Understand Market Penetration and How to Create a Strategy

Everyone wants their business to grow. This seems pretty intuitive considering effective and successful growth means your business is experiencing boosts in revenue, brand awareness, brand loyalty, and more — and we know this to be true by looking at the most successful and well-known companies today (e.g. Apple, Amazon, etc.).

The question is: What do these highly-successful companies do to ensure they put themselves in a position for strong and consistent growth?

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Of course, there are a number of answers to this question based on who you ask. However, the one we’re going to focus on in this blog post is market penetration. So, what is market penetration?

How to Calculate Market Penetration

If you’re using market penetration as a measurement, use the following formula to discover how much a product or service is used by customers compared to its total estimated market. In other words, take the current sale volume for your product or service and divide it by the total sale volume of all similar products available in the market.

(Number of Customers / Target Market Size) x 100 = Market Penetration Rate

Frequently monitoring your market penetration is important in order to identify any increases or decreases in penetration. If you’re wondering how often to calculate market penetration, a good rule of thumb is to calculate it after every marketing and sales campaign you run. This will highlight any changes in penetration — and, as a result, you’ll also have a better idea of the success of your campaign(s).

Next, let’s dive a little deeper into what market penetration is and why it’s such an effective growth strategy.

Understanding Market Penetration

A company can use market penetration at the industry level to review potential for specific products or services or on a smaller scale as a way to gauge the market share of a product or service. It offers insight into how the market and your customers view your product or service.

What is high market penetration?

When it comes to market penetration, you want yours to be high. There are many benefits to high market penetration.

For instance, think about Nike. The company is a market leader in athletic shoes. When you go to the sneakers section of a store like Foot Locker or Dick’s Sporting Goods, Nike consistently takes up a large portion of the space.

That’s because retailers like Foot Locker and Dick’s know Nike delivers in sales. They also know their customers expect a wide selection of Nike products in their stores. Nike’s popularity and brand name warrant better shelving space and visibility, too. This is all a result of Nike’s high market penetration.

Similar to Nike, when you have a high market penetration…

  • You’re an industry leader.
  • You sell products or services that are already established within the industry.
  • You have a widely-recognized brand.
  • You have good visibility in the market.
  • You have strong brand equity.
  • You likely make your product for less than you would be able to if you were a less-established business due to the scale of your operation.
  • You have a high sale volume which means you have leverage among suppliers and sellers.

High market penetration offers marketing advantage and more potential for continued growth and success as a business. Needless to say, high market penetration is the goal — but, how do you achieve it? Well, market development is a good place to start.

Market Development vs. Market Penetration

You may have heard of the term market development used in relation to market penetration before. Market development is a necessary strategy or action when trying to increase market share or penetration — it requires a clear set of steps that will lead to a boost in the number of potential customers. To increase market penetration, first focus on market development. Let’s look at an example.

Example of Market Development Increasing Market Penetration

A successful leggings brand, Booty by Brabants, has made waves in recent years in the athletic-wear industry. The brand has established itself as a seller of high-quality and unique leggings for women of all sizes.

By reviewing their market penetration, BBB was able to identify a small, existing market they could tap into — kids leggings. They determined that selling kids leggings could help them broaden their target audience and customer base for little added cost and effort.

Although BBB Kids leggings aren’t a major source of revenue for the company, they’re complementary to its existing product line and bring in new customers. BBB was able to identify an existing market they hadn’t taken advantage of yet and determine clear steps to successfully enter that market. As a result, they expanded their product line, customer base, and market penetration.

Now, let’s look at the most effective ways to get started on your market penetration strategy.

As you begin working on your market penetration strategy, you may hear the words: Ansoff Matrix.

The Ansoff Matrix is a tool with four growth strategies listed for businesses to consider.

ansoff matrix growth strategy

Source

As you move right and up on this matrix, the growth strategies become riskier for businesses. We’ve included information about the Ansoff Matrix in this article because it further proves and highlights the fact that market penetration is a highly-valuable and achievable way to effectively grow a business, even for the risk averse.

At this point, you might be wondering about the specific strategies under the umbrella of market penetration that you can deploy at your company — let’s talk about some of those next.

Market Penetration Strategies

Here are some examples of effective market penetration strategies that you may choose to focus on and/or implement at your company.

Change your pricing.

Lower or raise the cost of one of your products.

Revamp your marketing.

Rework your marketing plan and/or roadmap.

Identify the need for a new product and launch it.

Survey and analyze your customers and target audience to identify the need for a new product (or feature). Then, create that product and sell it.

Update or change your product (or a specific feature of your product).

Resolve the challenges of your customers and buyer personas more effectively by updating or changing a product or feature.

Grow business in new territories and offer for franchise opportunities.

Identify new territories in which you can expand and grow business. Ask yourself: Which new areas can we open our stores or prospect and perform outreach? You might also begin offering franchise opportunities to expand your brick-and-mortar business.

Identify a business partner to work with.

Partner or merge with another business in a way that’s mutually beneficial (e.g. run a co-marketing campaign).

Purchase a small business or competitor in your industry.

If you have the resources, consider acquiring a small business or competitor in your industry to broaden your base of customers and your offerings/ capabilities. (HubSpot did this a while ago.)

Offer a promotional program to boost loyalty.

Give customers an opportunity to sign up for a loyalty program that provides them with perks in return for giving you their contact information (e.g. discounts, birthday gifts, inside information, etc.).

Develop a new marketing campaign.

