Launching a product is just the beginning. There will always be opportunities for your digital products to evolve – it is how you will remain relevant. The digital product lifecycle is long and it will continue to repeat itself after each release. Whether it be through improvements or adding new features, a product growth mindset is a key to success.
Keep reading to learn more about the four main types of growth strategies and how you can leverage them for product optimization!
Product Development Strategy
When you choose a product development Strategy, you aim to boost your growth by maximizing your Market share. You can accomplish this by developing new products and services to help your target audience solve other problems. Similarly, your new products can enhance the solutions that you already provide.
You don’t need to overcomplicate your strategy to be successful with product-based growth, though. It doesn’t require major enhancements or changes – it can be as simple as adding options for paid add-ons that will increase your revenue from existing users!
Start by considering what you could do to get more people to purchase your existing products. Are there ways you could encourage existing customers to get more use out of your products? Would providing certain features increase value for your users?
The goal is to answer these questions so that you can optimize your product and increase the revenue you generate from it.
The freemium model is one way to implement your product-based growth strategy. This effort will get users to try out your product and, if the extra features are valuable enough, they will upgrade to a paid subscription.
Likewise, you should strive to make onboarding easy and offer personalized product recommendations. Doing so will maximize your opportunities for success!
So, what types of companies have used a product development strategy to boost their digital products? Look no further than Google!
This digital powerhouse relied on its product development to maximize revenue and market share. While its search engine was an effective way for them to build brand recognition and a B2C user base, it wasn’t doing enough for their bottom line.
They addressed this by developing Google AdWords, which aimed to monetize their search engine by encouraging businesses to pay for ads. Not only did they make this new offering extremely attractive for the B2B space, but they also ensured that it worked seamlessly with its existing offerings.
When you develop a new product line or feature, it should not take away from the experience of your existing products – and Google did this perfectly! Users continued to use their search engine, and they enhanced their profits by selling ads to businesses.
Another way you can grow your brand is to use a diversification strategy. As the name suggests, this involves creating products and services for new and different markets. The diversification strategy comes with a high level of risk, though, since it involves trailblazing into areas where you may not have experience or expertise. However, it has a very high reward potential!
How can you take this strategy and use it for digital product growth?
Consider looking for ways to improve the customer experience. Is there another product you could offer that would complement your existing offerings? Is there a pain point your customers are still experiencing that you could address?
Amazon did a fantastic job of using a diversification strategy to build brand recognition, trust, and market share. Before they were a household name, Amazon focused on selling books. Since they didn’t have the traditional limitations of a brick-and-mortar store, customers could order a wide range of books and look to see what was in stock right away.
Once they proved their model they expanded into similar markets like electronics and DVDs. Over time, they continued to grow into other areas like clothing, groceries, healthcare, and more!
Market Development Strategy
If you want to expand your user base, grow your market share, or increase existing users’ product usage, consider opting for a Market Development Strategy. This route requires your brand to enter a new market, but with existing products.
A new market can mean several different things, though. For instance, it could be a new target audience, different geography, or a fresh marketing channel.
In other words, you need to have an existing digital product to use this strategy. Once you have tested it in one market, you can expand it to different segments and areas. There will likely be other competitors in your new market, so you must offer a better price, an improved customer experience, or another incentive to gain traction.
Let’s look at Etsy as a case study for a market development strategy. When they launched their platform, they took a unique perspective and marketed to sellers. They wanted to create more than just an e-commerce site – it was meant to be a community of like-minded artists!
They supported their sellers and gave them tools to market their businesses and share their products on social media. As a result, they recruited the buyers themselves! This organic growth allowed them to establish themselves without investing time and resources into building a buyer base.
After some time, they moved into a new market: the other side of its users, which consisted of buyers. They added features like product recommendations based on purchase history and targeted ads to drive users to their app.
From a market development strategy perspective, sellers of crafts and hand-made goods were their initial focus. They later expanded this reach to include marketing to buyers, and these efforts were extremely successful.
Market Penetration Strategy
The last product growth strategy we wanted to discuss is market penetration. The goal here is to boost your market share in an existing segment, through direct marketing or by lowering your prices. If you do this correctly, you will be able to enhance your reach and customer awareness so that your bottom line can benefit from the larger volume.
The market penetration requires you to start small but expand gradually. Once you are ready and have a tested digital product, you can increase the speed at which you expand to new customer segments. It may be necessary to adjust your products and services to meet the needs of each new market segment, which is why pacing your growth is so important!
One of the best examples of a brand that successfully used a market penetration strategy is Facebook. Before this platform became the foundation of social media as we know it, you may remember the popular MySpace.
MySpace dominated the social media market when Facebook was released in 2004, so how did it grow to surpass it? The key was slow and steady market penetration.
They initially focused on one narrow target audience: college students. As the platform gained traction in this market they gradually expanded, adding new features and capabilities along the way. The result was a complete takeover of the social media space, to the point where MySpace became irrelevant!
Developing Your Product Growth Strategy
Now that you understand the various product discovery methods, you may be wondering, how can you develop them further to improve your brand? You must evolve your product to produce more revenue, increase customer reach and brand awareness, spur innovation, and better serve your users!
Set A Goal
Start by defining your product growth goals. Making more money is usually the first thing that comes to mind, but you need to take it a step further – how will you increase revenue? Do you need to onboard more users? Will it require you to develop a new product, or charge more for your current offerings?
To answer these questions, consider where you are in the business lifecycle. If you are starting from scratch, expanding your user base will likely be a top priority. However, if you already have an expansive user base, it may be time to branch out into a new market or diversify your product offerings.
Make sure that the goal you set is measurable and has a specific timeline. It should be realistic too – you can’t just decide to become the next Amazon or Apple overnight!
Do Your Research
Next, you must perform market research to determine the best way to achieve your goal. Consider where the industry is headed. What are your competitors are doing, and what do your users want to see from your brand?
This assessment will allow you to develop a plan that will be more likely to succeed. You want to avoid spending time and resources developing features that no one wants or needs! Instead, focus your efforts on what will be most effective with your target audience.
Once you determine what will work best in the current market, you can choose the right strategy. Whether it involves diversification or increasing market penetration, your success will be based on how well your audience receives the changes.
You can also create forecasts during this step. Doing so will allow you to measure your progress and ensure that your entire organization is on board with the product growth strategy.
Develop Your Action Plan
After you’ve done your research and determine the best way to achieve your goal, you must develop an action plan. Take your high-level aspirations and break them down into actionable steps.
How will you increase your market share? What products will you develop to address your users’ needs?
The more details in your action plan, the better. Launching a new product will require a go-to-market strategy, and expanding your reach will require significant marketing efforts. The objective here is to make sure all vital teams within your organization know what their role is to help you accomplish the goal!
Benefits Of Product Growth & Optimization
Product growth and optimization don’t just benefit your bottom line. There is a wide variety of benefits, including creating a competitive advantage, gathering valuable data, and identifying future opportunities.
When you understand the needs of your current and future users, you can develop a more well-rounded product that better addresses their pain points. This evolution must be consistent – but if you do it correctly, you will always stay one step ahead of the competition!
It is always possible to improve and enhance your brand, so always look out for ways to improve the user experience.