

iv. Prioritize Features and Initiatives: Evaluate the potential features, enhancements, and initiatives based on various factors such as customer value, market demand, technical feasibility, and business objectives. Prioritize them using frameworks like the MoSCoW method (Must-haves, Should-haves, Could-haves, and Won’t-haves) or other prioritization models.

v. Visualize the Roadmap: Present the product roadmap in a visual format that clearly communicates the planned initiatives, timelines, and dependencies. Use tools like Gantt charts, swimlane diagrams, or digital project management platforms to create an easily understandable and shareable roadmap.

vi. Communicate and Align: Share the roadmap with stakeholders, including internal teams, executives, and customers. Communicate the rationale behind the chosen priorities and timelines to foster alignment and manage expectations.

b. Prioritizing Features and Enhancements:

Prioritizing features and enhancements is a critical aspect of product strategy. It involves determining which initiatives to focus on based on their potential impact, alignment with goals, and available resources. Consider the following factors when prioritizing features:

i. Customer Value: Assess the potential value and impact of each feature or enhancement on the target customers. Prioritize the ones that address significant pain points, fulfill unmet needs, or create differentiated value.

ii. Business Objectives: Evaluate how each feature aligns with the overall business objectives and strategic priorities. Prioritize the initiatives that directly contribute to achieving the desired business outcomes.

iii . Technical Feasibility: Consider the technical complexity and feasibility of implementing each feature. Evaluate the available resources, technology constraints, and dependencies to ensure that the prioritized initiatives can be executed efficiently.

iv. Market Demand: Analyze the market demand for each feature by gathering customer feedback, conducting market research, and monitoring industry trends. Prioritize the initiatives that align with market demand and have the potential to gain a competitive edge.

v. ROI and Cost-Effectiveness: Assess the potential return on investment (ROI) of each feature and consider the cost-effectiveness of its implementation. Prioritize the initiatives that offer a favorable ROI and can be executed within the available resources.

vi. User Feedback and Iterative Development: Incorporate user feedback and insights from user testing, beta testing, or early adopter programs into the prioritization process. Continuously iterate and refine the roadmap based on real-world user experiences and feedback.

c. Agile vs. Waterfall Approaches:

When it comes to product development methodologies, two commonly used approaches are Agile and Waterfall. Both have their own advantages and considerations:

i. Agile Approach: Agile methodologies, such as Scrum or Kanban, promote iterative and incremental development. They emphasize flexibility, collaboration, and responsiveness to changing requirements. Agile allows for continuous feedback and adjustment throughout the development process, enabling faster time to market and the ability to adapt to evolving market conditions.

ii. Waterfall Approach: The Waterfall methodology follows a linear, sequential process where each phase of development (e.g., requirements gathering, design, development, testing) is completed before moving to the next phase. Waterfall is suitable for projects with well-defined requirements and stable environments. It provides a structured approach with clear milestones and deliverables.

The choice between Agile and Waterfall depends on factors such as the nature of the product, project complexity, available resources, team dynamics, and organizational culture. Many organizations adopt a hybrid approach, blending elements of Agile and Waterfall to suit their specific needs.

d. Adapting to Changing Market Conditions:

In today’s dynamic business environment, market conditions can change rapidly. To maintain a competitive edge, product teams must be agile and adaptable. Here are some strategies to ensure that the product strategy remains relevant in the face of changing market conditions:

i. Continuous Monitoring: Regularly monitor the market, industry trends, competitor activities, and customer feedback. Stay updated on emerging technologies, customer preferences, and evolving market dynamics. This enables timely identification of shifts in the market landscape and informs necessary adjustments to the product strategy.

ii. Customer Engagement: Foster strong relationships with customers through various channels, such as user surveys, interviews, focus groups, and user testing sessions. Actively seek feedback, understand their evolving needs, and incorporate their insights into the product strategy.

iii . Data-Driven Decision Making: Utilize data and analytics to gather insights and make informed decisions. Leverage user analytics, market research data, and business metrics to assess the performance of the product and identify areas for improvement or adaptation.

iv. Agile Mindset: Cultivate an agile mindset within the product team, encouraging flexibility, collaboration, and responsiveness. Embrace iterative development, frequent feedback loops, and rapid experimentation. This allows for quick adjustments to the product strategy based on changing market conditions.

v. Scenario Planning: Anticipate potential market disruptions or shifts and develop contingency plans. Conduct scenario planning exercises to assess the impact of various scenarios on the product strategy and identify alternative courses of action.

vi. Continuous Learning: Foster a culture of continuous learning and improvement within the product team. Encourage experimentation, knowledge sharing, and professional development. Embrace a growth mindset that embraces change and encourages adaptability.

7. Execution and Iteration

In the product development process, execution and iteration play a vital role in turning the product strategy into a successful reality. This phase involves implementing agile development practices, effective project management, gathering and incorporating user feedback, and iterating to enhance the product continuously.

a. Agile Development and Continuous Improvement: Agile development methodologies have gained significant popularity in the software industry due to their flexibility and adaptability. Agile practices, such as Scrum or Kanban, enable cross-functional teams to work collaboratively, prioritize tasks, and deliver incremental value to customers.

By adopting agile principles, product teams can break down the development process into smaller, manageable tasks known as user stories or backlog items. These tasks are prioritized based on customer needs and business value. Agile development allows for frequent iterations and continuous improvement, ensuring that the product evolves based on user feedback and changing market conditions.

b. Effective Project Management: Effective project management is crucial for executing the product strategy and delivering the product within the defined scope, budget, and timeline. Project managers play a critical role in planning, organizing, and coordinating the various activities involved in product development.

Project management techniques, such as creating a project plan, defining milestones, allocating resources, and managing risks, help ensure that the product development process remains on track. Project managers facilitate effective communication and collaboration among team members, stakeholders, and other departments, promoting a shared understanding of project goals and objectives.

Moreover, project management methodologies like the Project Management Institute’s (PMI) Project Management Body of Knowledge (PMBOK) or PRINCE2 provide structured frameworks and best practices for managing projects successfully.

c. Gathering and Incorporating User Feedback: User feedback is invaluable for understanding how well the product meets customer needs and identifying areas for improvement. Gathering user feedback can be achieved through various methods, such as surveys, interviews, usability testing, or analyzing customer support inquiries.

User feedback should be collected systematically and analyzed to identify patterns, trends, and common pain points. This feedback helps product teams gain insights into user preferences, identify usability issues, and validate assumptions made during the product development process.

To effectively incorporate user feedback into the product, teams can leverage tools like customer relationship management (CRM) systems or feedback management platforms. These tools facilitate capturing, organizing, and analyzing user feedback, ensuring that it is integrated into the product roadmap and prioritized for implementation.

d. Iterating and Enhancing the Product: Iteration is a fundamental aspect of the product development process , enabling teams to continuously enhance the product based on user feedback and changing market dynamics. Iteration involves revisiting and refining various elements of the product, such as features, user interface, performance, or user experience.

During the iteration process, product teams analyze user feedback and prioritize the identified improvements based on their impact and feasibility. They then implement these enhancements through incremental releases or updates, allowing users to benefit from new features and improvements over time.

To support iterative development, product teams often adopt practices like continuous integration and continuous delivery (CI/CD) to streamline the release process and ensure a rapid and reliable delivery of updates to users. This iterative approach allows for faster response to user needs and market changes, enabling the product to evolve and stay competitive.

8. Measurement and Evaluation

Once a product is launched, it’s crucial to measure and evaluate its performance to determine the effectiveness of the product strategy and make informed decisions for future enhancements. This phase involves tracking key metrics and KPIs, analyzing user engagement and satisfaction, making data-driven decisions, and fine-tuning the strategy based on the results.

a. Tracking Key Metrics and KPIs:

Tracking key metrics and KPIs allows product managers to assess the success of their product strategy and measure its impact on business goals. The choice of metrics and KPIs will depend on the nature of the product and the objectives set during the strategy phase.

Common metrics include user acquisition, retention rate, revenue, conversion rate, user engagement, customer satisfaction, and customer lifetime value. These metrics provide insights into the product’s performance, user behavior, and overall business success.

To track these metrics effectively, product teams can leverage various analytics tools and platforms, such as Google Analytics, Mixpanel, or Amplitude. These tools provide in-depth data on user interactions, conversion funnels, user demographics, and other valuable insights that inform decision-making.

b. Analyzing User Engagement and Satisfaction: User engagement and satisfaction are critical indicators of the product’s value proposition and its ability to meet customer needs. Analyzing user engagement involves assessing factors like active users, time spent on the product, feature usage, and user interactions.

Additionally, measuring user satisfaction through methods like Net Promoter Score (NPS) surveys, customer feedback, or ratings and reviews provides valuable qualitative insights. Understanding user sentiment and gathering feedback allows product teams to identify areas for improvement and address user pain points .

By monitoring user engagement and satisfaction, product managers can identify trends, patterns, and opportunities to enhance the product experience and optimize its value delivery.

c. Making Data-Driven Decisions: Data-driven decision-making is essential for effective product management . It involves collecting and analyzing relevant data to derive actionable insights and inform product strategy. Data can come from various sources, including user analytics, market research, customer feedback, and competitive analysis.

Product managers should leverage data analysis tools and techniques to make sense of the information collected. Data visualization tools like Tableau or Power BI can help present complex data in a comprehensible format, facilitating data-driven decision-making .

By relying on data, product managers can identify trends, validate assumptions, and prioritize product improvements based on quantifiable evidence. Data-driven decision-making reduces subjectivity and increases the likelihood of making informed choices that positively impact the product’s success.

d. Fine-tuning the Strategy Based on Results: The measurement and evaluation phase should inform the iterative refinement of the product strategy. By analyzing the metrics, user engagement, and satisfaction data, product managers can identify areas of strength and weakness in the product.

Product teams should use this information to fine-tune the strategy by adjusting priorities, features, or target audience focus. This iterative process ensures that the product remains aligned with customer needs and business objectives.

Based on the evaluation results, product managers may choose to pivot the product strategy, make significant enhancements, or explore new market opportunities. This adaptability allows product teams to stay responsive to changing market dynamics and maintain a competitive edge.

About the Author : Arnould Maren Joseph – Product Marketing Manager

Frequently Asked Questions

Product strategy is a plan that outlines how a company will develop and market its products to achieve business objectives.

The key elements of an effective product strategy include market research, clear goals and objectives, target audience identification, differentiation and competitive advantage, roadmapping and prioritization, execution and iteration, and measurement and evaluation.

Market research helps understand customer needs, analyze competitors, and identify industry trends, which inform product strategy decisions.

Clear goals and objectives in product strategy are established by defining a product vision, setting SMART goals, aligning business objectives, and defining key performance indicators (KPIs).

The target audience is identified by understanding the target market, creating user personas, analyzing user behaviour and preferences, and tailoring the product strategy accordingly.

Differentiation and competitive advantage help position the product in the market, identify unique selling propositions (USPs), assess the competitive landscape, and leverage advantages to stand out from competitors.

Prioritization is done by creating a product roadmap, evaluating features based on their importance and impact, and considering agile or waterfall approaches for development and adaptation to market conditions.

Execution and iteration involve agile development, effective project management, gathering user feedback, and continuously improving and enhancing the product based on user insights.

Measurement and evaluation involve tracking key metrics and KPIs, analyzing user engagement and satisfaction, making data-driven decisions, and refining the strategy based on results for continuous improvement

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Product Life Cycle Explained + Examples

Arlene Soto

13 min. read

Updated May 11, 2024

Everything has a shelf life. Whether it’s a car, your phone, exercise equipment, or anything else — eventually its use and sales potential will run dry. That’s because anytime that a product enters the market it follows specific product life cycle stages.

The stages of a product life cycle take it from being introduced as the next big thing, to something that everyone has and eventually everyone has forgotten about. This process is constant, meaning that every business needs to be aware of how it works and how it can affect their products.

