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)
-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?
-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
-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?
-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?
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