Create and launch a marketing campaign or initiative to promote your product line in a unique and new way that your customers haven’t seen before. Analyze your campaign’s success so you can refer to it in the future.

Boost sales rep activity.

Encourage sales reps to increase the number of interactions they have with qualified prospects (e.g. focus on social selling and meeting prospects where they are).

Lastly, let’s look at an example of market penetration in action.

What’s an example of market penetration?

There are a number examples of companies using market penetration to grow their business. For the sake of this piece, let’s look at Dunkin’.

Dunkin’ (formerly, Dunkin’ Donuts) was started in Quincy, MA back in the 1940’s. Since, Dunkin’ has become a globally-recognized brand. Dunkin’ has since grown substantially and opened stores in 46 countries — yet, the company’s most-loyal customers remain in New England. In fact, there are 12,500 Dunkin’s worldwide (9,000 of which are in the U.S.) — yet, over one-third of Dunkin’s stores are located in New England. In terms of market penetration, Dunkin’ continues to tap into their large and loyal market by opening and maintaining that large portion of their stores in New England.

Check out the following map for example — Boston is a small city, and you can walk between almost all 10 of these Dunkin’ locations in just minutes.

dunkin donuts example of market penetration

Source

Dunkin’ knows where their customers are and that those customers want a Dunkin’ store every… well, city block.

Not only has Dunkin’ successfully penetrated their market by opening and maintaining so many stores in New England, but they’ve also increased market penetration by making specific changes to their branding and menu.

Most notably, they changed their name from Dunkin’ Donuts to Dunkin’. The company does 60% of their business in coffee and other drinks, so the “Donuts” aspect of their original name was arguably a bit misleading. The CEO of Dunkin’ said this move was important because the new name, “… speaks to the breadth of our offerings.”

The brand name change also gives a signal to customers that there are a number of other menu items available, aside from donuts. In fact, the name change was paired with many menu additions, including healthier options as well as offerings for non-dairy and vegan customers including their Beyond Sausage and almond milk.

All of these changes broadened Dunkin’s customer base and target audience by accommodating more people within the market they were already penetrating.

Invest in Market Penetration to Grow Better

We just covered a number of reasons why market penetration is so beneficial to your business’s long term success. And as you’ve learned throughout this blog post, it’s a highly-effective growth strategy that’s typically low-risk.

There are a number of market penetration strategies to choose from, plan, and implement at your company, so pick the best option for your goals and get started.

Product Marketing Kit

Originally published Aug 27, 2020 7:00:00 AM, updated August 27 2020

Topics:

Product Marketing

What Is Product Classification, and Why It Matters for Your Marketing Efforts

The other day, I roamed the aisles of CVS and picked up the same Crest toothpaste I’ve been buying for years.

I didn’t think twice about it. I made the purchase on auto-pilot. I didn’t consider testing out a different brand, or purchasing one from another retailer.

Toothpaste, as it turns out, is known as a “convenience good”, which matches my buying behavior.

Understanding product classification can help you understand your consumers’ general buying behaviors, which will help you market your product more effectively.

There are four types of product classification. Let’s dive into each type, so you can determine where your product falls in the list.

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Consumer Product Classification

There are four types of product classification — convenience goods, shopping goods, specialty products, and unsought goods.

Let’s dive into each one in more detail.

1. Convenience Goods

Like the Crest toothpaste example, convenience goods are products that consumers’ purchase repeatedly and without much thought. Once consumers choose their convenience goods’ brand-of-choice, they typically stick to it unless they see a reason to switch — such as an interesting advertisement that compels them to try it, or mere convenience at the checkout aisle.

These products include toilet paper, soap, toothpaste, shampoo, milk, and other necessities that people buy over and over again.

To market a convenience good, you want to consider that most people will impulse buy these products. Placing your products near the checkout line at a store could be a good idea for these products — which is why you’ll often find candy and gum at the front of a store.

Since most convenience goods are low-price, pricing and discounting isn’t a major factor. I won’t switch my toilet paper brand just to save a few cents. For convenience goods, brand recognition is key, so you’ll want to implement wide-spread campaigns to spread awareness of your company if possible.

For instance, Charmin toilet paper is a popular brand in the United States — likely in part due to the company’s consistent and long-term advertising strategy, dating back to the 1960’s with the invention of “Mr. Whipple”, a Charmin character who appeared on TV, print, and radio.

2. Shopping Goods

Shopping goods are commodities you likely think of when you hear the word “shopping”. They might be higher-end items like cars or houses, or smaller items like clothing and electronics.

Consumers typically spend more time conducting research, comparing prices, and chatting with salespeople when they’re looking to purchase shopping goods. These are more one-off purchases, and are typically more important and higher economic-impact products compared to toilet paper or soap.

For instance, while you will buy toilet paper over and over again for the rest of your life, you’ll likely only purchase a house a few times at most. And, since it’s an expensive and important purchase, you’ll spend a good amount of time deliberating on it, attending different open houses, speaking with various retailers, and comparing pros and cons of your final selection.

The same can be said for smaller products. A nice t-shirt from the Gap, for instance, isn’t typically an “impulse” buy. Instead, you’ll want to try it on, consider whether the price is worth it, and even text a picture of it to a friend.

To market a shopping goods product, then, you’ll want to invest in content that helps persuade your buyer that your product is worth it. It’s important your marketing materials demonstrate how your product differs from the competition, and the unique value-add it provides consumers.

This will vary depending on your industry and product, but ultimately, marketing shopping goods entails helping consumers understand why they should choose your product over others in the marketplace.

