A‌ ‌Primer‌ ‌on‌ ‌Product‌ ‌Strategy‌ ‌from‌ ‌‌Understanding‌ ‌Michael‌ ‌Porter‌

5 min readApr 16, 2021


By Chinazamekpere Obi

Chinazamekpere Obi

A great strategy delineates exactly how your product will dominate its market. But what exactly is strategy? The term “strategy” is one of the most elastic in the world of business. Some managers define strategy as a plan, others define it as a kind of pattern, some others define strategy as a perspective or a ploy.

As a product manager launching a product, the strategy may be the thing that determines if your product succeeds or fails. So how exactly should you be going about your product strategy?

The book Understanding Michael Porter details how managers should be thinking about strategy and I will be sharing the central framework in this article for product managers looking to develop their strategy muscles.

Porter explains strategy as “deliberately choosing a different set of activities to deliver a unique mix of value”. Strategy is what explains how a product faced with the competition will achieve superior performance.

According to Porter, A good strategy has to pass the following tests:

  1. A distinctive value proposition
  2. A tailored value chain
  3. Trade-offs different from rivals
  4. Fit across the value chain
  5. Continuity over time

A Distinctive Value Proposition

Choosing what value to offer your customers is the core of competing to be unique. The value proposition is the element of strategy that looks outwards at the customers/users.

A distinctive value proposition answers three questions:

  1. What customers?
  2. What needs?
  3. At what price?

What Customers?

The success of your product often lies in choosing the right customers for the product. There are usually distinct groups of customer segments within an industry and a distinctive value proposition can be aimed at serving one or more of these customer segments. When choosing your target customers, you can go the traditional route of segmenting your customers by demography, psychography, or geography or you can employ the jobs-to-be-done framework.

What Needs?

Historically, the primary cause of failed products is a misalignment with customer needs. As a product manager leading the customer discovery efforts, you need to figure out what unmet needs your customers have and then systematically conceptualize products/features to meet those needs. Here, strategy is built around your unique ability to meet a particular need or a subset of the needs of your target customers.

At what price?

This answers the question: What relative price will provide acceptable value for my customers and acceptable profitability for the company?

For some value propositions, relative price is a key differentiating factor in the mix of the three factors. Some value propositions target customers who are currently being overserved hence overpriced and by crafting an offer that meets just enough of the customer’s needs, the business can win the customers over.

Conversely, a product can be targeted at customers who are underserved and hence underpriced.

| Test 1: Is your value proposition different from that of your competitors?

A Tailored Value Chain

The value chain is the element of strategy that focuses internally on the operations and the different set of activities that you have chosen to carry out to help deliver your unique value proposition. A unique value proposition can only translate into a meaningful strategy when the best set of activities that have been employed to deliver it is different from the activities performed by your competitors.

Let’s say for example that you have chosen to provide a service to your customers at the lowest possible price. This second test of your strategy helps you tailor all your product activities to ensure that you are in the best position to deliver on your value proposition.

|Test 2: Is the best set of activities to deliver your value proposition different from the activities of your rivals?

Trade-offs different from rivals

Building a product to be all things to all people is one of the easiest recipes for a failed product. Strategy is all about choices, and the choices of what not to do are often as important as choices of what to do.

While putting your strategy through this test you have to be clear about all the things that your product is not and will not be so that you can effectively focus on making choices that will help you deliver on your unique value proposition.

|Test 3: Have you made different trade-offs from your competitors?

Fit across the Value chain

Fit is the element of strategy that is focused on how the activities of the value chain related to one another. This test requires that you are deliberate about all the choices you make regarding your product and that you ensure that all the activities align to amplify the value chain that supports your unique value proposition. Fit makes it harder for competitors to copy you because they have to copy a whole nest of interdependent activities to get the benefit of imitating you.

|Test 4: Is the value of your activities enhanced by the other activities you perform?

Continuity over time

Good strategies sometimes take time, Continuity at the core of the strategy enables the company to get good at its activities and fosters tailoring, trade-offs, and fit. Continuity of strategy however does not mean that a product strategy should be rigid, As long as there is stability in the core value proposition, there can and should be constant innovation on how it is delivered.

|Test 5: Is there enough stability in the core of the strategy to allow the organization to get good at what it does?

In Conclusion

Great strategies are rarely if ever, developed with a concrete prediction of the future. Strategy is mainly about making a bet that the needs you have chosen to meet for your customers and the essential trade-offs made while tailoring your activities will be enduring, When crafting your strategy you need a very broad sense of which customers and needs are going to be relatively robust five to ten years from now.




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