Let’s look at the ins and outs of the product life cycle and how you can leverage it to manage your business.

• What is a product life cycle?

The product life cycle is the length of time from when a product is introduced to the consumer market up until it declines or is no longer being sold. This cycle can be broken up into different stages, including: development, introduction, growth, maturity, saturation, and decline. The full product life cycle is typically used to determine when it’s appropriate to increase advertising, adjust pricing, explore new markets, redesign packaging and even adjust your messaging. 

• What are the stages of a product life cycle?

Each stage has its costs, opportunities, and  risks , and individual products differ in how long they remain at any of the life cycle stages. While there are differing opinions regarding if there are four, five, or six stages of the product life cycle, each option includes the following steps. 

1. Development

The development stage of a product life cycle is the research phase before launch. Technically, this falls outside the definition of a product life cycle, but it’s a vital step to be aware of. In short, it’s used to determine the viability of a product, confirm when it should go to market and how to approach your official launch.

At this stage, costs are accumulating with no corresponding revenue. Some products require years and large capital investment to develop and then test their effectiveness. Since risk is high, outside funding sources are limited. 

Existing companies often fund research and development from revenue generated by current products. For startup businesses, this stage is typically funded by the entrepreneur from their own personal resources. For those developing a new product, it may be wise to land on a  minimum viable product  (MVP) as early as possible. 

This can be as minimal as a sketch or as complex as a sample or prototype version of the product itself. You just need enough to show how your product will work to  potential investors  and customers. The earlier you can validate its market potential, the more likely you’ll be to land investment and launch.    

2. Introduction

The product life cycle introduction stage is when your product is first launched in the marketplace. It’s where you step beyond the product itself to  develop a market  for the product and build product awareness. Here, you’ll work to carve out a  target market , conduct a market analysis to understand the competitive landscape, and ideally land your first few sales.

Marketing costs are high at this stage, as it is necessary to reach out to potential customers. The best approach when promoting a new product is to focus on testing distribution channels and messaging. While your advertising budget may be hefty, you can strategically leverage it to identify  marketing channels  that lead to higher conversions. This is also the stage where intellectual property rights protection is obtained. Depending on your market position, product pricing may be high to recover costs associated with the development stage. It also may be lower, meaning you’ll initially be running at a loss until you gain traction. This is where landing initial funding efforts and mapping out  your cash runway  are vital to the success of your product.

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In the product life cycle growth stage, the product has been accepted by customers, and you are now striving to increase market share. That means that demand and revenue are growing, ideally at a steady rate. How long you achieve steady growth fully depends on your product, the current market landscape, and the adoption rate of customers.

If you’re entering an already crowded market with a product, you’ll likely  see competitors  react fairly quickly. If you’ve entered a market with less competition or are first to market in a breakout industry, you’ll likely see a slower response by new or current entrants. 

In either case, your response during this phase is to fine-tune your messaging, solidify your brand presence and expand into new distribution channels. This also may be the time to consider adding additional services to support and further differentiate your product. Things like support services, add-ons, or insurance packages are just a few options to consider. Having these additions available, or at least in progress, can better help you react to competitors and extend the return on investment (ROI) from a given customer.

4. Maturity and saturation

The mature stage is when sales will level off. This doesn’t mean you aren’t still growing, you just won’t see the same level of rapid growth as before. Typically at this point, you will begin to lower prices, offer free additions or make other adjustments to keep your products competitive. 

At the same time, you’ve also become more efficient. Production costs tend to decline, costly mistakes in the manufacturing process can now be avoided. Even your marketing expenditure is likely more refined and effective at this stage. So, while you may not be growing in volume, you’re likely at your most profitable in this stage.

However, it’s worth remembering that your competitors have likely now solidified their own offerings in this stage. This means that they have taken a portion of the market, further leading to the flattened growth of your own product. Most consumers are likely already using a version of your product and have begun  developing brand preferences .

This is when any adjustments to advance your product or the services that accompany it, should be made. If you’ve hit the point where any real adjustments simply aren’t possible, then your messaging, services, and add-ons should take full focus.

You may only be able to make incremental changes but can still look to market it as a refresh accompanied by new features or benefits. Video game consoles are a great example of this, where incremental updates to hardware are often touted to sell new consoles. The  Nintendo Switch OLED  edition is the latest example, where the only update is a new, slightly larger, and crisper screen. 

The decline stage for a product occurs when the market becomes saturated, competition peaks, and customer needs start to change. Companies at this stage have several options: 

• Discontinue the product
• Sell the manufacturing rights to another business
• Find new uses for the product
• Tap into new markets

It’s at this stage of the product life cycle that you’ll really need to weigh the costs and benefits associated with each option. Are you really capable of revising the product? Are there other features you simply haven’t tapped into? Is there a market you haven’t looked into that could benefit from your product?

If you can, look to run different  forecasting scenarios  during this time to see what each decision could lead to depending on product performance. Hopefully, you have other products to help support your business when one declines. Ideally, you’ll have multiple products or iterations running at different points in the product life cycle. 

• How do you know what stage of the product life cycle your products are in?

There’s no guarantee how long a product will stay in a given stage. This can make it difficult to know what stage you’re in and when you’ve entered the next one. 

Knowing the characteristics of each stage can help you better identify your current position. However, it’s often easier to look back at performance to determine where your business is and where it’s headed. You can leverage  this actual performance  to then help paint the picture of what to expect in the future. In fact, you can tie this exercise into your financial forecasts and compare them directly to your financial statements.

This process will ensure that you are always considering what comes next. It will give you a more informed perspective of the future, while also helping you avoid poor strategic decisions. This will also help you better understand the value of a given stage, making it far easier to apply the same methodology to other products. 

• How to use the product life cycle to manage your business

Knowing what stage you’re in can effectively help you develop a strategy for your product. As we explored above, the stage has just as much influence over your decisions as it does sales performance. Here’s how you can leverage your understanding of the product life cycle stages to manage and grow your business. 

Establish authority

During the introduction stage, you can look to position your product as the cheaper, better, or any number of benefits over the competition. This is when you not only establish the brand for the product but your business as well. 

Do you want to be known as the low-cost alternative? The eco-friendly or local solution? Or maybe you want to focus on  your company mission  and how your business operates.

Whatever the case, this is the stage where you solidify how you stand apart. 

Set a pricing strategy

Each stage has a potential impact on your pricing. The introduction stage is all about positioning against competitors and trying to offset development costs. Growth can go any number of ways depending on availability, additional features, support, and other benefits. Maturity and saturation may be directly impacted by competitors, leading to further advancements and price decreases.

The decline stage will almost ensure a price decrease or a return to the introduction stage with a new version of the product. This will  start the pricing conversation  all over again, with the performance of the original product directly influencing your initial price position. The better you understand where your product sits in the cycle, the better you can prepare and adjust pricing when necessary. 

Create a marketing strategy

The performance of a product can directly depend on how well you market it. Thankfully, each stage of the product life cycle helps you test and refine your marketing strategy. During the introduction stage, you’re exploring different channels, testing different ad mediums, and working to connect with a target audience. The growth stage is when you’ve refined your channel selection, found winning copy, and streamlined your spending.

The maturity and decline stages are another opportunity to test new channels and adjust your strategy. Maybe you introduce a blog, try selling the product on a channel you avoided with new messaging, or further test copy and image variations to increase your return. 

In any case, each stage presents more opportunities to research and test new concepts that help solidify your  marketing strategy . 

Extend or vary product use

Knowing the stage your product occupies and what comes next can help you better prepare to make adjustments. For example, if you’re in the growth stage and begin to see signs of maturity or even decline, you can begin exploring ways to extend the value of your product. As we’ve said before, this could involve doing a refresh, adding on additional services, or looking to  tap into adjacent markets . 

• What factors affect the product life cycle stages?

How you choose to create, position and market your product are all elements under your control in the product life cycle. However, it’s worth noting that there are external factors that can directly influence how well your product performs and how long it sits in a given stage.

Ease of entry

How competitive the market you’re entering a product into can directly influence its success or failure. It can also influence the number of competitors that attempt to enter the market. If barriers to entry (number of competitors, expenses, market size, technology) are low the product life cycle is more likely to be short. If they’re higher, making entry more difficult, you’re more likely to see an extended product life cycle.

Advancements in technology

If you’re working within an industry or country that experiences a rapid rate of technological advancement (ie. phones, computers, etc), the life cycle of your product is likely very short. On the other hand, some products, locations, and industries only experience limited advancement, meaning that a single iteration may be relevant for far longer.

The key here is to understand how quickly technology changes, what changes are relevant for consumers, and when an iteration will be necessary to stay competitive. A good example of this in action is the  screen resolution of televisions . 

While some, incredibly expensive models, can achieve 8K resolution, the majority of sales and support are focused on 4K resolution. Depending on your market position, it may make sense to be the market leader and focus on high-end sales. On the other hand, if you deal in mid-range televisions and monitors, it likely makes more sense to keep your products at 4K output with a few options for 8K to test if it’s relevant.

Rate of market acceptance

Continuing the TV example, the life cycle of your product also depends on how quickly it’s accepted by consumers. 4K televisions have been available for years at this point, but are only now becoming the baseline. This is due to not only the price of earlier models, but support by streaming services, consoles, traditional cable, and other hardware manufacturers.

This has led to a somewhat lengthy product life cycle. The introduction stage took years for it to officially become accepted by the market. Additionally, the promised replacement of 8K is potentially years away, meaning that the growth and maturity stages might be even longer. 

It’s often viable to explore historical product life cycles to see what the acceptance rate may be. And keep in mind that the benefits of a longer or shorter life cycle fully depend on the stage. If it sits in the introduction stage for too long, you may not see an effective return to cover expenses. However, if you expect it to break into a lengthy growth stage, it may be worth it.   

Economic forces

The actual state of the economy can directly impact the duration of a product life cycle. A sudden dip, brought on by a  global pandemic , for example, may stretch out the introduction phase due to less or selective spending by consumers. On the other hand, the recovery of a financial crisis can also shorten an introductory and even growth phase due to a mass increase in spending.

This is a very broad example, and it fully depends on your target audience, the impact on your industry, etc. Just keep an eye on market trends and note any changes to ensure you’re prepared to adjust accordingly. 

Keep your full product life cycle in mind 

Understanding the product life cycle is a vital part of managing and growing your business. It can help you devise a more detailed roadmap for your business, make better strategic decisions and even help you create more accurate financial forecasts.

If you’ve  created a business plan , make sure that exploring your market position is part of your  regular plan reviews .

You’re likely already looking into everything involved in the product life cycle, but it’s well worth taking the time to solidify what the position of your product is on a regular basis.

Arlene Soto is the director of the Small Business Development Center at Tillamook Bay Community College. She is the former director the Southwestern Oregon Community College Small Business Development Center Director. She is responsible for outreach to Coos, Curry and Western Douglas Counties in Oregon to provide small business development services through free, confidential business advising and low-cost training programs. Arlene has been working with businesses in the accounting field since 1976 and in management since 1988. She is a Certified Management Accountant and a NASBITE Certified Global Business Professional with a Master’s degree in Management from Marylhurst University and a Bachelor’s degree in accounting from Portland State University.

Table of Contents

• Keep your full product life cycle in mind 

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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

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5 Steps to a Winning Product Strategy

Inspiration is a wonderful gift to a product manager—when it strikes. But like a lightning bolt, it’s difficult to know when, where, or how frequently inspiration will strike. And because inspiration—or your muse, or the lightbulb moment, or whatever you want to call it—makes a terribly unpredictable partner, you can’t count on it as the sole source of your product strategy .

Tweet This: “Inspiration is a terribly unpredictable partner—you can’t count on it as the sole source of your product strategy.”