3. Specialty Goods

A specialty good is the only product of its kind on the market, which means consumers typically don’t feel the need to compare-and-contrast or deliberate as much as they would with other products.

A good example of this? iPhones.

I’ve been purchasing new iPhones for years, and I haven’t paused to consider other smartphone models — not because an iPhone is an “impulse” buy, but because of the brand recognition and unique quality I feel I’m getting from an iPhone. It’s the same reason people buy Mercedes. There isn’t anything else on the market like it.

For this reason, if you’re marketing a specialty good, you don’t necessarily need to spend too much time convincing consumers that your product is different from competitors. They already know it’s different. Instead, your company should focus on constantly innovating on its previous products and producing the “next best thing”. This will ensure your customers will remain loyal to your brand.

For instance, if Apple stopped making impressive improvements on their iPhones and promoting new features, I might consider switching brands. But since they’ve continued to impress me over the years, I’ve continued to purchase from them.

4. Unsought Goods

Finally, unsought goods — a product that people aren’t typically excited to buy, and also don’t buy on impulse. Good examples of unsought goods include fire extinguishers, batteries, or life insurance.

People will typically buy an unsought good out of a sense of fear or danger. For instance, you wouldn’t go on the market looking for the “new and best” fire extinguisher. You’d only purchase one due to the fear of a potential fire. Alternatively, some unsought goods, like batteries, are bought simply because the old ones ran out.

When marketing an unsought good, you’ll want to focus on reminding consumers of the existence of your product, and convincing consumers that purchasing your product will leave them with a better sense of security.

For instance, Duracell’s Beach x Bear commercial encourages viewers to remember the importance of batteries in life-threatening situations, like impending bear attacks (as well as the everyday importance of batteries, like when using a metal detector … ).

Hopefully, you can find a clear fit with your product in one of these four classifications. Use consumers’ buyer behavior to inspire your next marketing campaign. How can you meet — and exceed — customers’ expectations of your product type?

Product Marketing Kit

Originally published Aug 21, 2020 7:00:00 AM, updated August 21 2020

Topics:

Product Marketing

Do AR Product Previews Actually Lead to Purchases [New Research]

According to a recent Retail Dive survey, 55% of consumers still prefer to shop in stores because they like to see or test out products before they buy them.

But, if consumers could see or try products virtually from home, would they still need to go to the store before making a purchase?

This question has been asked by companies like Amazon, Warby Parker, and IKEA which have embraced AR product reviews. With these previews, ecommerce visitors can see an item of clothing on a photo of their body, preview what furniture will look like in their bedroom, and even size themselves to ensure they’re buying a product with the best fit.

But is this virtual experience really as effective as a traditional store or fitting room at getting people to buy?

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Skeptics might say no. With AR being costly to implement and product viewings only requiring a physical store location, many marketers think that this technology isn’t worth the fuss.

However, as the world grows more and more digital, each new generation is making even more online purchases. They’re also embracing technologies like AR/VR for entertainment or retail purposes.

Not to mention, while holidays like Black Friday cause a burst in foot-traffic, retail businesses are finding it more challenging to keep people coming into stores throughout the rest of the year.

While AR might have been inaccessible to retail marketers in the past, could it be a revenue-generating opportunity at some point in the near future?

To determine if augmented reality was actually a beneficial marketing technology, I asked 300 consumers about their experiences with AR product previews using Lucid survey software.

In the survey, consumers were asked, “Have you ever purchased a product (such as furniture or clothing) after seeing an augmented-reality preview of what it would look like in real life?”

Since the technology is still rather new, you might expect consumers to say they’ve never used an AR product preview. However, you might also be wondering if those who’ve used an AR product preview actually converted.

If you think that the general population hasn’t used this new retail technology, you might be surprised by the result below.

have you purchased something after using an AR preview

Data Source: Lucid

According to the survey, 52% of consumers have purchased at least one item after seeing an AR preview of how it would look in real life. Over 30% of that group have purchased multiple products after previewing them with AR.

So, what does this mean for small or medium-sized retailers?

Understandably, you might not be able to afford AR technology to highlight your products just yet. However, the fact that more brands are using this feature to influence purchasing decisions means that technology and personalized digital marketing tactics like AR previews will likely become more prominent.

Just because you can’t afford AR now, doesn’t mean you’ll be unable to leverage it in the future. As augmented reality grows more prominent and more valuable to businesses, AR ecommerce tools might become more accessible or competitively priced. This is a theme we’ve seen with the influence of artificial intelligence.

While the technology was pricey and inaccessible to small-to-medium businesses at first, there are now a number of affordable out-of-the-box tools that marketers and businesses can leverage.

Even if you can’t take advantage of the latest marketing technology today, it’s still important to keep up with how other retailers are using it — especially if they’re selling products in a similar category as you.

Below, I’ll walk you through a few AR strategies that effectively benefit retailers now, or could be a vital product marketing tactic in the future:

3 AR Product Marketing Strategies to Watch in 2020

Mobile Previews on Ecommerce Sites

With this strategy, a mobile ecommerce website visitor can find a product they’re interested in, open a camera when tapping an AR preview button, and then view how the product — such as furniture — will look in the room they’re in. Some ecommerce platforms also allow prospects to see what an accessory such as glasses, will look on their face. If a customer likes what they see in an AR preview, they can exit the preview and make a purchase without setting foot in a store.

