Product Management: Vision & Strategy

Question 1

MVP

Answer 1

Minimum Viable Product. An early version of your product with minimal features that you can take to market in order to get feedback

Question 2

KPI

Answer 2

Key Performance Indicator. KPIs can be used to measure the success of the products.

Question 3

Revenue stream

Answer 3

A source of revenue for a company, mostly commonly transaction based or recurring events

Question 4

Subscription

Answer 4

A type of revenue model that generates recurring revenue. Users pay a fee on an ongoing basis in exchange for access to your product.

Question 5

Licensing

Answer 5

A revenue model that generates transaction based revenue. Users purchase a one time license to use your software on an ongoing basis

Question 6

Pay per use

Answer 6

A revenue model that generates transaction based revenue. Users pay a fee every time they use your product.

Question 7

Freemium

Answer 7

A revenue model that gives a small part of your product away at no cost to users with the ultimate goal of converting users to paid users in order to gain access to the full product.

Question 8

CPC

Answer 8

Cost per click.

Question 9

CPM

Answer 9

Cost per 1000 impressions.

Question 10

CTR

Answer 10

Click through rate.

Question 11

What is Vision?

Answer 11

What your product looks like in its final state

Describes the essence of the product

What your product does and why it matters to users

Can be summarized in a sentence or two

Question 12

Parts of a Vision statement

Answer 12

Vision needs to tell a story about:

What you’re building
Who it’s for
Why it matters

Question 13

Your vision should be …

Answer 13

Inspiring
Ambitious
Easy to explain
Something the team believes in
Something you evolve over time
Something you share out frequently

Question 14

The importance of having a vision statement

Answer 14

To understand the importance of having a vision statement, consider how difficult it would be to develop a strategically sound product without one. How would that product team know where to focus its resources, which features to prioritize, which markets to target? On what strategic basis would they make decisions and set priorities?

Question 15

When should you craft the vision statement

Answer 15

Creating a vision allows your team to take a top-down approach to your product’s development. In other words, you begin with a high-level vision statement, then translate that vision into a strategic guide and action plan—the product roadmap. Then, you can translate that roadmap’s strategic overview into a tactical development plan.

Drafting a vision statement should be your team’s first step in starting any new product’s journey—and it always should come before you begin working on the product roadmap.

Question 16

How can a product vision statement improve strategic decision-making?

Answer 16

Another reason a product vision can aid in your development is that it can help you more quickly and easily identify initiatives worth pursuing.

Think of your product vision statement as a compass that you can consult whenever your team is faced with conflicting priorities or lack of direction.

Question 17

How does product vision align stakeholders across the company

Answer 17

Finally, a product vision statement can also add value by making it easier for your team to clearly articulate the high-level goal driving your product’s development. This can help align the various groups and departments across your company that will be working on your product. With a shared vision, everyone always has a true north to refer back to, which can help remind them of why they’re doing what they’re doing.

Question 18

3 functions of product vission

Answer 18

Informs the roadmap
improves strategic decision making
aligns stakeholders accross organization

Question 19

Vision statement template

Answer 19

For [our target customer], who [customer’s need], the [product] is a [product category or description] that [unique benefits and selling points].

Unlike [competitors or current methods], our product [main differentiators].

Question 20

Difference between Product Roadmap and Product backlog

Answer 20

The Product Roadmap is a strategic plan that describes how the product is likely to grow across several product releases

The Product Backlog is a tactical tool that provides the details including epics and user stories that have to be implemented to create one or more releases

Question 21

Elements of a Product Strategy Canvas

Answer 21

Vision
Challenge
Target Condition
Current state

Question 22

What is product strategy

Answer 22

The means by which the product vision is accomplished

Question 23

What is a business model

Answer 23

A business model describes how a business creates, delivers, and captures value.