Yes, you could sit around waiting for the next Facebook-sized product strategy to hit you. But truthfully, you’re about as likely to be struck by lightning.

What’s the real challenge with product strategy?

Product teams and executives rarely have a process for evaluating the right initiatives to build in the first place.

So if you’re responsible for developing a product strategy roadmap , you need a plan. I’m not talking about a rigid formula for the product itself. That would probably just yield a boring, uninspiring product. But you should have some sort of defined approach to developing a winning product strategy.

Or, if you’d prefer to think of it this way, you should follow a series of steps that will help you clear a path for inspiration to strike.

Here’s the battle-tested product strategy formula we recommend.

How to Create a Product Strategy in 5 Steps

What does this all look like in practice? Let’s explore a bit further.

1. Go talk to your prospects before defining your product strategy.

Many product managers, even highly experienced ones, try to develop their product strategy entirely internally. They talk to their executives. They brainstorm with their product and marketing teams. They pore over market data. And then, they…think really hard.

Yes, a talented and experienced product manager who has studied the market probably has some great ideas about where to take their company’s product.

But doesn’t this introspective approach misses the mark on a crucial element in developing a winning product strategy? What about the product’s user?

Where in your product strategy are your users?

In the bestselling business book, The Four Steps to the Epiphany , author Steve Blank makes the case that, “There are no facts inside your building…so get outside.”

Successful product teams have a process to evaluate market opportunities and reduce new product risks. Truly great product teams blend entrepreneurial instincts with the evidence they’ve gathered from the market to make intelligent product decisions. They have first built a culture to ask the right questions and validate opportunities objectively.

2. Develop a high-level product vision before mapping out your product strategy.

After working with hundreds of product managers all over the world, we’ve learned this step is mission-critical to making your strategy a success.

There are actually three important benefits to starting with a high-level product vision and then working your way strategically down into the details.

• When you can articulate a compelling vision for your product, you’re more likely to earn executive approval you’ll to move forward (read more about this in Product Roadmaps: Your Guide to Planning and Selling Your Strategy ).
• Being able to communicate your compelling product vision makes it more likely that others will play a role in your product’s success. Communicating with developers, marketing and sales teams, your industry’s analysts, and tastemakers—will share your enthusiasm for your product.
• When you’ve established your high-level product vision first, all of the decisions you and your team make regarding the product will have a more strategic basis.

3. Define your product’s goals.

This step might sound obvious, but many product teams fail even to take a stab at it. They’d rather throw feature ideas on the whiteboard.

Tweet This: “Don’t just start throwing feature ideas on the whiteboard. First, define your product’s goals.”

After you’ve established a big-picture vision for your product, the next step in your plan should be to use that vision to determine a series of high-level objectives, specific things you want your product to accomplish.

You might determine that the most important thing your product could achieve would be to capture a new type of user persona and to increase the lifetime value of each customer.

Another way of thinking of these product goals is as key success metrics for your product —a way of gauging whether your product strategy is working or needs adjusting.

Once you have these goals in place—and, ideally, on a prioritized list of importance—you can then use them to inform your specific plans for features, functionality, and other aspects of the product you’re going to build.

4. Use your high-level product goals to guide your roadmap.

As you can probably see, we are moving top-down, one strategic level at a time, toward executing a product development plan. Start with a product vision that helps you shape your high-level product goals. Then, use those goals to help you determine what initiatives should make it onto your product roadmap .

Now that you’ve determined your most important strategic product goals, you are ready to translate those objectives into more concrete details about the product itself.

But what’s the process for this step? How can you tie your decisions about epics, themes, and other initiatives back to the product goals you outlined in the previous step?

I suggest you use a weighted-scoring model for the initiatives you’re considering adding to the product roadmap. Use the product goals you’ve established (“Customer Delight,” “Entry into a New Geographic Region,” etc.) as the guides for scoring each proposed new theme, epic, and feature. As you review a new epic, for example, you’ll score it against each of your product’s goals.

Prioritizing with a framework is a great way to ensure you make each decision about your product strategy on a truly strategic basis.

5. Check-in with your product’s vision to confirm your plan is on track.

At this point in your product strategy process, you have a compelling product vision that you can easily communicate.

You also have a series of well-defined goals for your product, which all reflect and support your product vision.

Moreover, you have a clear and strategically sound product roadmap. On your roadmap, every initiative is there for a reason. All initiatives also tie right back to your product goals. You’re ready to start development, with a solid plan.

But guess what? That solid plan, the one you’ve strategically established, is not going to be the exact route your product development process follows. As they do, things will change along the way. Things like: priorities, resource levels, competitor behavior, executive team patience.

So our final piece of advice for creating a winning product strategy is to periodically review the product vision and strategy you decided on early in your planning. I know it’s very easy to get pulled along in the current of day-to-day tasks, requests, and urgent issues that need your attention.

So, take a regular step back to make sure that the initiatives and priorities you’re working on right now still support the winning product strategy you worked so hard to create.

For more about developing and communicating a competitive product strategy, watch our webinar:

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Product planning: a 5-step guide for product managers

Markets, customers, and business priorities change so fast they can make a product manager dizzy, and rigid product plans can quickly become irrelevant.

So how can product managers plan, then?

Last updated

Reading time.

Creating flexible product plans that give your team structure and the ability to respond to changing circumstances is an art form. 

This guide takes you through five agile product planning steps to help guide your team in developing products that solve users’ most pressing problems.

Note: product planning is an ongoing process rather than a single event. The best use of this guide is to bookmark it and refer back to it as you move between each step in the planning process.

Feel confident in your product plan

Hotjar offers a steady flow of product experience insights to streamline your product planning

The product planning process

Product planning is the process of defining the right product outcomes and creating the right strategic plans to make those outcomes happen. It involves: 

Researching to ensure your product goals align with your users’ needs

Creating product vision and roadmap documents

Prioritizing actions and features

Getting stakeholder buy-in

Guiding your product team through development

Flexible product planning is important for setting the right product goals and keeping your team and stakeholders aligned in achieving them. A comprehensive but dynamic product plan is the key to creating products your users love.  

Get started with our five-step guide to product planning: 

1. Start with the why: understand your purpose

Your company mission and product vision are key touchpoints that should shape your decisions as a product team. 

See the overall company and product strategy to inform your product planning process.

It’s important to deeply understand the why of the thing. In our case, for example, we might start with a question like: why is conversational support important to our eDesk customers? 

It’s also important to ask: how does this fit in the product, and for whom? What is the ideal user experience? These key questions inform everything else that follows.

Internalize your company mission

Your first step in product planning should be to align your product team objectives with big picture goals. 

Dive into your company’s mission statement and make sure everyone on the product team is clear about the product's business goals. This will instill a sense of purpose in your team, which you can use to guide the product planning process. 

An organizational culture that helps the product team feel they're impacting the world and contributing to larger goals is a huge motivator.

Bonus reading: learn more about the importance of choosing the right company values and infusing them into your team culture.

Solidify your product vision

Once your company’s overall mission is clear, you need to define a product vision that connects the dots between fulfilling company objectives and meeting user needs. 

A strong product vision will give you product planning superpowers. 

Make sure you’re guided by the product vision when you ask for stakeholder buy-in and begin to develop your product plan. 

Your product vision can help you to make critical decisions like choosing which ideas and initiatives to include in your plan. You can then refer back to the vision throughout the planning process to ensure your team and stakeholders stay aligned. 

2. Understand the who: know your customers and market

Every product decision you make will impact your users, so they need to be at front and center in your planning. 

Start by taking steps to empathize with your users and customers and understand your market. 

Empathize with your customers

Empathizing with your customers and understanding their needs is the foundation of effective product planning.  

Study your customers’ motivations, behavior, and goals, and use what you learn to take a user-centric approach to product planning.

If you're using Hotjar: use Hotjar’s Session Recordings to put yourself in your customers’ shoes. Recordings let you track exactly how users experience your product, which will help to guide the next iterations of your product plan. 

You can also use recordings to identify which features deliver the intended value and which need improvement—and then plan the necessary changes.

Understand the market

You need to develop a strong understanding of industry and market dynamics to make a product people want and need. 

Analyze trends to understand where competitors are spending money, time, investment, and attention, and use this market research to inform your product positioning . 

For example, if you're building a platform for virtual courses, your product planning should respond to remote and online learning trends and market expansion. You might identify a need for a digital whiteboard feature, which you should validate with your customers and then incorporate into your planning priorities. 

If you're using Hotjar: the Feedback widget is a great way to ask users quick questions to gauge their interest in new features or product experiments.

3. Decide the what: plan user-focused outcomes

The next step involves bringing together everything you’ve learned about your users and business to define product outcomes.  

You can’t plan what you don’t define. 

Start by understanding what success means for your customers and your business, and then create measurable goals based on meeting user needs. 

Identify problems and opportunities

Identify the specific issues users need to solve—and then decide which you’ll focus on. 

To help you prioritize, dive deep into product research , and gather product experience insights with tools like Hotjar (👋). 

Let’s stick with the example of a remote learning platform. Maybe you’ve assumed the people who sign up for business accounts do so through their company. Your product experience, sales, and support work around that assumption. 

But after talking to your customers and watching how they use your platform, you discover that a lot of people signing up for free business trials are actually individual learners unaffiliated with a company. 

Now that you’ve identified a key user base—individual learners—find out what they want from your product and what roadblocks they’re experiencing in its current form.

You can then transform user problems into opportunities to deliver value : for example, maybe you should plan to release a version of your software that’s aimed at individual users who want an easy-to-use platform for occasional learning. 

Define your product outcomes and how to measure them

Once you’ve mapped out the opportunities your product will target, define your ideal outcomes. 

Determine which metrics you’ll use to measure success, and define the measurements that will allow you to quantify outcomes and test progress. 

With the above example of non-business users on business trials, you might identify the following outcomes:

Reduce the number of business trial signups by individual learners by 75%

Get 10% of individual-learning users who visit your site to purchase an individual license

Increase the average customer satisfaction score (CSAT) of individual learners by 3 points 

Pro tip: use Hotjar to seamlessly integrate CSAT surveys into your site or app. Customers can rate their experience quickly, without leaving your page, and get back to exploring your product.

Prioritize desired outcomes

You’ll identify a lot of desired outcomes during the product planning process, so next, you have to prioritize your product ideas and initiatives. 

To manage your product backlog and plan effectively, ask yourself which of these outcomes will have the biggest impact on your customers and business . 

Use product prioritization methods like the cost of delay analysis to identify which outcomes you should focus on to minimize revenue loss and maximize profits.

If you're using Hotjar: use Surveys and the Feedback widget —which acts as an on-site suggestion box where users can share their experiences with different features and elements on your site—to collect and analyze customer feedback and test your assumptions against your customers’ needs.

4. Execute the how: develop based on learnings

Product planning doesn’t stop when product execution starts. 

Adapt your product development plans along the way depending on the success of your outcomes.

Focus on one thing at a time

Start by taking stock of where you are in relation to your product goals. 

Determine a clear set of steps that need to happen to reach the outcomes you’ve prioritized , and try to anticipate potential obstacles and plan around them.  

For example, let’s take the previous case where non-business users were signing up for business trials on a virtual learning platform. 

Maybe you discover that the reason individual users aren’t purchasing licenses is because there isn’t an easy way for them to do so.

In this case: 

Identify your opportunity: individual users on business trials aren’t converting, so they have needs that aren’t being met. 

Determine your desired outcomes: these might be to increase conversions, revenue, and customer satisfaction scores. 

Identify obstacles: in this case, there isn’t a version of the product available for individual, non-business users. 

The next step will be to develop a path for individual users to purchase individual licenses.

Iterate and adapt

For agile product management and planning, keep batch sizes small so you can build, measure, and learn. 

Use continuous discovery to stay connected with customers throughout the process and use their input to revise and refine the next steps in your product development plan. 