With increasing mobile ecommerce, this strategy allows visitors to discover a product through mobile search or an app, visit an ecommerce site, get an idea of what it looks like in real life, and then smoothly purchase it wherever they are. It also eliminates key friction points that could halt a purchase such as going to the store or not finding a product in the right size or color in a physical retail location.

At the moment, we’re already seeing corporations like IKEA, Home Depot, and Amazon embrace AR product previews on mobile sites and apps. But, this strategy might not be totally inaccessible to smaller businesses.

For example, a small bicycle retailer called PureCycles wanted to improve its website’s mobile experience and conversions. With a large catalog of bicycle product shots taken from multiple angles, they created AR previews with Shopify.

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PureCycles says its use of virtual previews improved the customer experience on mobile-optimized browsers and allowed customers to answer key questions about their products, such as “Will this bicycle fit in my small apartment?”

Virtual Mirrors

Ever seen a shirt you loved in a clothing store but couldn’t find it in your size? Or, have you ever wanted to test out expensive makeup before buying it? These are two business cases that could call for AR mirrors, often called “virtual” or “magic” mirrors.

With AR mirror technology, you can stand in front of a screen in selfie mode, and see an overlay of how products in the store’s catalog will look on you in the right size or shade.

After your virtual experience, some virtual mirrors will allow you to order the product or send yourself a link for it so you can order it later. This prevents any additional friction related to having to wait until the item comes back in stock.

This virtual process also allows you to see products that the store sells but might not sell in the store due to seasonality or space-related limitations.

This strategy is used by Charlotte Tilbury, a UK-based beauty retailer.

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Virtual mirrors, purchased and installed by Holition, line the boutique’s walls. When a customer looks into one, the camera and software scan the measurements and skin tone of their face. From there, the customer taps different makeup items on the screen to see how the products will look on their face. Here’s a quick video demonstration of how the software works:

Social Media Filters

Have you ever launched Instagram or Facebook Stories and noticed new AR filters that allowed you to test out products directly through your app? If not, you’ll definitely see more of this soon.

Recognizing the low-hanging fruit of AR previews in ecommerce, Facebook and Instagram, are actively taking steps to provide more commerce that leverage this technology. For example, in late 2019, Facebook made AR filter ads available in Facebook Ads. These ads allow users to test out products in Facebook Stories and its News Feed.

Here’s an example of what one of these ads might look like:

AR social media product filters

Image Source

Leveraging product-centric AR filters on social media provides the perks of the mobile AR previews without relying on shoppers to actually visit an ecommerce site.

As social media users tap through their friend’s Stories or content, they might notice a Story with an AR product in it or discover and AR preview that they can experience. These types of experiences are much more natural than seeing an influencer posting about a dress or makeup item, visiting the ecommerce site, and then doing added research to see if it’s the right shade.

While social AR previews are still in early phases, platforms like Facebook are already identifying types of retailers that could thrive with these tools. For example, AR features that allow users to preview products via social media could be a game-changer in the world of fashion and beauty. In 2018, this industry already saw a 164% social media revenue increase from paid promotions.

With social media users actively engaging with paid beauty ads, brands that are able to leverage AR on Facebook and Instagram would be able to reach social-media-friendly audiences on popular platforms and allow them to try new products.

One company that’s already leveraging AR to highlight products on social media is Dior, which allows users to try looks from its Fall/Winter fashion line on their Instagram Stories camera.

product try on AR filters

Image Source

As social media and mobile surfing continue to dominate how millennials and Gen Z spend their time, the need to invest in clever mobile advertising, such as AR ads, will also grow. .Although the combination of AR tactics and social media is still new — and not worth blowing your budget on just yet — you should still continue to follow brands and competitors that leverage it in case this technology becomes more accessible in the future.

What AR Success Means for Retailers

While the growth of AR shows how businesses are using new technology to benefit the customer journey, the effectiveness of AR and other retail technologies shows that customers are increasingly looking for digital, personalized, and frictionless shopping experiences.

And this makes sense. More and more, people are using mobile ecommerce stores and online social platforms to find, vet, and ultimately purchase products.

Even if you do have a physical store, you’ll need to embrace highly digital tactics to ensure that you’re gaining brand awareness from people online along with people in your neighborhood.

And while you shouldn’t spend all of your money investing in AR, there are other tactics you can take on to inform your audience about your products or services. These include highlighting your products on social media, launching a small but scalable ecommerce store, or sending customers personalized emails about products they might like based on what they’ve already purchased from your store.

Stay Current on Emerging Tech

Originally published Aug 18, 2020 7:00:00 AM, updated August 18 2020

Topics:

Product Marketing

6 Stats that Prove the Importance of Product Videos for Ecommerce

Producing quality videos for your ecommerce site is hard, we know. Equipment is expensive, and specialists who know how to use that equipment cost even more. For that very reason, many ecommerce businesses will settle for photos and graphics just to get the job done.

These video marketing statistics show that video might just be an investment worth making. Sure, you’ll have to dig a little deeper into those pockets at first, but the results will return more than you dreamed.

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Product Video Stats Marketers Need to Know

1. Video is the #1 content type used by marketers to sell products and services.

In our Not Another State of Marketing Report, marketers surveyed said that video is the top content type being produced in their content marketing programs, passing blog posts for the first time ever. 

2. More than half of marketers invest in some sort of product-related video.

Also in the HubSpot report noted above, we found that nearly one quarter of marketers invested in product promotion videos, while nearly one fifth invested in product demos.  

3. 73% more visitors who watch product videos will make a purchase. 