Question 24

Components of the Business Model Canvas

Answer 24

Key Partners - help build or deliver the product to users

Key Activities - what you need to do to build and deliver the product

Key Resources - things that you need to build the product

Cost Structure - cost of building the product

Value prop - why people would want your product

Customer Relationships - how you build relationships

Channel - how you get the product to customers

Customer Segments - different types of customers

Revenue Streams - how you get money from customers

Question 25

Most common revenue models

Answer 25

``` Ads Purchase / Licensing Pay per use Subscription Freemium ```

Question 26

Business Model vs Revenue Model vs Revenue Stream

Answer 26

A revenue stream is a company’s single source of revenue. A company can have zero or many revenue streams, depending on its size. A revenue model is the strategy of managing a company’s revenue streams and the resources required for each revenue stream. A business model is the structure comprised of all aspects of a company, including revenue model and revenue streams, and describes how they all work together.

Question 27

Pros and Cons of Ad-Based Revenue models

Answer 27

1. Ad-Based Revenue Model Ad-based revenue models entail creating ads for a specific website, service, app, or other product, and placing them on strategic, high-traffic channels. If your company has a website or you have a web-based company, Google’s AdSense is one of the most common tools get ads. For most websites, AdSense will earn about $5-10 per 1,000 page views. Advantages: Making money from ads is one of the simplest and easiest ways to implement revenue models, which is why so many companies utilize ads as a source of revenue. Disadvantages: In order to generate sufficient revenue to withhold a business, you will need to attract millions of users. In addition, most people find ads annoying, which can lead to low clickthrough rates, and therefore, lower revenue.

Question 28

Pros and Cons of Affiliate Revenue Model

Answer 28

2. Affiliate Revenue Model Another popular web-based revenue model is the affiliate revenue model, which works by promoting links to relevant products and collecting commission on the sales of those products, and can even work in conjunction with ads or separately. Advantages: One of the most obvious benefits of employing an affiliate revenue model is that it generally makes more money than ad-based revenue models. Disadvantages: If you use an affiliate revenue model for your startup, remember that the amount of money you make is limited to the size of your industry, the types of products you sell, and your audience.

Question 29

Pros and Cons of Transactional Revenue Models

Answer 29

3. Transactional Revenue Model Countless companies, both tech-oriented and otherwise, strive to rely on the transactional revenue model, and for good reason too. This method is one of the most direct ways of generating revenue, as it entails a company providing a service or product and customers paying them for it. Advantages: Consumers are more attracted to this experience because of its simplicity and the wider set of options. Disadvantages: Because of the directness of the transactional revenue model, many companies employ it themselves, which means more competition and price deterioration, and therefore, less money to made for everyone who uses this model.

Question 30

Pros and Cons of the Subscription Revenue Models

Answer 30

The subscription revenue model entails offering your customers a product or service that customers can pay for over a longer period of time, usually month to month, or even year to year. Advantages: If your company is far enough along in its development, this model can generate recurring revenue, and can even benefit from customers who are simply too lazy to cancel their subscription to your company (which is the dirty little secret of a subscription-based model). Disadvantages: Because this model depends so much on having a large consumer base, it’s critical to maintain a higher subscribe rate than an unsubscribe rate. In the blog post “Comparing Business Models to Sales Models”, Dave Parker outlines the various ways that a company can sell their product or service, emphasizing how the market you pick affects the way in which you take your product to market. Here are the methods he describes:

Question 31

Pros and Cons of Web Sales Model

Answer 31

This is an offshoot of the transactional revenue model, in which a customer pays directly for a product or service, except that customers must first come to your company via a web search or outbound marketing, and conduct transactions solely over the internet. Advantages: Web sales work with a wide variety of offerings, including software, hardware, and even subscription services. Disadvantages: Relationship sales are incompatible with the web sales model, so if your company is related to consulting or big ticket items (high-value items such as houses, appliances, and cars), you should consider employing a model that’s more suited to your offering.

Question 32

Pros and Cons of Direct Sales Model

Answer 32

There are two types of direct sales: inside sales, in which someone calls in to place an order or sales agents calling prospects; and outside sales, which is a face to face sales transaction. Advantages: Direct sales models work great with relationship sales cycles, enterprise sales cycles, or complex sales cycles that entail multiple buyers and influencers. Disadvantages: The direct sales model often requires hiring a sales team of some sort, which means that it isn’t optimal for small ticket price items. If your offering is priced below the $1,000-$2,000 range, you’ll have trouble building a scalable company.

Question 33

Pros and Cons of the Channel Sales Model

Answer 33

The channel sales model consists of agents or resellers selling your product for you and either you or the reseller delivering the product. The affiliate revenue model is a good companion model to this one, especially if your offering is a virtual product. Advantages: The channel sales model is ideal for companies who have a product that’s an incremental sale for their channel and can produce incremental profit. Disadvantages: Don’t employ this model if your product requires you to evangelize your marketplace, or if your product competes with that of your partner’s, as they will push theirs and not yours.

Question 34

Pros and Cons of the Retail Sales Model

Answer 34

Retail sales entails setting up a traditional department store or retail store in which you offer physical goods to your customers. Keep in mind that the retail sales model will require shelf space (that you’ll have to pay for) at existing stores, and is best suited for products that require logistics to reach your customers. Advantages: Retail sales is a great way to offer deals and complimentary products to an existing customer base to help boost brand awareness. Disadvantages: The retail sales route is not ideal for early stage companies, or companies that offer digital products like software or apps.

Question 35

Pros and Cons of the Product is Free, but Services Arent' Model

Answer 35

9. Product is Free, But Services Aren’t This model is unique compared to others, in that you have to give your product away for free, yet require customers to pay for installation, customization, training or other additional services. Advantages: This model is great for building trust with your customer base and boosting brand awareness, as any company that offers anything for free will generate considerable buzz. Disadvantages: Remember, employing this model means that you are basically running a services business with the product as a marketing cost. Also, a model like this isn’t always the best for scaling your company in the long term, so keep your eye on additional revenue models to utilize later on.

Question 36

Pros and Cons of Freemium Model

Answer 36

The freemium model is one in which a company’s basic services are free, yet users must pay for additional premium features, extensions, functions, etc. One of the biggest companies to use this model is Linkedin, the most popular business/social media platform. Advantages: Similar to the previous model, the freemium model offers something free to users, which is a great way to give them a taste of your product or service while simultaneously enticing them to pay for something later on. Disadvantages: This model requires a considerable investment of time and money to reach out to your audience, and even more effort to convert free users into paying customers.

Question 37

Key points to consider in a competitive analysis

Answer 37

``` Product offering and key features Differentiators Target customers Distribution channels Price points ```

Question 38

3 Types of competitors

Answer 38

Direct: same product, same market Indirect: same product, different market Replacement: different product, same market

Question 39

Process for defining an MVP

Answer 39

To create an MVP: ``` Start with the business model canvas Weigh against competing solutions Make sure it’s aligned with business objectives Translate to requirements Identify KPIs ```

Question 40

Which technique can be used to determine what features should be included in the MVP?

Answer 40

MoSCoW technique. This technique splits the minimum viable product functionality into Must Haves, Should Haves, Could Haves, and Won't Haves.

Question 41

The MVP Triangle: Good, Fast, Cheap

Answer 41

That means there’s always a trade off: Cheap + fast = lower quality work Fast + good = expensive Good + cheap = Slow What are your priorities?

Question 42

BATNA

Answer 42

Best Alternative To a Negotiated Agreement. If negotiations were to fail, BATNA is the next best option