In our example, let’s imagine that after delivering a way for individuals to purchase licenses, the data shows only 2% of individuals actually convert. To decide how to refine your plan, you need to find out why . 

By using a learning tool like heatmaps , the product team can see which parts of the site users are clicking on and scrolling past. Maybe you learn users aren’t scrolling down far enough to reach the CTA to purchase—so your next step might be moving the CTA to a more prominent location.

Pro tip: use Hotjar Heatmaps to see which site elements users are engaging with or skipping—then go deeper with Session Recordings , which show you exactly how individual users are experiencing your product.

Hotjar Session Recordings help you go deeper into how users experience your product

5. Communicate the when: focus on results

Your product planning should center on outcomes rather than time-bound outputs. Here’s what to do:

Base your product roadmap on problems, opportunities, and outcomes

One of the biggest mistakes product teams make in roadmap planning is tying specific features to specific deadlines . Of course, you may need to fix tentative release dates, but focusing too much on deadlines in your product plans can block your team’s ability to make adjustments as you learn. 

Plan for flexibility : you can’t always know in advance the amount of time and effort it will take to iterate a specific feature. 

Make your product roadmap a high-level plan for achieving product goals. Your team should be able to use it as a communication touchpoint and prioritization aid without getting too bogged down in delivery dates. 

Take a look at Hotjar’s public product roadmap here for a sense of how we do it.

Create an internal and external communication plan

It’s important to make a plan for communicating your progress to key stakeholders as you iterate, experiment, and learn.  

As product manager and entrepreneur Jason Shen emphasizes: "Until you ship, communication is the deliverable."

Product planning is important for teams so that there’s a shared vision of goals. It gives everyone a clearer sense of the process and how they can contribute. Product planning is important for teams so that there’s a shared vision of goals. It gives everyone a clearer sense of the process and how they can contribute.

Plan for cross-functional collaboration touchpoints with other departments as well as external partners and customers. 

Key opportunities for internal communication include:

Product updates in company all-hands meetings

Product update summaries on internal communication tools like Slack (check out Hotjar’s Slack integration !)

Holding regular product Q&A sessions to give updates and field questions

Sharing key user insights (with Hotjar Highlights , it’s easy to share an overview of product experience learnings)

Key opportunities for external communication include:

Email newsletters to customers for recent and upcoming releases

Social media posts for recent and upcoming releases

Changelog—either in-product or on a support page (see how Hotjar does it )

Partner-facing Q&A sessions or webinars

Product planning doesn’t have to be overwhelming

Brilliant product planning needs to balance thinking ahead with responding quickly and flexibly to changing markets, business goals, and customer needs. 

The best product managers integrate planning into the product workflow so that planning becomes an ongoing process of continuous discovery and communication.

By focusing on outcomes, centering user needs, and adapting plans based on results, you can ensure your product planning leads to delighted users and a motivated product team.  

FAQs about product planning

What is the most important step in the product planning process.

The most important step in the product planning process is to set the right outcome goals that align with your company and product vision. The purpose of product planning is to identify the goals and objectives that define success, and how you’ll accomplish them.

How far into the future should my product plan extend?

Your product plan can extend as far into the future as your business and product demand. But if you plan far into the future, your plan may have to rely on assumptions.

In general, specific features and solutions should only be planned out a few months in advance, while problems, outcomes, and opportunities can be planned out up to a year or more in advance.

What’s the difference between product planning and product strategy?

There’s a large degree of overlap between product planning and product strategy. The main difference is that product strategy is longer-term and focuses on the high-level vision and objectives for the product and business. Product planning is a continual process that teams can engage in daily. It’s focused on more immediate and actionable outcomes.

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The Product Life Cycle and How it Affects Your Company

Everything has a life cycle, even products and brands.

Have you ever thought about your product and where it is in it's product life cycle? Are you offering something that's never been offered before? Are you offering something that others also have, but with a twist? Is your product new to the market, or is it something that is familiar to users? Are you breaking new ground, or making an improvement on something already available?

The stages that a product goes through is the product life cycle. It's a conceptual model which describes the stages and some of the characteristics, both good and bad, in each stage. For example, if your product has a short lifetime, it needs to have a fast response and action from customers to survive. You have limited time to make a profit on that product. Think about the fidget spinner craze of 2017/2018. Fidget spinners came and they went - and once they were out of fashion, many entrepreneurs that tried to take advantage of the craze were stuck with products people no longer wanted.

But, some products are long period businesses; they find themselves in an almost never ending life cycle. For example, regular Coca-Cola; it's been around since the 1886 and is still popular. But even Coca-Cola has seen a decline, with consumers demanding similar products with less sugar, or different flavors. So Coca-Cola has had to start offering products like Diet Coke to maintain their market share and grow.

The Product Life Cycle

There are five stages a product goes through from conception to death. This process is the product life cycle.

The product life cycle model helps you :

• Forecast the expected path of the sales a product gets over the course of its life
• Check which stage a product is and how it fits in the market.
• Determine how to position your product and target a particular audience.
• Help to decide when and how to focus investments for a product (particularly useful when you identify that the product is towards the end of its life cycle).

The stages of the product life cycle are :

product development, also called research and development

introduction stage

growth stage

Identify the stage of a product

Identifying the stage of a product is difficult, especially during the transitions between one stage to another.

There are four main factors that help you determine the stage of your product: sales, investment costs, profit and competition.

Your product will develop through the five stages which will determine your business strategy.

Stage 1: Product Development

The product development timeline begins here. Before you launch a product you need to conceive it first. In this stage you're still in the early stages of bringing your product to life. You're doing research, talking to customers/potential customers and creating a prototype or alpha/beta. You're working to understand what your customers want or need.

Here you go through the process of new product development (NPD) depending on what market your business is operating in. Product development can be a simple or quite complex process; it could also take a long time to complete; depending on the product itself. For example, a new drug can take years or even decades of development and cost hundreds of millions of dollars. Whereas a simple web app can be out the door in a week with very little costs.

This stage is generally the most expensive, and you face lots of costs during this phase of the product life cycle. Because you don't actually have a product to sell, you're focusing on development. You will begin to get sales when you place your products in the introduction stage; then, as you place your products in the growth stage; you will build profit, these profits usually peak at the maturity stage of the product life cycle.

Depending on your product, you may be very quiet publicly about your product - develop the product in secret to be released. But in most other cases, you'll use the research and development phase to validate your product, talking to potential customers and seeing if there is value in what you're doing.

Stage 2: Introduction

You've launched your product amd released it to the world. Your product is on the market you begin to drive sales. You're marketing, your talking to customers and your starting to see the feedback in the real world.

There may be heavy advertising and marketing costs as you figure out the market that cut into your margin. You might also be working to make improvements to you product based on feedback. You're also figuring out how to offer your product efficiently, with less costs. The expenses at this stage might exceed the initial sales; but you should be driving those costs down with a path to profitability.

Stage 3: Growth

Once your product is out there for all customers to see, comes growth. At this stage, your product should be driving profits, sales performance has increased. You're on your way to recouping the development costs.

You may also see competitors enter the market. If your product proves successful, others will take notice and try to offer similar products, sometimes with a twist to make it different, sometimes not.

When that happens, it's important to double down on your product and customers. Continue engaging with your customers to understand how to continue making the improvements that add value.

If you have a physical product, you will find the unit cost will start to fall as your produce more, potentailly increasing your margins. If you have a digital product, you may be able to limit some of your expenses associated with serving your customers, like customer service or server costs.

Stage 4: Maturity

The fourth stage is maturity. In this stage, profits usually peak; the product might still perceive growth during this phase but not as fast as during the growth phase. The product is at the top of its life cycle and many in the targeted audience already know about it. The market may be saturated and you may have to look at new markets or additional products. Weaker competitors will leave the market because of the lack of growth and because prices will start to fall as competition intensifies.

A product in the maturity stage can generate very good profit; as you already operate efficiently and have a low cost unit.

Focus on managing the capacity and production of your product. You can find ways to reposition the product in the market; allowing this phase to extend for longer.

Stage 5: Decline

Just as in nature itself, all things die eventually; in this case it translates into going off the market. When a product goes through maturity and eventually sales begin to go down, the stage of decline has started. The market is saturated and even more competitors leave the market.

Times changes, new competitors arise, customers change to other products; whatever the reason could be, sales will go down and with them, profits. Eventually you should move on from the product.

The reasons for products to go into the decline stage are usually:

The advance of technology - new technologies make the development of new and better products, replacing what's on the market.

Consumers change their preferences; societies, trends, people in general change constantly.

The business fails to improve and innovate its product. This will bring the product down while competitors will rise above it.

Extending the product life cycle :

There are ways and strategies to elongate the life of your product before it reaches the decline stage

Advertising is the best way to reach a new audience and remind your current one you and your product is still there.

A good way to squeeze more out of your product is by reducing the price to make more attractive to customers.

Upgrades and improvements of the product; by adding new features you add value to your product.

Finding a new audience to offer your product; market on a new region and a different demography. Conducting research and getting the product to a new market is also a good way to extend the product life cycle.

To consider

Consider the duration and structure of the product life cycle depends on the product itself; the approach you take and the decisions you make can and will change based on the product and the market. It’s not always obvious where in the life cycle a product currently is and the product life cycle is a theoretical concept; it’s not meant to predict precisely the success of a particular product. The are many variables that affect the duration and behavior of the product life cycle.

In conclusion, the product life cycle is a helpful model that can be used in many sorts of ways to create better marketing strategies and take good decisions to develop a successful business.

How to Describe the Product in a Business Plan

by Charles Crawford

Published on 1 Jan 2021

The reader of a business plan should come away with an understanding of what the company's product line is, what it does and how it functions. The same is true if the company offers a service. If pictures and other images contribute to this understanding of the product, the writers of the plan should use them. The business plan should tell about problems the product solves, the needs it meets and the benefits it gives to consumers. The plan should also address any liability issues associated with the product.

Explain what the product does, how it works, and how it can be put to commercial or consumer use.

Write a description of the product's physical characteristics, including colors, finishes, sizes, specifications and ingredients. Use photographs, diagrams and other graphics to help the reader learn about the product.

Compare the product to those of competitors. Tell how the company's product is better than competing products. Discuss its potential in the marketplace. Include the results of any market trials, surveys or focus groups.

Describe the product's benefits to the customer. For example, if the product reduces wrinkles on the face, saves money or increases efficiency, explain in detail how it does each of these things. If there is a family of products, discuss the customer benefits of each one.

Explain any liability issues associated with the product, if applicable. If you have consulted with a lawyer about these issues, provide a summary of those discussions in the business plan.

Remember that the business plan often becomes a sales document for the company. When writing about the company's product, keep sales in mind.

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Buyer behavior

Last updated: 7 April, 2023

Types of buyer behavior

Buyer behavior patterns.

Model of buyer behavior

Buyer behavior analysis

Checkout our sales pipeline templates freebies.

Buyer behavior refers to the decision and acts people undertake to buy products or services for individual or group use. It’s synonymous with the term “consumer buying behavior,” which often applies to individual customers in contrast to businesses.

Buyer behavior is the driving force behind any marketing process. Understanding why and how people decide to purchase this or that product or why they are so loyal to one particular brand is the number one task for companies that strive for improving their business model and acquiring more customers. 

Buyer behavior is always determined by how involved a client is in their decision to buy a product or service and how risky it is. The higher the product price, the higher the risk, the higher the customer’s involvement in purchase decisions. Based on these determinants, four types of consumer buyer behavior are distinguished:

Complex buying behavior

This type is also called extensive. The customer is highly involved in the buying process and thorough research before the purchase due to the high degree of economic or psychological risk. Examples of this type of buying behavior include purchasing expensive goods or services such as a house, a car, an education course, etc.