Did you know that your products are more likely to sell if you create videos for them? There are quite a few reasons for this, which we’ll cover in the next points. The most important thing to note, however, is simply that videos for your products do prompt more purchases. That’s really the biggest and most important statistic you need.

4. 92% of marketers who use video say it’s an important part of their marketing strategy — up from 78% in 2015.

According to the late-2019 Wyzowl Survey that polled marketers about their video tactics, the number above was up from 78% in 2015. With a stat like this, there’s almost no question that marketers are finding video valuable and worth their investment.

5. 71% of consumers prefer video over other marketing content.

When consumers feel like they understand the products you sell, they’re more likely to take a chance on spending their money. Video clears up a lot of that confusion. Isn’t that what your marketing is all about, anyway? Answering questions with quality content? 

6. 87% of Gen Z prefers branded videos or ads that show someone talking about a product.

Gen Z is one of the most digitally connected, and most budget-conscious, generations out there. And, as they reach full purchasing potential, you’ll want to keep their buyer’s journey behavior in mind.

As people in the age group research products, they’ll look for video-based ads, demos, tutorials, unboxings, or video reviews from influencers in order to see how well the product works and what it looks like in real life.

7. 55% of consumers use videos for purchase decisions.

While Gen Z most heavily relies on videos to research products, other age groups aren’t that different. More than half of people in all age groups use video to make a purchasing decision, according to 2019 data from Google.

A man looks at a list on his phone. “I’m not a list guy. I have it in my brain. I’ll watch the video in the plumbing or electrical aisle to make sure I’ve got everything I need.” 55% of shoppers say they use online video while actually shopping in-store.

Image Source

Ultimately, authentic videos can lead to a greater sense of trust. By providing product videos, you give buyers quality information that doesn’t hide behind good angles and lighting. They understand the products they’re ordering and are happier with their purchases. With every great transaction, you build more and more trust.

Video Stat Knowledge Check

Think you know your video stats? Test yourself with the interactive quiz below to see how well you soaked in the details above. Try not to peak as you answer each question:

Creating an Engaging Product Video

A consumer who trusts your business is worth the investment you’ll make in product video production, isn’t it?

If the stats above have intrigued you, and your ready to invest in your first product video, consider what you’d like to try out first. Here are a few examples of product video formats:

  • Demos/Tutorials: These videos walk through how the product or service works so a consumer can see how it functions in a real-world setting.
  • Influencer Marketing Videos: If you don’t have the time to produce product videos, but do have some budget to work with, you could consider hiring a macro or micro influencer to post a video on their networks where they talk about or promote your product.
  • Ads or Video Promotions: These videos are often shorter than tutorials. They merely highlight the product or service and all of it’s great features, but don’t necessarily need to go into full detail about how it works.
  • User-Generated Content: If you have happy customers that are using your product or service, encourage them to film a video review or unboxing that you can then share publicly over social media or on your website. When others see a real person talking about success they had with your brand, they might be more willing to trust your offerings.

To learn more about video marketing, check out this handy ultimate guide

Editor’s Note: This blog post was originally written in February 2016, but was updated in July 2020 for freshness and comprehensiveness.

ecommerce plan

Originally published Jul 31, 2020 3:30:00 PM, updated July 31 2020

Topics:

Product Marketing

Product Strategy: Defining a Product’s Purpose and Plan

Say I’m in the process of developing a new waffle iron. It’s going to be capable of perfectly detecting when a waffle is golden brown no matter the volume or thickness of the batter. We’re talking about next-level waffle technology. It could be an absolute game-changer, but in this scenario, something goes horribly wrong. 

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The product is rushed through development without any real guidance or objectives. And when it’s sent to the manufacturer, there’s no picture of what kind of audience will gravitate to it, how it stacks up to other waffle irons, what it’s going to do for the business, or other crucial factors that might give this waffle iron an identity in the marketplace.

If that were the case, then this once-in-a-generation feat of waffle engineering would go to waste — all because it didn’t have a solid product strategy to guide its development.

A sound product strategy can be the difference between a product being able to carve a permanent place in its market and being an absolute afterthought. It can put weight and sensibility behind a product to help it resonate with consumers as effectively as possible.

It’s the foundation for a successful product lifecycle, so if you’re interested in developing a product at any point in the future, it’s a concept worth having a picture of.

Here, we’ll get an understanding of what a product strategy is, the framework that structures it, the key elements it should address, and an example of the concept.

Product Strategy Framework

A product strategy framework is typically composed of three core components: market vision, product goals, and product initiatives.

Market Vision

Who is this product for, and what does that mean for you as a business? Those are the critical questions to answer when defining your market vision. This portion includes information about your target customers, plans on how you’ll position your product, and how it’s going to perform relative to your competition. Your market vision has to address your customer needs, the buyer personas you intend to appeal to, and how you’ll deliver a competitive offer.

Product Goals

There has to be some sort of endgame to your efforts with a product strategy. You have to work towards something. Setting goals is crucial to charting your course and keeping you on track. Goals guide your development team, allow you to keep tabs on progress, and ultimately measure success when your product has been released.

Make sure your goals are SMART — specific, measurable, attainable, relevant, and time-based. Make them clear-cut with a sense of urgency behind them. Also, don’t backload all your goals for the end of the project. Set individual, timely milestones along the way to ensure that your team is maintaining a solid pace and accomplishing everything that needs to be done.

Product Initiatives

Product initiatives are essentially more conceptual product goals. They’re big-picture ideas, including trends you want your product to influence. They represent the kind of impact you want to have on your business, your reputation, your status within your industry, the state of your industry, consumers’ lives, or the world at large — depending on the scale of your operation.

