Launching a new product: 4 Things to Analyze (Case study of a dating industry included)

When you’re thinking about launching a new product, you need to think about 4 things first to make sure that you have a high chance of success.

They are: Industry, Competition, Customer, and Company (including Product).

(Image credit: economiaefinanza.blogosfere.it)

1. Industry

-Industry lifecycle (is it emerging? mature? declining?)

For instance, in the online dating industry my company is in, it is a mature market and there are lots of small and big players.

-Is the industry growing?

-Is it heavily regulated? Any legal issues?

-What is the barrier to entry and exit?

(The higher the fixed cost, the higher the barrier to entry.)

-What drives this industry? (Is it brands, technology, etc)

For instance, the online dating industry is driven by two things: innovative technology + marketing.

-How profitable is the industry?

2. Competition

-Who are the major players and what market share do they have? Is it monopoly? oligopoly? etc.

For example, in online dating industry, there are about 3 major players which have been around for a decade or so, and they hold 60% market share total.

-Product analysis: any differentiating factors?

-Distribution channels, suppliers, target customers

-pricing strategies

-any substitutions?

3. Customer

-Who’s our target customer? (Segment by channel, by product, region, type)

-Figure out any trends and needs

-Willingness to pay, price elasticity and sensitivity

-Which Distribution channels do they like?

For example, do they want to buy online? on mobile? in the supermarket? in the store?

4. Company/Product

-What are your product’s differentiating factors?

For instance, my product, Funfundate, sends you 2 daily matches and lets you pick which one is hotter, thus gamifying the product and positioning it as “a social matching game” instead of an “online dating service.”

-is it a commodity product or premium? (which affects pricing)

-Pricing- How much would we charge for? What’s our revenue model like?

-Cost of manufacturing/building and distributing the product

-Then, Predict revenue/year

-Then, figure out if you can break-even?

For instance, it costs you $1 million (fixed sum) to build a product, and $500K of variable cost per year. But if you can only make $300K per year given the number of customers you predict and price you set, you cannot break even ($300K<$500K), and this doesn’t even take into account the initial cost of $1 mil.

-Can you finance the product? how?

<Summary>

Do you think your product will be successful in your market? How big is the market size? How competitive is the industry? Can you differentiate? Can you fulfill the needs of your target customers? Is your product expensive or cheap? How can you finance your product?

If you analyze the industry, competition, customer, and company (and its product), you can at least avoid some pitfalls. This analysis alone doesn’t gauge success or failure, but you can get a deep insight into your market and know what you are signing up for. Think strategically and objectively. Don’t fall into a trap of loving your “idea” too much because it can mislead you in determining whether your product will be successful!

 

Bio: Emily is the marketing director at Funfundate, a social matching game dedicated to connecting people with like-minded singles nearby in a stress-free, fun way. She likes to cook, travel, and read books.

 

References: Marc P. Cosentino’s Case in Point, Michael Porter’s Five Forces

Five Things to Keep In Mind Before You Start Your Own Business

Please note: This article was actually my guest post for The Secrets of Entrepreneurship. The blog has a lot of great contents too, so please go check them out!

Thinking of starting a business? Globally, more and more people are jumping on board to start their own businesses. Unfortunately, a few years later, a majority of entrepreneurs give up their dream venture for various reasons: they can’t find a way to make money or find any investors, the industry is too competitive, or they just can’t get enough traction in the market. However, most entrepreneurs don’t realize that failure typically stems from giving up too “soon.” They don’t see that entrepreneurship is a battle not only with their competitors but also within their inner self. In other words, you have to fight the battle with yourself.

That being said, you would probably have heard many entrepreneurs saying that starting a business involves having to face lots of small and big challenges. Indeed, entrepreneurship requires mind control, optimism, and tenacity. Therefore, it helps if know what entrepreneurship entails before you even write your business plan. Here isa list of five things you need to know before starting your own business.

1.Know the definition of failure in the realm of entrepreneurship.

Entrepreneurs willingly accept and embrace failure, which is viewed not as an obstacle but as astepping stone to success. However, when you are starting a business for the first time, you might find yourself not being able to cope with failure very well. It does take time to get used to failure, especially if you’ve rarely experienced a major failure before. As an entrepreneur, you need to treat failure more lightly and view it as a mistake that anyone can make. When a mistake is made, most people learn from it and move on, making sure that they won’t make the same mistake again. Likewise, when you fail, what you need to do is to take out a piece of paper, write down a list of reasons why your business failed, and learn how to avoid making the same failure next time. Ask your mentor or other entrepreneurs about how you can improve. If you follow this solution, you won’t waste your precious time and energy blaming yourself or making yourself depressed.