Dissonance-reducing buying behavior

Like complex buying behavior, this type presupposes lots of involvement in the buying process due to the high price or infrequent purchase. People find it difficult to choose between brands and are afraid they might regret their choice afterward (hence the word ‘dissonance’). 

As a rule, they buy goods without much research based on convenience or available budget. An example of dissonance-reducing buying behavior may be purchasing a waffle maker. In this case, a customer won’t think much about which model to use, chousing between a few brands available. 

Habitual buying behavior

This type of consumer buying behavior is characterized by low involvement in a purchase decision. A client sees no significant difference among brands and buys habitual goods over a long period. An example of habitual buying behavior is purchasing everyday products.

Variety seeking behavior

In this case, a customer switches among brands for the sake of variety or curiosity, not dissatisfaction, demonstrating a low level of involvement. For example, they may buy soap without putting much thought into it. Next time, they will choose another brand to change the scent. 

Each consumer may have unique buying habits. Still, there are typical tendencies, which allows distinguishing the following buyer behavior patterns:

Place of purchase

If customers have access to several stores, they are not always loyal to one place. So even if all items are available in one outlet, they may divide their purchases among several shops.

Items purchased

There are two things to consider: the type of the product customers purchase and its quantity. As a rule, people buy necessity items in bulk. In contrast, luxury items are more likely to be purchased in small quantities and not frequently. The amount of goods people buy is influenced by such factors: 

• Product durability
• Product availability
• Product price
• Buyer’s purchasing power 
• Number of customers for whom the product is intended

The analysis of a buyer’s shopping cart may bring many valuable insights about buyer behavior.

Time and frequency of purchase

With the development of e-commerce , purchases have become only a few clicks away. Anyway, marketers should understand how often and at what time of the year or day people tend to buy more goods. The product purchase frequency may depend on the following factors:

• Product type
• Customer’s lifestyle
• Product necessity
• Customer’s traditions and customs

Method of purchase

People buy goods in different ways: some go to the store, while others prefer ordering items online. Some pay cash, while others use a credit card. Among customers who buy goods in online stores, some pay on delivery, while others are ready to pay right after they place an order. The way customers choose to purchase products tells a lot about their buyer persona .

Model of consumer buying behavior

The buyer behavior model is a structured step-by-step process. Under the influence of marketing stimuli (product, price, place, and promotion) and environmental factors (economic, technological, political, cultural), a customer understands the need to make a purchase.

The decision-making process they undergo afterward is affected by their characteristics, such as their beliefs, values, and motivation, resulting in the final decision to either buy or not to buy. 

Most buyers go through several stages when making a purchase decision:

1. Need recognition

At the first stage, the buyer recognizes that there is a need for a product or service. For instance, they might realize that, since their company is growing, manual email outreach is no longer effective, so they need an email automation solution .

2. Information search

After understanding the need for a product or service, the buyer starts looking for information. They might obtain it from different sources (friends, commercials, mass media). For example, a prospect may start browsing email automation solutions, read reviews, etc.

3. Evaluation of alternatives

Once all the necessary information has been gathered, the buyer starts to evaluate a choice. They might compare key features and pricing, looking for advantages of one tool over all others.

4. Purchase decision

After evaluation, the buyer makes a purchase decision. For example, they start their free trial or purchase a paid plan. 

5. Post-purchase evaluation

After purchasing the product or service, the buyer assesses whether it has met their expectations. At this stage, they might also leave an online review about the purchase or share their feedback with subscribers, colleagues, or friends. 

There are cases, however, when some stages of the decision-making process are skipped. For example, the customer already knows a lot about a product and does not need to search for information. Another situation is when the buyer might see a product in the store and decide to buy it impulsively. Besides, there are situations when, after evaluating alternatives, the customer goes back to the information search step.

To offer relevant products and services to the target audience, marketers should analyze what and how people buy. Companies adhere to several ways of monitoring consumer buying behavior:

Using computer software

Computer software provides companies with valuable information about the customers’ purchase experience. This allows analyzing what products or services are preferable among certain groups of buyers, how the customers’ location influences their purchase habits, etc.

Analyzing customers’ reviews

Another way of analyzing buyer behavior is to study the customer’s feedback. Online reviews can often reveal more than just people’s feelings about the purchase. They might also share some information about how they choose items or the way they prefer buying goods. 

Conducting online surveys

Some companies also conduct online surveys , which gives them an opportunity to research the buyer behavior at any angle they need. Surveys allow requesting direct information about what people like to buy, what product qualities they value the most, what determines their purchase decision, and so on.

The analysis of buyer behavior tendencies will help companies find the right marketing strategies to attract potential customers and convert them.

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The Complete Guide on Behavioral Segmentation in Marketing

• Customer segmentation

Karolis Bilcius

Targeting the right niche is not easy, especially if you are only familiar with traditional methods, i.e., demographical or geographical segmentation. But there is more to your customers than just their age and location. Aspects such as interests, income, occasion, needs, brand loyalty, etc., also play a crucial role in purchasing decisions.

So how do you understand your customers, their needs, and intents and do so in a way that positively impacts your marketing efforts?

Let’s take a look!

What Is Behavioral Segmentation?

Behavioral segmentation involves grouping or clustering customers based on common behavioral patterns. Typically, these behaviors (and subsequent purchase patterns!) are related to behavioral parameters, such as customers’ activity on the website, interaction with the brand, reaction to marketing messages, purchase frequency, satisfaction levels, etc.

This segmentation can be done effectively with tools such as artificial intelligence-based analysis platforms. Since predictive modeling helps businesses predict future behavior from customers , they can create marketing messages that find their target niche and make it more effective.

Why Is It Important?

Behavioral segmentation in marketing is vital for businesses because it helps them find the right audience that will respond to their product’s marketing messages.

Aside from benefiting from personalization, it helps businesses with budget allocation. By understanding how much to spend and how to maximize ROI, businesses can curb wasteful spending.

Other advantages include:

1. Identifying High-Value Customers

For businesses, it is critical to identify their high-value customers as this segment increases their revenue through purchases. They also influence others to perceive the brand positively.

Through behavioral segmentation, businesses can identify which customers are valuable and could become loyal customers or unofficial brand ambassadors. It allows business owners to track how customers spend, what they spend the most on, where they buy their products, and when they make these purchases.

In this way, a business could build a marketing plan that will allow more customer interaction, such as features and content, to build more responsiveness in their target market.

With key insights into high-value customer behavior, businesses can increase their existing customers’ lifetime value (CLV), improve customer retention, and increase the CLV of these high-value target customers.

2. Identify Services and Products That Are Worthy of Investment

Companies can use behavior segmentation in marketing to identify popular products or services for their consumers. They can also use the data collected to identify which products need improvement. Key insights such as these will also help businesses determine which products require more resources and how to expand their customer reach. They can also examine whether underperforming products need improvement or if they’re better off being dropped.

3. Remove Blocks on the Customer Journey

Customers often face challenges such as long waiting periods, complex purchase systems, lack of support, expectation mismatch, etc. Behavior segmentation in marketing can help businesses identify pain points in the customer journey and improve the situation. For instance, if online shoppers often abandon their carts or don’t complete their transactions, businesses can segment such customers, interact with them to learn more about their experiences, and then take appropriate steps.

4. Improves User Experience Design

Behavioral segmentation also allows businesses to improve the user experience through better user experience (UX) design.

When existing customers use websites, mobile apps, and other digital platforms, they often encounter issues that prevent them from completing their customer journey. Through this kind of segmentation, businesses can identify where and when their consumers lost interest or what propelled them to continue through the customer journey.

They can then design a digital site that creates a better experience for their target users and identify user status through their interaction with the design.

How Does It Work?

Behavioral segmentation in marketing groups customers by their behavior. It also uses other information such as demographics and geographical data to predict their future behavior related to a service or product.

Businesses can then use the insights gained from behavioral segmentation to adjust their marketing strategy.

While behavioral segmentation takes many forms, a prime example is observing occasion-based behavior (by the way, we’ve created an exclusive article full of behavioral segmentation examples and strategies here ). This happens when an occasion triggers a consumer to make a purchase. For instance, people buy certain products or services during the holidays or personal milestones, such as anniversaries or birthdays.

This specific product or service sales spike affects a large part of the target market and can be observed across all demographics.

When consumers make purchases to mark an annual celebration such as a wedding or a birthday, it can be called a regular personal occasion since it happens yearly. Equally, some behavioral segmentation examples occur rarely and mark milestones that do not happen regularly. Examples include milestones such as retirement or receiving special honor from an institution.

This type of segmentation allows a business to create a marketing scheme based on these segments, thereby targeting specific consumers within these segments.

Types of Behavioral Segmentation in Marketing

Behavioral segmentation can be divided into five types or forms based on consumers’ behavior during their customer journey. Here’s a closer look at these types or forms and why they’re important.

Purchasing Behavior

Businesses can segment consumers based on their purchasing behavior. This includes transaction history, purchasing decisions, and the specific behaviors that are likely predictors of a possible purchase. Businesses can create marketing strategies when analyzing purchasing behavior as the scientific data obtained from this can give them actionable insights.

Purchasing behavior can be divided further into four categories.

A complex purchasing behavior requires the customer to make an important decision and puts them as highly involved in the purchasing process. Customers often do a lot of research and compare the benefits and differences of similar products before deciding. For instance, when a customer wants to buy a car, they will conduct extensive research into manufacturers, compare different models, consider the cost of shortlisted models, fuel efficiency, maintenance ease, etc., before deciding.

2. Variety Seeking

Variety-seeking behavior includes brands or products that have significant differences or variations. The consumer is not highly involved in the decision-making and purchasing process as the decision is not significant in their lives. This means that whatever product or brand they choose, it still has the same effect regardless of the purchase. OTC products (over-the-counter) like ointments, cough syrups, bandaids, pain relievers, etc., do not involve complex purchase decisions.

3. Dissonance-Reducing

Dissonance-reducing purchasing behavior requires a customer to decide between two very similar products. If the products have few differences or benefits, the customer will likely decide based on whether or not they will benefit from the purchase. The price of the product or service is typically what sways a customer’s decision.

4. Habitual

Habitual behaviors depend on a customer’s brand loyalty, personal choice, and personal experience. Consumers choose certain brands because, after repeat purchases from that brand, they’re comfortable with that brand and choose to continue their association with the brand.

Occasion Purchasing

Occasion purchasing segmentation occurs when consumers make purchase decisions based on specific times or circumstances in their personal lives.

Here’s a look at the three kinds of occasion purchasing in behavioral segmentation.

1. Life Stage

Life Stage is when customers make purchase decisions when they reach specific milestones in their lives. These could include getting married, buying a house, or even starting a family.

2. Seasonal

Seasonal purchasing decisions are based on seasonal factors such as holidays, weather, similar changes, even the start of a school year.

3. Day-Part

Day-part is habitual purchasing decisions based on the time of day when the consumer buys a product. Consider hot beverages such as coffee or tea. They’re typically purchased in the morning. Similarly, sandwiches and meals are more likely to be bought at lunch or dinner.

For some businesses, day-part purchasing is vital because it can leverage customer behavior and increase revenue.

Customer Journey Stage

This strategy focuses on the brand’s customer journey. It helps businesses increase conversion rates by identifying which marketing strategy will work and what will increase a customer’s satisfaction levels.

Customers can engage and interact with the brand at any point in the customer journey, at any channel, and with any content. This is perhaps what makes this segmentation difficult for marketers to analyze. Thankfully, artificial intelligence (AI) and digital technology simplify the process by collecting customer data and comparing all the data points along the customer journey stage.

Usage Behavior Segmentation

This behavior segmentation is based on the number of times consumers use or purchase products or services. Purchase and usage behavior segments customers based on the products they use, the length of time they use the product, and what kind of features interest consumers. Customer loyalty segmentation can indicate which ones could increase customer lifetime value (CLV).