Product Strategy Example

In 1984, Apple released the Macintosh 12K8 — the first iteration of what would go on to become the world’s most popular brand of personal computer. The Mac was a bold step forward in the landscape of computing, and though it ultimately fell short of the goals it set initially, its product strategy is worth examining.

Market Vision

High tech marketing and product strategies through the 70s and early 80s catered primarily to hobbyists and “early adopters” — people without backgrounds in computing willing to learn about it to improve work productivity.

There wasn’t much emphasis on appealing to the common consumer — exactly who Apple made a point of trying to reach. Its market vision revolved around giving the average person access to straightforward, aesthetically appealing personal computing.

Product Goals

Apple set a series of measurable, time-oriented goals for the Macintosh — specifically when it came to sales. Apple estimated the Mac would sell 50,000 units in its first 100 days — a target it hit with relative ease. However, those early sales proved to be misleading, and the Mac 12K8 didn’t come close to hitting its long term sales goals.

Though that might be the case, the fact remains that Apple set specific goals about its preferred sales figures to ultimately gauge the success of its product strategy.

Product Initiatives

Apple released the original Macintosh with the tagline, “The computer for the rest of us.” It was easily operable with an accessible graphical user interface, among several other approachable, straightforward features.

The original Mac was designed, positioned, and marketed as a machine that would shape the future of personal computing. It was going to make the concept more accessible for the general population, beyond hobbyists and traditional PC users. That was Macintosh’s product initiative — to democratize personal computing. And for what it’s worth, Apple nailed it.

Key Product Strategy Elements

An effective product strategy revolves, in large part, around four key elements: honing in on a customer segment, understanding the competition, ironing out the business end of the strategy, and considering the macro-environment.

1. Hone in on a customer segment.

You can’t develop a product strategy without understanding who you’re trying to reach. The first step in identifying that base is determining what specific need you’re trying to address with your product. Once you identify the best need to tackle, you have to consider who that need applies to. Don’t approach the process with some fuzzy, indiscriminate picture of who’s buying — that will be inefficient and unsustainable.

Take time to develop detailed buyer personas. Touch base with who you think you can reach to see if your product will resonate with them. And be prepared to adapt to feedback from your customers as time goes on.

2. Understand the competition.

In all likelihood, your company will have competitors within your space with similar value propositions. That’s why you have to understand the options they offer, how you compare, and how you can stand out.

Successful products always have some kind of differentiating factor. Bear in mind, that’s not necessarily the same thing as your product’s key benefit. Your competition is your competition because your products serve a fundamentally similar purpose. So how do you go about tracking that factor down?

Generally speaking, your differentiating factor will be a matter of better service, better quality, or lower prices. But how do you settle on one? Well, you can run different ideas by that customer base you’ve landed on. They’re as reliable a source of inspiration as you’ll find. Also, keep tabs on your competitors. See how they’re trying to set themselves apart and try to find a lucrative niche that still has space.

3. Iron out the business end.

Ultimately, a product is a means to an end, and that end is generally monetary. A product strategy will let shareholders know how they’ll see a return on their investment. It will detail — in-depth — how you plan to monetize your efforts.

What is your business model? If your product is web-based, will you generate revenue through selling ad-space? What about a subscription model? If your product is a consumer good, what kind of retailers will carry it? Or will it be sold exclusively online?

A business isn’t a business if it has no interest in making money. Putting out a product with no concept of how customers will be able to buy it makes for an ineffective, borderline-pointless product strategy.

4. Consider the macro-environment.

The macro-environment is the sum of the major external factors well beyond your control that influence your company. They’re the political, economic, social, and cultural forces that can sway the context in which you do business and how your customers might view your product.

Though they’re not entirely predictable, your product strategy has to take them into consideration. That could mean being mindful of new technology that might shape your market, different markets you might be able to appeal to going forward, or the ways your customers’ needs, interests, and behaviors might shift over time.

Product Positioning

The concept of product positioning revolves around how customers view your product — the space in their minds your product is going to occupy. It’s essentially the process of determining how to best communicate the useful, compelling attributes of your product to your target audience to shape a specific perception.

How you intend to position your product is often summarized in something known as a “positioning statement” — a concise statement that explains how your product suits your ideal buyer persona. It’s meant to be used as an internal tool to align marketing efforts with the brand and value proposition. It goes like this:

For [target customer] who has [need statement], [Product/brand name] is a [market category] that [key benefit statement/compelling reason to buy]. Unlike [primary competitor alternatives], the product [unique differentiation statement].

The statement for video-sharing social media platform TikTok this statement could read:

For mobile users, predominantly aged 13 to 24, who are looking for a consistent stream of straightforward, engaging content, TikTok is a video-sharing social networking service that never stops running videos tailored to their specific preferences. Unlike Instagram or YouTube, TikTok automatically plays new content nonstop — all in keeping with what users have demonstrated they like to see.

Companies generally leverage tactics and resources like market research and focus groups to inform their ideal product positioning strategies. These strategies allow businesses to understand how their target audiences can best be reached. With that information at hand, companies can determine the best ways to convey their products’ benefits to resonate with those consumers.

Product positioning often informs a company’s marketing efforts. That means tailoring certain aspects of a product’s presentation and messaging to suit the needs and wants of that audience. This can often involve adjustments to aspects like packaging or display.

