At its core the product strategy details, at a high level, what an organization wishes to accomplish with their products and how they want to do it.
But, before that we need a mission; every business needs a purpose, a vision, of not only what they represent but also the value they provide. For Disney it’s ‘Making People Happy’, for Google it’s ‘to organize the world's information and make it universally accessible and useful’. Once you have this vision the product strategy becomes the end to end road between the mission of the company and the value offering of the product.
For smaller companies, those that are developing the first products, the alignment to the product strategy is throughout the lifecycle of the product. The product is built based on the specific vision of the company to address the specific needs of a target consumer segment. Here the product strategy can be seen as a guiding principle that affects specific goals and objectives. Though for larger companies, those that have a portfolio of products, the alignment to the product strategy is not throughout the lifecycle. Typically, the products are developed based on market insight, addressing specific needs of the consumer to accomplish certain goals that are planned through a roadmap. Eventually the product management function attempts to align their products towards the overall corporate goals using product strategy.
There are three core components to a product strategy; if done fully, not only will you have a strategy that will lead to remarkable growth but also a strategy, that can be used on the other end of the spectrum, for product revitalization.
Starting from the outside, the first key component is understanding what market is the product in, who is the product for, what are needs that being addressed. Going inwards, the second component is to understand what your product offers in comparison to the other products for the same market; what are the key differentiators or Unique Selling Propositions (USP) for your product. The finial component is looking internally at your business; it is centered around understanding what are the corporate goals for the product.