User rate segmentation has three categories, as described below.

• Heavy/Super Users – Consumers that use a product or service frequently and are most engaged with the brand’s content and features.
• Medium/Averge Users – Consumers that use the product or service but not frequently enough to classify as heavy users.
• Light Users – Consumers that use the products only once or less than average consumers.

Customer Loyalty

This segmentation strategy focuses on the most loyal customers who generate the most revenue for the business. This segmentation type helps businesses answer questions about what behaviors would indicate customer loyalty and customer satisfaction, and which ones have the highest CLV and merit membership in a customer loyalty program.

How to Use This Kind of Segmentation in Your Marketing Strategy

Behavioral segmentation is an efficient way to reach your target audience and create marketing messages and marketing materials that will likely compel your target audience to make a purchase. However, research shows that almost 76% of companies do not use it.

Consider the following tips if you’ve been wondering how best to leverage this kind of segmentation to boost your marketing efforts.

1. Research Your Audience

Businesses could use surveys, audience analysis, track behavioral data, and conduct interviews to know their target audience’s interests and preferences. These methods could help them identify the trends that lead to a purchase.

2. Create Buyer Personas

Companies should then create a buyer persona or a complete customer profile that includes detailed descriptions of a customer’s demographic information, goals, pain points, and even preferences. An audience analysis could help business owners fill in the information they need, so the marketing is targeted for the right audience.

3. Map Out the Buyer Journey

Once you have your buyer personas, you need to plan the buyer journey that shows how customers engage with your brand and what activity or engagement interests them at each part of the marketing funnel (Awareness, the Engagement, Evaluation, Purchase, and Post-purchase phase.) Businesses can also map out pain points and possible questions that the consumer could raise during the whole journey.

With this insight, you can create a content map that will plan out how each content is linked to the customer journey and how your brand’s content could nurture customers throughout the journey. This will eventually improve your customers’ satisfaction levels.

4. Develop a Marketing Campaign Using Behavioral Segmentation

Once a company has created buyer personas, mapped out the customer journey, and created a content map that nurtures customers, marketers can identify the themes that inspire customer activities and behavior.

Marketers could then use different types of behavioral segmentation to present possible marketing opportunities.

How to Improve Segmentation by Behavior for eCommerce

While behavior segmentation offers several advantages (better focus, stronger brand identity, accurately targeted marketing, etc.), several challenges deter businesses from investing. These include cost, prediction accuracy rates, dependency on assumptions, etc.

Digital technology can make behavioral segmentation more effective by tracking customer choices and purchasing behavior better.

Here’s a closer look at how.

1. Use Purchase Behavior

Study which actions and activities helped or influenced your customers to decide by collecting and collating data from online engagements and interactions. For instance, a post-workout bottled water or health drink purchase. Similarly, events such as weddings will trigger jewelry or fancy clothes purchases.

Companies can then customize their marketing strategies to suit the specific purchase behavior that would target those consumers and encourage more leads to convert and become sales.

2. Cluster Customers in the Same Customer Journey Stage

Why not cluster your audience in the same stage of the customer journey? If you focus on segmenting customers who belong in the same stage of the journey, then you could use the same engagement for this cluster and increase the chance of a conversion.

To increase the effectiveness of this strategy, companies need to be able to determine every customer’s current journey accurately. It does require the use of algorithms. You’ll also need to study patterns of behavior for a long period.

The benefits are worth it, though, as the sales cycle is shortened and the number of loyal customers and turnover rates increase significantly.

3. Use Purchase Frequency

Are your customers first-time buyers or repeat customers? Knowing the purchase frequency of your products or services could inform a marketing team if their efforts are working and which strategies fit your target audience.

You could then identify which customers are super users and which ones are single-time or first-time users. You’ll also get better insight into which actions or activities create new customers and nurture your current ones to become super users.

An eCommerce site makes it easier for companies to trace the average customer’s location and transaction history. They can then use their buyer persona to check the likelihood of the customer becoming a super user.

4. Focus on Customers Availing Specific Benefits

Products or services are designed to help solve problems that customers face. Unfortunately, not many businesses are adept at highlighting how their products or services address these problems. When businesses market their products’ specific benefits, their customers will likely stay with the product or service and become loyal customers.

5. Customers Seeking Variety

When consumers seek variety, they often focus on options that allow them to browse and compare products or services before deciding.

If your target audience fits within this category of variety-seekers, you should create a marketing strategy based on their personality, preferences, and even economic limitations. When products or services don’t offer variety and personalization, then customers decide based on their personality and background. Plan a marketing strategy that focuses on the preferences of the majority of your target base, and your conversion rates will increase.

6. Occasion-Based Behavior

eCommerce sites will prosper when they use occasion-based behavior segmentation. Map out personal occasions or seasonal events that compel your customer base to make a purchase decision. These could include summer holidays, birthdays, graduation days, weddings and anniversaries, etc.

This marketing segmentation will influence your strategy, and by focusing on these special times and tailoring your marketing message accordingly, you will see more engagements and leads from your target audience.

User Segmentation and Machine Learning

Behavioral segmentation can help companies allocate resources to maintain a level cost per acquisition (CPA) and increase revenues. Machine learning makes this all the more possible when the appropriate segmentation is used.

Companies can plan the right marketing campaigns for the target audience and reduce marketing waste when the right number of resources targeted to the right audience produce the most number of conversions.

Machine learning (digital technologies such as artificial intelligence (AI) algorithms and other computerized analyses) can process customer data using predictive modeling and machine learning models. These models can then help marketers identify customer trends across different variables or factors, such as geographic and demographic data.

The K-means Algorithm

Many kinds of machine learning are used for business and marketing, but the K-means clustering algorithm is used to segment customers. This is also called unsupervised algorithms since it lacks labeled data to evaluate performance. The main concept is to group data into similar clusters.

How to Use Machine Learning Algorithms for Customer Segmentation

While the choice of tools and partners depends on preference, companies can follow the following steps to create customer segmentation with machine learning.

1. Plan a Business Case

Begin by building a case research covering consumer habits and styles across different demographics, infographics, and even geographics. Check for customer engagements and how customers interact with sellers. See whether these customer interactions result in conversions that are worthy of attention. Businesses also need to review the number of products or services purchased, return rates, and the company’s spending on the campaign.

2. Collect and Arrange the Relevant Data

You need to collect data from different sources, such as demographics, infographics, and geographics, and assemble it to reveal certain patterns, trends, and biases in the data set. Businesses need to choose the relevant metrics such as the median lifetime value, the total revenue, maintenance spending, total consumer purchase cost, and consumer engagement rating.

Businesses might need to find missing values when using open source tools or software such as Python, especially since some data sets are vital for visualization. The more customer data you have, the better your forecasting and marketing analysis will be when you segment your customers using machine learning.

3. Use K-Means Algorithm for Segmentation

K-means algorithm uses different data sets, grouping customers based on factors that are attainable and small enough for a business to identify.

Using k-means clustering sets a random value of k as the number of clusters. Then the algorithm allots a data point to the nearest cluster that is grouping customers while relocating the center of the main group.

The algorithm checks and reviews the clusters reducing distances and middle points for all clusters. When all the data points agree, the algorithm ends the process.

4. Tuning the Model Using the Hyperparameters

The marketers will then determine the best hyperparameters or the values that control the process or the creation of the clusters. These hyperparameters become the main measure in behavior patterns or customer segmentation in machine learning.

5. Visualization

Once the algorithm has completed the process and the top parameters for the behavior have been identified, the company and its marketers can then visualize the data using a plotting library to create graphs, plots, and charts. These help businesses understand customer behavior patterns and how their marketing affects certain segments.

It could enhance your audience targeting and marketing plans and create customer engagement activities in the customer journey that will produce the most conversions and increase brand loyalty.

It will also reveal which target customers are most likely to become loyal, which are more likely to return, and which behavior will turn single users into repeat consumers.

All customers have basic needs (food, clothes, homes, transport, etc.). They also seek varied benefits from a product or service—picking a tooth whitening toothpaste over a regular one, oil control facewash over regular soap, vitamin or mineral-enriched skincare products, organic produce over GMO, etc. Triggers such as events, holidays, etc., prompt people to make purchases.

When businesses invest in understanding what these motivators are, they can capitalize by tailoring their marketing efforts and messages. Whether it’s rewarding frequent purchases or personalizing products and services to attract new segments, behavioral segmentation creates relevance, removes ambiguity from marketing messages, increases retention of high-value customers, making company spending more effective.

The four categories under purchasing behavior are Complex, Variety-Seeking, Dissonance-Reducing, and Habitual. Understanding these, categorizing your customers based on their purchase behavior, and leveraging insights to tailor your marketing efforts will help your business achieve its targets.

Behavioral segmentation divides the target market into specific groups based on customer attitude, purchase decision, product use, knowledge, response or engagement, and lifetime value.

The five types of behavioral segmentation are purchase behavior, occasion purchasing, customer journey stage, customer loyalty, and usage behavior segmentation. An in-depth understanding of these will help businesses create a complete consumer persona and actionable insights that, when implemented, will increase the efficiency of their marketing efforts.

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How to Use RFM Segmentation to Understand Audience

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Cohort Analysis for Retention: How to Use It to Grow Your ECommerce

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Behavioral Segmentation Examples & Strategies For 2023

Whether you believe it or not, your background, habits, and emotions play an integral role

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What is Product Planning: Benefits, Examples, Process

Home Blog Agile What is Product Planning: Benefits, Examples, Process

Product planning is the process of product development and management that involves defining and strategizing to create a successful product. It encompasses the activities and processes required to identify market needs, set product goals, prioritize features, and create a roadmap for product development.

The goal of product planning is to align business objectives with customer needs and market demand. It involves understanding the target market, conducting market research, and analyzing customer feedback and preferences. By gathering insights and data, product planners can identify opportunities, assess market trends, and make informed decisions about product features, pricing, and positioning.

What is Product Planning?

Product planning is a systematic approach taken to develop a successful product that meets customer needs and aligns with business goals. Product planning encompasses various activities, including market research, competitive analysis, customer segmentation, and defining product requirements. 

The product planning and control phase involves key activities such as defining the product vision and goals, conducting market analysis, identifying target customers and much more. Product planners collaborate with various stakeholders, including product managers, designers, engineers, marketing teams, and sales teams, to gather input and ensure alignment.

Agile courses like Agile Methodology training offer you valuable insights and methodologies to enhance the product planning process by promoting adaptability, collaboration, and iterative development. Key components of product planning and control include:

• Market Analysis: Evaluating market trends, customer preferences, and competitive landscape to identify market opportunities and potential challenges.
• Customer Research: Understanding the needs, behaviors, and pain points of target customers through surveys, interviews, user testing, and data analysis.
• Product Vision: Creating a compelling product vision that defines its purpose and aligns it with the overall business strategy.
• Product Goals: Setting specific, measurable, achievable, relevant, and time-bound (SMART) goals that guide the product's development and success metrics.
• Product Roadmap: Creating a visual representation of the product's planned features, timelines, and priorities.
• Prioritization: Identifying and prioritizing the most valuable features and functionalities based on customer needs, market demand, and business objectives.
• Cross-functional Collaboration: Collaborating with various teams, including product management, design, development, marketing, and sales, to gather input, align strategies, and ensure smooth execution.
• Iterative Development: Embracing iterative and agile development methodologies to incorporate feedback, adjust, and continuously improve the product.

Who is Responsible for Product Planning?

The product planning process is a collaborative effort that involves various stakeholders within an organization. While the specific roles and responsibilities may vary depending on the company structure and size, the following are key individuals typically involved in product planning:

Product Manager: Product managers are key players in an organization's product planning. They collaborate with cross-functional teams and stakeholders to ensure the product's triumph. Their pivotal role encompasses defining the product vision, conducting market research, gathering customer insights, prioritizing features, and aligning product strategy with business goals. Additionally, they are accountable for creating the product roadmap for development and release.

