There are four aspects that needs to be covered when we think of a new product idea.
- What problem is my product solving?
- How is it different from the existing products in the market? What is its USP?
- How does it fit into my existing product line (assuming this is not a start-up)? This is very important thought as there is always a danger of cannibalizing our own product that may be generating good revenue. At times, we might have to evaluate the amount of revenue your latest product will generate compared to its predecessor.
- Who is my customer?
- Why is he going to buy from me? What’s the value he gets?
- How do we reach them? Can we reach them through Internet? (Internet is revolutionizing the way we do our business today)
- How do we retain them?
- How does it affect my existing product line? Is it going to replace them? Does it cannibalize them?
- Is this idea a reaction to my suppliers’, customers’ or competitors’ move?
- Does it increase my sales revenue or my customer base?
- Is the idea catering to a new market? If yes, we might want to look at many aspects, but predominantly barriers to entry and exit, players, size, growth, life-cycle of the economy and industry, impact of technology (internet), …
- Who are the players in the market and their market share? How would the competitor respond to it?
- How would you finance the product launch, if we get a ‘Go-ahead’?
- What happens if the economy sours? How will I pay the debt, if I’m raising funds for it?
We need to understand the supply and demand aspect of the game. Many a times, we invest in new things only to realize that it’s a “desire” (and not a need) in the market. We approach the prospect and try to force sell them by continuous education/campaign. That is when the cost goes up. I suggest we do a demand analysis with a strong perspective on competitors move in such an area, and then try to find out why the other players haven’t done anything with it.
Questions I’d ask myself are:
- Is there sufficient demand for such a product idea?
- What’s the supply?
- Why haven’t others identified it yet?
- If they have, what are they doing with it?
- Have they tried to cater to the need?
- If they failed, what’s the reason behind it?
- Are there any substitutes for it?
- What are the barriers to entry and exit?
This post originally appeared in one of my blogs in public CXO forums:
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Really a great article sir.