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).

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(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

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Lesson from OMGPOP shut-down: Don’t get acquired by Zynga?

I just heard the unfortunate news that OMGPOP no longer exists. Zynga shut it down officially, and strangely it seems like some OMGPOP employees found out about their layoff via Facebook. What happened between these 2 companies?

I used to be a huge fan of OMGPOP’s Draw Something. It was a fun, social game I used to enjoy with my friends. Then one day, I read about Zynga’s acquisition of OMGPOP, and this quickly made me lose interest in the game and switch to another similar game. It’s not that I don’t like Zynga but that I thought OMGPOP had so much potential but they lost it by getting acquired by a big, established company.

Zynga has had a bad reputation for a while. A company with a bad reputation never survives long. When talented, creative people start leaving, or when a company lays off talented people, that’s often a bad sign.

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What Zynga is doing wrong is as follows:

1. Zynga doesn’t have a respect for the company they acquired.

They acquired a creative, popular game company and they shut it down because they think it’s a “mistake”? Rather than trying to resolve conflicts and use OMGPOP’s talents to develop an innovative game, Zynga decides that it will just shut the whole thing down and lay off all of its employees. From now on, no start-ups are going to be “excited” about getting acquired by Zynga.

2. Zynga is known to copy games from others. A big no-no.

Talented people would no longer want to work for Zynga. Would you want to work for an established, popular company that copies games from others?

3. Zynga made an acquisition in a hurry.

Zynga obviously wanted to acquire OMGPOP because its game went viral and very popular internationally. Post-acquisition culture clash is actually quite common, but Zynga should have been more careful about the acquisition. Both companies and their management teams need to trust each other and share their visions.  It seems that neither were ready for M&A.

If Zynga wants to fix its damaged reputation and become a beloved, innovative company again, instead of acquiring start-ups hastily, hire some killer talents and let them freely create an innovative game that is not copied nor similar to other games. The management should be nice to all of your employees, and benchmark other company’s creative culture like Facebook’s if necessary.

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!

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

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.

Five Things to Keep In Mind Before You Start 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.

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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/))

The Disruption of the Online Dating Industry

As a person working in the online dating industry, I’ve had the opportunity to experience and analyze a lot of popular online and social dating services in the U.S. and abroad. OKCupid, Bang with Friends, How About We, Match.com… there are lots of great online dating services that help you find dates in your region. The concept of online dating closely resembles that of social networking, except people are looking for romance, not friendship. Online dating serves the purpose of bringing people together, putting them into a carefully created “virtual” space, and letting them freely hang out with people they like. Remember when you went clubbing or just chilled out with your friends at a bar, you met new people and became friends with them in 5 minutes, only to forget most of them the next day? Online dating has a similar flow. You meet new people in a virtual space, chat with people you are interested in for a few minutes, and unless there is some chemistry, you don’t contact them or see them again. Just close the chat window, and talk to someone else. There’s even no concern about being rude or mean online, because it’s anonymous.

Every excellent Internet service has one thing in common, and that is, it mimics real life. For instance, Evernote is like an online diary. Coursera is like your online classroom. Facebook is like your online contact book. Online dating is no exception. It’s like your online social “club” where you meet someone just for a drink or for a long-term relationship, depending on what you want.

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The problem is, unlike real social events or clubs where there is a limit on the number of guests, online dating services have no such limit. In other words, there are too many members approaching you and saying hi to you, when all you need is only a few quality matches who are truly compatible with you. When people are given too many choices, they can naturally feel overwhelmed and end up making poor choices. It takes hours to sift through profiles and to chat with them individually, only to choose one or two persons you want to meet for a coffee chat. It’s not only taking your time and energy but also making you stressed out. If the Internet is created to make a human life more convenient, why are people more stressed out by using online dating?

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This question led me to build a casual, social dating game called Funfundate. As the name suggests, it’s built for people to have fun. I wanted a product that is easy to use, social, and stress-free. True, nothing is ever stress-free in this world anymore, but I wanted to “minimize” people’s stress by making algorithms do all of the works for humans. Isn’t that what the algorithms are supposed to do anyway? And of course, I tried to make it resemble real life dating as closely as possible. It’s a web service, not an iOS or Android app, and we’re on a testing phase to figure out what people “need” and what they don’t need. Since FFD lets you sign up via Facebook, registration takes only a few seconds. You don’t need to fill out your profile information (unless you want to fill out optional questions like truth or dare.) Plus, it’s FREE to sign up and use! 🙂

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And then, something magical happens. It gets you two quality matches a day, from which you can anonymously pick one. (Your matches would live nearby your region.) We call it as a “Pick-who’s-hotter” game. A hotter match would be a person who is closer to your type. Only two choices a day for each member. Not one, not three, not tens or hundreds. If there is a mutual interest, a match is made, and you can chat with your match for free within our platform and then you two can meet up! Matching gets updated every 24 hour, and you can invite your Facebook friends over to play with you.

Online dating has been used by over 40 million people in the U.S. alone (data source: Pew Research Center). The industry is being disrupted by new, innovative platforms that embrace social, intuitive, stress-free, casual approaches to dating. It will be interesting to see how old players will respond to this disruption stage and how new players will shake up the industry in the future. (Innovation is always fun to watch, isn’t it? :))