2. Your previous work experience doesn’t really matter.

Your previous work experience can help you in somecases. For instance, when you’re looking to hire someone, you can tap into your network to help you find a talented employee. Your network can introduce you to a journalist, influencer in your market, investor, and so on. However, in most cases, I don’t see how your work experience can make you a better entrepreneur. Entrepreneurship requires different skill-sets because you have to work with scarce resources like a small team, a small office, or a small amount of money. Patience, persistence, and resilience will be more important than anything else. However, ifyou want to work for another company before starting your business, I suggest you work for a start-up company less than 2 years old. Otherwise, you won’t be able to learn much about how entrepreneurship works.

3. Don’t create a product just because “you” need it. 

It’s usually a silly move to create a product or service that “you” want to use, because you may as well be the only one who needs it. Your friends and family might also tell you that it is a good product, but it is still not enough. Your focus should be on your target customers.Talk toyour target audience, observe how they think or live, and find out what they need most. That should be the starting point of your business model. Of course, you need to be passionate about what you are building, but do not build something just because you want it. Build something a lot of people need so that you can make an actual business out of it. Without money flowing in, it is not going to last.

4. Don’t be afraid of soliciting feedback.

It is very important to stay open to people’s feedback and opinions about your business. You need to figure out what people like and don’t like about your product. By doing so, you can simplify your business model and focus more on people’s needs. In addition, share your ideas with as many people as you can, because no one’s going to steal your ideas. Your ideas will also be modified and tweaked based on people’s feedback and reactions.

5. Build a revenue model from Day 1.

Even if you plan to offer your product for free at the beginning, you still need to build a revenue plan from Day 1. Research how your competitors make money and benchmark them. For instance, if you’re building a social game like I did, there can be many ways to monetize the product: virtual currency, virtual gift, subscription, advertising, and so on. You have to think about at least 3 possible options for monetizing your business so that once your business attracts enough users, you can pick one that fits your business best.

(Image credit: Flickr.com)

My guest post link: http://www.entrepreneurshipsecret.com/five-things-to-keep-in-mind-before-you-start-your-own-business/

[Entrepreneurship Tip] 3 Things you need to know before starting your business

Starting a business is not the same as working on a school project. Often times, when you’re starting a company, it’s a battle not with your potential competitors but within yourself. In other words, you have to fight the battle with yourself. Every day, you’re given a new challenge and you have to resolve it somehow and then move on. Whenever you’re angry or frustrated, you just have to get over it. It requires mind control, optimism, and tenacity. I’d like to give you a list of things you need to know before starting your own company. Whatever you plan to build, you have to know what you’re getting into. I hope my startup advice will help prospective entrepreneurs, especially if you’re under age 30.

1. Your work experience won’t matter.

Your work experience can help you in the following cases: 1) you’re looking to hire someone and you can tap into your network to help you out. 2) you’ve made some connections at work and may know a lot of people who can introduce you to a journalist, target customer, investor, etc.  Other than these two cases, I don’t see how your work experience can make you a better entrepreneur. Entrepreneurship requires a very different skill-set because you have to work with scarce resources like a small team, a small office, and a small amount of money. Patience and persistence will be more important than anything. So, if you’re thinking of working for someone before starting your business, I suggest you work for a start-up company less than 2 years old. Otherwise, you won’t be able to learn how entrepreneurs work.

2. Don’t create a product just because you need it. 

It’s typically a silly move to create a product or service that “you” want to have because you may be the only one who wants it. Your friends and family might say it’s a good product, but they might actually not use it themselves. Instead, observe people carefully and find out what they need. Of course, you need to be passionate about what you’re building, but don’t build something just because you want to use it. Build something a lot of people would want or need so that you can make an actual business out of it. Without money flowing in, it’s not a business.

3. Have a clear revenue model in mind

Even if you plan to offer your product for free, you still need to have a clear revenue plan set up. For instance, if you’re building a social game like me, there can be many ways to monetize the product: virtual currency, virtual gifts, subscription, advertising, and so on. You have to have at least 3 options for monetization so that you can pick one that’s best for your business in the future.

Do you have any other tips you want to suggest? Please let me know by leaving your comments here! 🙂

(Image caption: Flickr.com (http://www.flickr.com/photos/ter-burg/5807930178/))