Product Owners: In Scrum, the product owner serves as the customer's voice, connecting the development team with stakeholders. They collaborate with the product manager to prioritize user stories, manage the product backlog, and communicate the product requirements to the development team. Certification like a certified Scrum Master course can enhance the understanding and application of Agile principles and practices, providing valuable skills for product planning and development.

Marketing Team: The marketing team plays a crucial role in product planning by conducting market research, competitive analysis, and identifying target customers. They contribute to defining the product positioning, messaging, and go-to-market strategy.

Development Team:  The development team collaborates with the product manager and product owner to understand the product requirements. This collaboration helps the team develop the necessary features and functionalities.

Sales Team:  The sales team provides valuable insights from the front lines, sharing customer feedback, market trends, and competitive information. They contribute to the product planning process by highlighting customer needs and market opportunities.

User Experience (UX) Designers: UX designers contribute to product planning by understanding user needs, creating user personas, and designing intuitive and user-friendly interfaces. 

Executives and Stakeholders: Executives and key stakeholders provide guidance, strategic direction, and support throughout the product planning process. Their input and decision-making help shape the overall product strategy.

Product Plan Example

The first step of a successful product plan is identifying the target market. Conducting thorough market research gives you insights into the needs of your customers. These insights are of great use to the product development team.

Let us consider the example of Blue Hibiscus Beauty, an online retailer specializing in makeup, skincare products, and hair accessories. As part of their market research strategy, they distribute surveys to customers who make purchases from their online store. These surveys include demographic questions and an open-ended section where participants can provide feedback on desired products. 

After analyzing the survey results, Blue Hibiscus Beauty discovers that their primary customer demographic, which consists of females aged 18 to 25, expresses a strong interest in sustainable and easy-to-apply eyeliner. With this knowledge, the company has decided to develop a new eyeliner product that meets these specifications.

Why is Product Planning Important?

Increased Chances of Success: Product planning helps to increase the chances of success for new products. Product planning helps in long-term business success. 

Reduced Risk: Product planning can also help to reduce risk. By carefully analyzing the market and the competition, businesses can identify opportunities and avoid risks. 

Improved Efficiency : Product planning can also help to improve efficiency. By creating a well-defined process businesses can streamline their operations and save time and money.

Better Decision-making: Product planning can also help businesses make better decisions by having a clear understanding of the market, the competition, and the company's goals,

Increased Customer Satisfaction: Product planning can also help to increase customer satisfaction. By creating products that meet the needs of the target market, businesses can improve customer loyalty and repeat business.

Certifications and KnowledgeHut Agile Methodology training can enhance the understanding and application of Agile principles and practices, providing valuable skills to support effective product planning and development processes. 

The objectives of product planning are:

1. Customer Satisfaction: By understanding the target market and conducting thorough research, businesses can develop products that provide value and enhance customer satisfaction.

2. Market Competitiveness: Product planning aims to position the product in the market to gain a competitive advantage. The objective is to differentiate the product from competitors, identify unique selling points, and capture a significant market share.

3. Profitability: Product planning focuses on developing products that contribute to the financial success of the business. The objective is to create offerings that generate sufficient revenue, achieve profit margins, and contribute to overall business growth and sustainability.

4. Strategic Alignment: Product planning ensures that the development of new products aligns with the overall business strategy and objectives.

5. Innovation and Differentiation: Product planning aims to foster innovation and develop products that stand out in the market. The objective is to create offerings that introduce new features, technologies, or approaches, providing a unique value proposition and distinguishing the business from competitors.

6. Resource Optimization: Product planning focuses on optimizing resources, including time, budget, and personnel, to develop and launch products efficiently. 

7. Risk Mitigation: Product planning aims to minimize risks associated with developing and launching new products. The objective is to conduct market research, feasibility assessments, and risk analyses to identify and mitigate potential challenges, ensuring the successful introduction of products in the market.

8. Customer Loyalty and Retention: Product planning seeks to build customer loyalty and promote repeat purchases. 

9. Continuous Improvement: Product planning strives for continuous improvement of products based on customer feedback and market insights.

Core Elements of Successful Product Planning

Successful product planning encompasses several core elements that contribute to the development and launch of a product that meets customer needs and achieves business objectives. Here are the key elements:

Market Research: Thorough market research is essential to understand customer preferences, market trends, and the competitive landscape. It involves gathering insights on customer needs, pain points, and behaviors, as well as analyzing industry trends and competitor offerings.

Customer Segmentation:  Identifying and segmenting the target market based on relevant characteristics such as demographics, psychographics, behaviors, and needs. This helps tailor the product to specific customer segments and create targeted marketing strategies.

Product Differentiation: Developing a unique value proposition that sets the product apart from competitors. This involves identifying and highlighting key features, benefits, and advantages that resonate with the target market and address their pain points.

Clear Objectives: Setting clear and measurable objectives for the product, such as sales targets, market share goals, or customer satisfaction metrics. Objectives provide direction, focus, and a benchmark for evaluating the success of the product.

Product Design and Development: The product planning and development process comprises transforming customer needs and preferences into a meticulously designed and developed product or service. This includes defining product features, specifications, functionalities, and user experience to meet customer expectations.

Pricing Strategy: Setting an optimal pricing strategy involves considering various factors such as production costs, perceived value, market positioning, etc. Pricing should align with customer perceptions of value while also supporting revenue and profitability goals.

Distribution Channels:  Identifying the most effective distribution channels to reach the target market and make the product accessible to customers. This may include direct sales, e-commerce platforms, retail partnerships, or a combination of channels.

Marketing and Promotion: Creating a holistic marketing plan that encompasses various strategies and tactics to build brand awareness, generate customer interest, and boost sales. This includes defining marketing channels, messaging, branding, advertising, and promotional activities to effectively communicate the product's value to the target market.

Launch and Execution: Planning and executing the product launch, including production, distribution, marketing campaigns, and customer support. This involves coordinating cross-functional teams, monitoring performance, and making necessary adjustments based on market feedback.

Continuous Improvement: Monitoring the product's performance, gathering customer feedback, and making improvements or modifications as needed. Regular evaluation and analysis of market dynamics, competitor strategies, and customer needs help drive continuous product improvement and innovation.

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Stages of an Effective Product Planning

The following are the stages of product planning:

1. Ideation:  In this stage, ideas for new product planning or enhancements to existing products are generated. Brainstorming sessions, customer feedback, competitive analysis, and technological advancements can all contribute to idea generation.

2. Research: Once ideas are generated, they need to be evaluated and screened to determine their viability. This includes researching the market, your target audience, and the competition.

3. Planning: At this stage, the selected ideas are further developed into tangible product concepts. This includes creating detailed product descriptions, outlining features and benefits, and considering potential target markets and pricing strategies.

4. Development: Once the product concept is deemed feasible and financially viable, the actual development process begins. This stage involves designing and engineering the product and creating prototypes.

5. Testing:  Before a full-scale launch, the product is introduced to a specific market segment or geographic area to gather real-world feedback and assess market acceptance. This stage helps identify any issues, gather customer insights, and make necessary adjustments before the wider release.

6. Launch:  The product is officially launched in the target market, accompanied by comprehensive marketing and sales activities. This stage involves executing the marketing plan, establishing distribution channels, training sales teams, and implementing promotional campaigns to create awareness and drive sales.

7. Post-launch:  Once the product is on the market, ongoing monitoring and evaluation are crucial. This involves tracking sales performance, customer feedback, market trends, and competition. Regular evaluation helps identify opportunities for improvement, product extensions, or necessary adjustments to ensure ongoing success.

Mistakes in Product Planning

Product planning is a complex process, and various mistakes can occur if not carefully managed. Below are some common mistakes in product planning:

Insufficient Market Research: Thorough research and understanding of the market, target audience and competition is crucial before you start planning your product.

Poor Target Market Identification: Not accurately identifying and segmenting the target market can lead to ineffective product positioning and marketing efforts. 

Ignoring Competitive Landscape: Neglecting to analyze competitors and their products can result in developing offerings that are not differentiated or fail to stand out in the market. 

Overlooking Product-market Fit: Failing to ensure that the product aligns well with the target market's needs, preferences, and price sensitivity can lead to low adoption rates and poor sales. 

Inadequate Planning and Resource Allocation: It is crucial to allocate sufficient time, budget, and resources to each stage of the product planning process.

Lack of Cross-functional Collaboration: Product planning involves various departments and stakeholders, including marketing, product development, finance, and sales. 

Poor Pricing Strategy: Setting an inappropriate pricing strategy can lead to pricing that is too high or too low. Pricing should be based on factors such as production costs, value delivered, and customer perceptions.

Inadequate Marketing and Launch Execution: Poorly executed marketing strategies and product launches can lead to limited awareness, weak positioning, and slow market adoption. 

Neglecting Post-Launch Evaluation: Failing to monitor and evaluate the performance of the product after its launch can hinder the ability to identify areas for improvement or necessary adjustments. 

Lack of Flexibility and Adaptability: Product planning should be agile and adaptable to changing market conditions, customer feedback, and emerging trends. Failure to embrace flexibility can result in missed opportunities or the inability to respond effectively to evolving customer needs.

How to Avoid Product Planning Mistakes?

To avoid product planning mistakes and increase the chances of success, consider the following strategies:

• Conduct Thorough Market Research: Invest time and resources into comprehensive market research to understand customer needs, preferences, and market dynamics. 
• Define a Clear Target Market: Develop a deep understanding of your target customers' pain points, aspirations, and preferences to tailor your product to their specific needs.
• Analyze the Competitive Landscape: Use competitive analysis information to differentiate your product and develop a unique value proposition that sets you apart in the market.
• Validate Product-market Fit: Conduct surveys, interviews, focus groups, or beta testing to ensure your product aligns with customer needs and provides value.
• Foster Cross-functional Collaboration: Encourage collaboration and communication between different departments and stakeholders involved in product planning, such as marketing, product development, finance, and sales.
• Execute Effective Marketing and Launch Strategies: Develop a comprehensive marketing plan that includes clear messaging, targeted marketing channels, and a well-orchestrated product launch. 
• Monitor and Evaluate Continuously: Regularly review the product's performance, gather insights, and make data-driven adjustments to optimize your product planning strategies.
• Embrace Adaptability and Learn from Mistakes: Stay agile and be open to adapting your product planning strategies based on market feedback, emerging trends, and lessons learned from mistakes.

Product planning is crucial for businesses to create successful products, meet customer needs, and stay competitive. It involves understanding customers, aligning strategies, and optimizing resources to ensure well-designed products, differentiation from competitors, and customer satisfaction. By prioritizing product planning and incorporating customer insights, businesses increase their chances of success, adaptability, and innovation. It sets the foundation for long-term business growth and success in a dynamic and competitive marketplace.

Frequently Asked Questions (FAQs)

Some features of product planning are:

• Defining product goals and objectives.
• Generating product ideas and concepts.
• Developing a product roadmap and timeline.
• Monitoring and evaluating product performance.

In Agile methodologies, product planning involves creating a roadmap and backlog to guide iterative development. It entails collaboration among teams, product owners, and stakeholders to define the vision, prioritize features, and set release goals. Agile product planning emphasizes flexibility, adaptability, and continuous feedback.

Steps to planning a product:

• Develop a product roadmap with key milestones and deliverables.
• Allocate resources and budget, and form a cross-functional team for product development.
• Continuously monitor and evaluate product performance, gathering feedback and making necessary adjustments for ongoing success.