Successful product development needs guidance. It doesn’t figure itself out as it goes, and businesses can’t afford to wing it. A product strategy sets the tone for the process. It sets development in motion and keeps it on track.

Product strategy is a matter of defining a product’s purpose. One of its most important functions is establishing the why of a product. And without that, it’s very difficult for product teams to know where to start and how to proceed.

Product Marketing Kit

Tips & Templates for Truly Memorable Product Announcements

Your organization spends time and money researching, developing, and implementing a great product. The next (ongoing) step is to bring awareness to that product and its changes. That’s where you come in. In the product marketing space, you have three main goals: increase the number of users, improve adoption and loyalty of those users, and reduce churn. As the development team continues to reduce friction by adding or improving features, users must be made aware of these changes so you can fuel your flywheel. 

The effort that will have the most impact in this endeavor is investing in your product announcement strategy.

You can likely envision the palpable excitement your prospects will have for your new product or feature, but at the same time, it may seem daunting to get the word out. We have some tips, best practices, and templates to help you out.

→ Download Now: Free Product Marketing Kit [Free Templates]

New Product Announcement Example

New product announcements will be different for every brand, depending on who the audience is and how big of an update or announcement is required. The one thing all product announcements have in common is that they engage existing customers. Initially, this is done with a product announcement email that outlines: 

  • Who the new product or update benefits
  • The reason for the change or addition
  • The problems and pains that it solves
  • How best to take advantage of it

To set the product announcement up for success, you may also choose to strategize a supporting launch campaign. In addition to the initial announcement email, this may include: 

  • A reminder email sequence to keep the product top of mind
  • In-app or in-product tutorials or notifications
  • Social posts and ads to reach users and fans outside of email
  • Product or feature demos for high-profile users and all new customers
  • Demos or promotional materials for tradeshows or other events
  • Blog posts and promotion for large releases and announcements

All of the above are examples of how to get the word out about your new product or feature set.

Tips for Truly Memorable Product Announcements

Here are a few ideas for planning out your next product launch or other company announcements.

1. Know Your Audience

As you strategize your product announcement, you’ll need to identify your target audience, especially if the product or feature will only be available to a segment of your existing and potential users. Focusing on a single buyer persona at a time will help you craft your strategy, write laser-focused messaging, and help you identify your promotion channels. The key thing to remember is that they are experiencing pains and problems that your new product or feature is likely to solve.

2. Know Your Competition

In order to craft great messaging for your product announcement, you’ll need to answer the following questions:

  • How does your product compare to your competition?
  • How does your new product or feature factor into this equation?
  • What are the differentiating and positioning factors you can leverage?

3. Demonstrate the Value in Your Messaging

When setting pen to paper (or fingers to keys), keep your buyer persona and competition in mind. Across each channel, your messaging should be targeting the pains and problems your customers are experiencing and leveraging your solution in a way that your competition doesn’t. Take a stance and add some creativity along with your brand’s voice to create your core messaging.

4. Pick the Right Channel for the Initial Announcement

Meeting your prospects and customers where they hang out is a critical strategy for a successful product announcement. Many brands have the advantage of a large customer database that they use as a marketing asset, making email an ideal announcement choice for the initial announcement. If this is not the case for you, think about other channels and strategies you can lean into.

5. Strategize the Additional Promotions and Announcements

If there is a visual element to your announcement, consider holding an in-person event, scheduling a webinar, or creating an online video. If the speed at which the news spreads is the most important factor, leverage your social media channels. Twitter is an especially great choice for this. If you care most about media exposure, reach out to a journalist you respect and offer them an exclusive.

6. Create Amazing Promotional Materials for Each Channel

Email, blogs, and social media all need visual collateral to drive the point home. Think of your promotional materials as the vehicle for your message. Shareable graphics and videos that are aesthetically pleasing will go a long way during your launch. To get the most mileage out of each asset, tailor what you create to each asset, taking care to consider repurposing across channels.

7. Set Goals

Unless you have a clear plan for how your efforts impact the bottom line, none of the above tips matter. Set S.M.A.R.T. (Specific, Measurable, Attainable, Relevant, Time-Bound) goals to measure the success and ROI of your campaign: 

  • Specific – “Creating awareness about the product” is a broad goal that lacks context. Expand on it. Why are you doing all you’re doing?
  • Measurable – Identify what metrics you’ll measure and what will signify success. 
  • Attainable – Be realistic about those metrics and reverse engineer a clear path to achieve them. 
  • Relevant – Focus and ensure that the goal and the actions you’re taking support the bigger picture. 
  • Time-Bound – Choose when the campaign ends and when you will evaluate its success.

8. Determine the Right Amount of Hype

There’s nothing more deflating than a big build-up for a little announcement. Use suspense tactics to lead into a major product announcement, new partnerships, or big events.

9. Get the Timing Right 

Don’t give too much lead time to your announcement, or your supporters will lose interest. Increase the frequency of hints and sneak peeks as you draw closer to the announcement.

10. Leverage Social Media 

One of the best ways to drop hints is through your social media channels. There’s nothing more intriguing than a tweet like, “Something big is in the works… can’t wait for the world to see!”

11. Tell Your Most Loyal Supporters First

For announcements that aren’t top-secret, seek out a small group of your best customers and brand advocates and provide them with advanced notice. If you’re launching a product or service, let them be the first to try it out and provide feedback. If you are throwing an event, host them for an exclusive dinner or give them a space to interact with each other. Fans are your best assets and should be empowered to help shape your product and speak on your behalf.

12. Be Agile

You never know how announcements are going to go until you are smack in the middle of them. Be prepared to handle any surprises that could come your way, and react to them. A few plan Bs to have:

  1. If the Story Leaks: Try as you might to prevent leaks, sometimes news gets out ahead of time. When this happens, move quickly beyond the surprise and make the most of the occasion. Correct any inaccuracies and prioritize a communications plan to notify your customers as soon as possible. Then, run with the story. Make yourself available to answer any questions and invite bloggers or journalists to spread the story. If you had a launch event planned, turn that event into a celebration. 
  2. If the Announcement Doesn’t Go Over Well: Particularly if you are dealing with a new product or service, there’s always a small risk that the public won’t like what you’ve released. If this happens, try not to have a knee jerk reaction. Listen to the concerns you’re hearing, and open up more channels for feedback. Communicate any changes you are making in response.
  3. If Your Site Goes Down: If you run into technical problems on the day you’ve released your news, don’t panic. Designate a core team to be ready and responsive if there is any trouble with your website. Use every other channel possible to communicate the announcement and the work being done to fix the technical problem. Don’t forget to breathe!

The most important part is to let your genuine enthusiasm shine through your announcement. Make sure your audience is able to feed off that excitement. 

Product Announcement Template

If you still need inspiration for the initial product announcement, you can use the templates and guides below and add your own flair.

Product Announcement Email

Consumers don’t sit and read novel-length content while checking their email, so focus on the core message you want to convey and stick with it. Here is a template you can follow:

Subject Line

In the subject line, your goal is to get the email recipient to open the email. For this reason, you’ll want to use suspense while setting expectations for what they’re about to read.

e.g. You asked, and we answered…

Headline

Write a concise and snappy sentence to draw the reader in. 

e.g. [Feature Benefit] That Saves 20% More Time

First Paragraph

Briefly paint a picture of how your prospect will benefit from your new product. What do they stand to gain? How will their life (or business) change?

Second Paragraph

Expand on the new product (or a key feature) and the main benefit. 

Call to Action

If your prospect takes one action from this email, what would you want it to be? Use a brief imperative statement that tells your reader what to do next and make sure it’s aligned with the rest of the copy. 

Third Paragraph

Announce any supporting details or information. Feel free to use bullets or icons to present the information in a visual and easy-to-digest way.  

Product Announcement Blog Post

Blog posts are a bit different in that you can go far more in-depth about your product announcement than in your email. Just be sure to use heading tags, images, bulleted lists, and other visual elements to break up the text for readability. 

Blog Title/Headline

The blog title is similar to an email in that it is instrumental for getting individuals to open or click into the blog post. However, there’s an added element of strategy to making your blog post as discoverable as possible. For this reason, it’s best to include keywords in your blog post title that properly describe your product announcement while still maintaining an air of creativity. Keep in mind that a headline should also be under 60 characters. 

e.g. [Company Name]’s [Product Feature] Has Landed. 

First Paragraph

Your first paragraph should hook the reader by empathizing with the problems and pains they’ve been experiencing. Use this space to connect with your reader and prove that you care about their situation.

Second Paragraph

Make your product announcement. Explain what has changed, the benefits they can expect, and how it’s an ideal solution to the pains and problems you mentioned in the first paragraph. 

Call to Action

Similar to the email, if they take one action from this post, what would you want it to be? Use a brief imperative statement as the anchor text to a link where they can complete that action. 

Third Paragraph

Announce any further details or supporting information. Feel free to use bullets, icons, images, and videos to present the information in a visual and easy-to-digest way. 

Additional Paragraphs

Don’t be afraid to include a human element to your blog post. Below are some questions to prompt you. 

  • What was the journey to this development? 
  • How did your team arrive at the conclusion that this product/feature needed to be added or improved upon? 
  • What issues did you encounter along the way? 
  • Were there any customer use cases you can draw from to provide additional context? 

People love stories, and stories make ideas resonate. 

Conclusion

Provide a brief summary here and then guide the reader on what next steps to take. Will they need to update their app, upgrade their package, or download anything to get the new features? This is where you can provide those details. 

Call to Action

Most likely, the call to action will have the same goal as the earlier one in the post. For this iteration, though, you’ll want to present it in a banner image that draws the eye’s attention. When they click the image, they will be directed to the page where they can complete the action. 

However you decide to make your product launch, always put your customers and prospects first. Understand what it is they want and how you are solving for it. Before making your announcement, make sure you understand the market and have a plan in place to support your launch.

Product Marketing Kit

The Ultimate Guide to Product Marketing in 2020

During the 1950s, Volkswagen sold a bus. Although now considered a classic vehicle, the bus remains an icon for the car company decades later.

The cool part? Volkswagen announced their new VW Bus — it’s electric and features sleek, modern styling. Volkswagen’s marketing for the vehicle is eye-catching, unique, and fun, and it complements the original “hippie” vibe the company was once known for.

volkswagen bus example of product marketing

Source

Volkswagen also released a TV commercial for the bus that’s clever, minimalist, and on-brand. It introduces the new vehicle with the song The Sound of Silence playing in the background (hint: electric cars are silent) and ends with a short message on the screen for viewers to read: “Introducing a new era of electric driving.”

Download Now: Free Product Marketing Kit [Free Templates]

This sentiment touches on the fact Volkswagen is contributing to society’s interest in electric, eco-friendly vehicles. It also relates to this being a new era for the bus.

Continue reading “The Ultimate Guide to Product Marketing in 2020”