Lindy Quick

Lindy Quick, SPCT, is a dynamic Transformation Architect and Senior Business Agility Consultant with a proven track record of success in driving agile transformations. With expertise in multiple agile frameworks, including SAFe, Scrum, and Kanban, Lindy has led impactful transformations across diverse industries such as manufacturing, defense, insurance/financial, and federal government. Lindy's exceptional communication, leadership, and problem-solving skills have earned her a reputation as a trusted advisor. Currently associated with KnowledgeHut and upGrad, Lindy fosters Lean-Agile principles and mindset through coaching, training, and successful execution of transformations. With a passion for effective value delivery, Lindy is a sought-after expert in the field.

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How to Create a Business Development Plan in 7 Steps

Don't leave your sales to chance. Set your goals, choose your target market, and create a plan to reach them.

Erin Hueffner

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Sales leaders often want to know how to improve their revenue or hit their sales numbers. To reach new heights, you need to start by building a solid foundation. That’s your business development plan. If you’re wondering where to begin, you’re in the right place to learn. We’ll explore how business development works and how to create a winning plan.

What you’ll learn:

What is business development, what’s the difference between sales and business development, how does business development work, why is business development important, how to create a business development plan in 7 steps, what’s the best technology for business development planning, sales planning can be delightful. no, really..

Our Sales Planning solution keeps sellers on track with easy-to-build and easy-to-optimize sales plans.

Business development (BD) is the process of long-term planning to increase your company’s value through relationships, markets, and customers. It involves researching your target audience, finding new opportunities, and using your channels to reach them. Your sales representatives can only close the leads they’re talking to. Finding and starting those conversations is what business development is all about.

The sales team receives leads, works them through their sales pipeline , and sells your company’s products and services. Sales representatives work their territories and their lists to close deals and convert leads to customers. It’s a transactional and tactical process.

On the other hand, the business development team digs through the entire marketplace to find new growth opportunities. Business development representatives prospect, reach out to leads, qualify them, and move them through the funnel. It’s a strategic process that requires patience.

When both teams are working together, businesses thrive.

( Back to top )

Business development takes many forms. Researching the market to find growth opportunities. Creating a new lead-qualifying process. Managing a project across departments with marketing and sales. Analyzing data to validate a theory. And of course, sales prospecting to find good leads.

Areas for new business development

So where do brand-new growth opportunities come from? Here are some places to start:

• Market analysis: Look into the market using tools like a customer relationship management (CRM) tool and determine areas your competitors haven’t tapped, or issues where current customers are dissatisfied. Those are gaps where you can introduce an existing product, a new bundle, or new campaigns.
• Strategic partnerships: Collaborate with partner companies on channel partnerships (such as third-party resellers) that can create new opportunities for both parties.
• Product development: Innovate on your offerings based on customer feedback, working with other teams to create something new. This could be new features to existing products, new product line extensions, and new business models (such as introducing freemium options or subscription offers).
• Mergers and acquisitions (M&A): Buy up market share and do a lot of business development all at once. If business leadership makes this decision, business development is responsible for finding ways to transition the new organization’s customer base over, and possibly migrate them to your company’s products instead.
• New funding: Find investors for working capital, things to invest in, and obtain grants to expand the business. Business development reps would be responsible for the outreach approach to investors, and making the case for the funding using sales data and customer feedback.
• Emerging technologies: Keep an eye on the industry and find new ways to disrupt your industry and take your company further. This could take the form of new channels like a trendy social media platform gaining popularity, or a new must-have feature that all your competitors begin adding to their products.

What skills do you need for business development?

Whether you’re thinking about transitioning into a role as a business development representative (BDR), or you simply need to add BD skills as you start wearing more hats in your current role, you’ll need some important skills. It’s easy enough to get started. Develop a curiosity about the customers you serve, the problems you solve, and the market you’re in. Here are some core skills:

• Communication: Business development representatives have to be skilled in cold calling, interacting with prospects on social media, and building relationships.
• Finding prospects: BDRs interact with prospects a lot, so they need to update the sales funnel, qualify leads, and nurture them.
• Business intelligence: Reps have to understand their business and competition through research, know how to collect meaningful data, and interpret and present that data using visualization dashboards.
• Data analysis: They should know how to track and present data to leadership, such as revenue, pipeline value, and the influence of business development on that pipeline.

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Nothing stays still in the world of sales.

According to the State of Sales report , 82% of sellers say they’ve had to quickly adapt to new ways of selling in the face of global challenges, including supply chain issues, inflation, and health precautions. On top of that, 57% of buyers said they prefer engaging with companies through digital channels. And 81% of sales reps said buyers are increasingly doing their own research before reaching out.

You need to adapt your plan as markets shift, and that’s where business development comes in.

Business development is the core activity that helps an organization find new areas of growth and strategize on making those areas work. It’s important for finding new leads, converting them, and keeping them as reliable customers.

What is business development planning? If I was joining a brand-new team and building a plan from scratch, here’s how I’d approach it.

1. Set S.M.A.R.T. goals with “sales math”

Start by reverse-engineering how to hit your target. Let’s say my quota is closing a million dollars a year, so that’s $250,000 per quarter. Ask these questions:

• How many deals do I have to close?
• What’s the average deal size?
• What are typical closing ratios?
• How many qualified opportunities would I need in the pipeline?
• How many first meetings would I need to do?
• What does the outbound activity look like in order to get a meeting?

To create the goal at the start of that list, use S.M.A.R.T. goals (Specific, Measurable, Attainable, Relevant, and Timely).

So if I want that $250,000 in a quarter, that’s specific . We can measure all the stats in our sales math to figure out if we’re on track. To judge if the goal is attainable , we’d need to calculate the lead and volume increase. A jump of a few percent points is likely; a 50% increase isn’t. Any goal that’s geared towards growing the business is relevant to the business development representative’s job. And it’s timely because it’s set for this quarter.

2. Choose key performance indicators (KPIs)

As a subset of the goal setting, we need to choose the KPIs that we’ll measure along the way. Try these common KPIs for business development:

• Changes in revenue
• Lead conversion rate
• Leads generated per month/quarter/year
• Prospect and customer satisfaction
• Pipeline value

3. Market research

The next thing I want to know is how we’re messaging (and to whom). These are the core components of a solid business development plan:

• What are the key core personas and the accounts that I’m targeting, and what do they care about? What are their priorities?
• What are their current solutions? If they’re not using ours, how do they get the job done instead? Do they do it themselves?
• Do they use a competitor, or (in the case of tech sales) do they just use a spreadsheet? What problems does that create, and how can I align my solution to those problems?

Once we know these, we can figure out how to position our product or service to our target audience.

4. Pick a strategic target

Even a niche product can draw in a pretty broad list of leads. However, it’s not effective for our sales reps to just work a list of 100 accounts from top to bottom. If only a small percentage of your target market is in buying mode right now, you need a targeting strategy .

You need to pick low-effort targets first who have buying intent. If you’re collecting leads in a fully featured CRM, the system can track actions they take, including opening marketing emails you send to them, visiting key parts of your site, and even interacting with your social posts. AI can elevate these leads as “high intent,” or it can be done manually by reviewing actions taken by your leads list.

5. Sales pitch and sales enablement

Once you know your product-market fit, who you’re talking to, and how you’re approaching them, you can boil your messaging down to a sales pitch . It should explain your business’s mission and how it fits with the needs of your target persona in an attention-grabbing way.

From there, you’ll need to adapt that message to all kinds of sales enablement strategies. You should be asking questions like:

• What should the emails sound like?
• What’s the right sequence?
• What are the common objections I’m going to come across, and how do I handle them?

6. Set the budget

All this work will cost money. While it’s expected to have a return on investment (ROI), it’s not as immediate as sales activity. The budget needs to account for necessary personnel, tools, and forecasted returns. You’ll need to work with your finance team to ensure you have funds allocated to bring your plan to life.

7. Customer outreach

Finally, you need to decide how you’re going to prospect and nurture your leads, which depends on the budget you just set. Here are some methods to consider:

• Cold calling
• Upselling current customers
• Cross-selling
• Sponsorships with partners
• Advertising

Once you’ve chosen your mix of outreach methods, you need to decide on the cadence and order of channels. For example, you might use social posts to get the initial leads to your site. From there, you could pepper them with retargeting ads to make sure they sign up for your email list. Then you reach out with a “welcome series” of emails that introduce and entice them to your offer. The offer and messaging could change the longer they go without taking any action.

8. Measure, test, and improve

Form a plan to measure the relative success of each individual outreach strategy to decide where to invest more the next time around. Methods that lag behind should be investigated for weak points where leads are lost so they can be tweaked and tested in the market again.

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The modern business development team needs a good tech stack.

A customer relationship management (CRM) platform helps track the pipeline you’re building. Standardize the cadence of your outreach and build repeatable sequences that your entire team follows to help enforce your strategy.

Lead scoring helps you know when to move prospects to different parts of the pipeline, and some programs even monitor and collect customer signals to help automatically notify business development representatives when it’s time to reach out again.

No matter what platforms and tools you choose, it’s important to start with a process before throwing data intelligence and automation at your problems. Technology can only scale a process. If that process is broken or bad, it’s just going to make your problems bigger.

Build a plan to move your business forward

Before you can hit your numbers, you need a plan to get there. Set S.M.A.R.T. goals, build your customer persona, and choose the right channels to reach your prospects. When you do this, you can build a roadmap for the future and grow your revenue.

Deliver sales plans that perform and adapt

Learn how Sales Planning helps you optimize for customer coverage, and gives you the flexibility to handle change.

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Erin Hueffner is a writer from Madison, Wisconsin. Her career spans two decades in tech, journalism, and content marketing. At Salesforce, Erin’s work focuses on sales fundamentals and best practice content for Salesblazers. Erin has a bachelor’s degree in English from the University of ... Read More Wisconsin-Madison.

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Apple's next big product doesn't sound that convincing

• The iPhone could get a major redesign as early as 2026, The Information reported.
• Apple is reportedly moving forward with its plans for a foldable handset.
• The project isn't guaranteed, but Apple competitors are way ahead when it comes to flip phones.

Apple is reportedly planning to take the iPhone's design in a new direction — but the possible hardware update isn't actually all that innovative.

Apple is working on plans to start selling a foldable version of its iconic phone as early as 2026, sources told The Information . It's not guaranteed to be released, but those familiar with the project told The Information that the company has reached out to suppliers in Asia for components.

Whispers about a foldable iPhone have floated around for months, but Apple is already years behind similar offerings from competitors. It's unclear who, exactly, is hoping to get their hands on an Apple flip phone after years of the same silhouette.

Investors have questioned what Apple's next big innovation will be, and so far, 2024 has been a mixed bag. It unveiled its long-awaited AI plans and is gearing up to release the iPhone 16, which — thanks to its AI capabilities — analysts believe could spark a "golden upgrade cycle."

But the release of the $3,500 Vision Pro earlier this year in the US failed to move the needle significantly in terms of sales, leaving a lot riding on the next iteration of the iPhone. Apple also killed its self-driving-car plans in February.

Meantime, competitors like Samsung and Chinese rival Huawei already have foldable phones available.

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On July 10, Samsung announced the new Galaxy Z Flip 6 and Galaxy Z Fold 6 . The two smartphones fold differently, and The Information reported that Apple's planned phone will fold similarly to the Z Flip, which was first launched in 2020.

The new handset could also be pricey. Ming-Chi Kuo, a much-followed analyst who has previously been a go-to for Apple product predictions , noted that a possible all-screen foldable MacBook could cost the company a lot to mass produce to Apple's quality standards.

Although innovation and creativity are pillars at Apple, making new, more expensive products like the Vision Pro hasn't always paid off.

Still, the loyalty of Apple users (Wedbush Securities analysts estimated earlier this year that there were 2.2 billion iOS devices out there) may ensure a foldable iPhone isn't a flop after all.

Are you a current or recent Apple employee? Reach out to this reporter via email at [email protected] or Signal at @jordyhart.99.

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Reporting by Stéphanie Hamel and Charlotte Bawol in Gdansk; Editing by Milla Nissi

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