Seven questions to ask yourself before executing your product idea

There are four aspects that needs to be covered when we think of a new product idea.

Product Strategy

  • 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.

Customer Strategy

  • 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?

Market Strategy

  • 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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Copyright Nitin Garg | All Rights Reserved


How would you add an extra $10m in revenue in the next year?

First, we need to understand the external factors – economy and industry. The questions that we need to ask ourselves are:

  • What’s the size of the market?
  • What’s its growth rate?
  • Which stage of the life-cycle is it in?
  • Performance for the last 2 years (it would be very difficult for a start-up to take a leap unless we have ample amount of “qualified” pipeline to generate this revenue). I suggest we do a comprehensive analysis and do a Specific, Measurable, Achievable, Realistic and Time-constrained (S.M.A.R.T.) projection to avoid disappointment and hence the cost of the effort (which can be huge).

Growth Strategy

  • Increase distribution channels
  • Diversify product line
  • Increase product and services
  • Acquire competitors (this needs cost-benefit analysis and due diligence of M&A targets)

Increase Sales Revenue

  • Increase price. This has to be done with caution and need smart approach to pass it on the customer. We need to anticipate the competitors’ response and check the substitutes available in the market. Otherwise, the customers/prospects will run away from you! 😉
  • Increase per unit sale
  • Increase volume (get more buyers, increase distribution channels, hire sales force, …)
  • Create a seasonal sale, if applicable
  • Invest in major marketing (one that has proven to be fruitful). Digital marketing is most cost-effective and efficient for larger target audience. We can hire an advertising agency for this with KRA like number of leads and conversion rate for the pay-off.

There might require certain changes to the pricing strategy as well as compared to your competitors’ price

This post originally appeared in one of my blogs in public CXO forums:

If you wish to gain any privilege to this blog, please write your message to the author through the page “CONTACT ME” by filling in the required details in the form, OR by dropping an e-mail to him at

Copyright Nitin Garg | All Rights Reserved

Competitive Strategy: Five forces of Michael Porter

In 1979, Michael Eugene Porter, the Bishop William Lawrence University Professor, Harvard Business School, submitted an article on “How Competitive Forces Shape Strategy” that revolutionized the strategy field. In his article, Porter highlighted how the five forces of competition affect the profitability of organizations and hence, the industry. In this article, I present his thoughts in an easy-to-comprehend manner such that readers can understand and apply the concept while formulating their corporate strategy. Read about Michael E. Porter here.

(1) Customers: The customers who are relatively large, the buyers who purchase in large volumes and the buyers who are few, enjoy more bargaining/negotiating leverage as compared to the industry participants, especially when the industry is price sensitive. These customers can derive more value by forcing down prices, demanding better quality, thereby driving up the costs, at the expense of industry’s profitability. Bargaining power increases because of the following:

  • Buyers are few: They tend to play one vendor against another for its own benefit.
  • Large volume buyers: Buyers who purchase in large volumes find such advantage in high fixed costs and low margin industries like telecommunications equipments, chemicals, etc.
  • Standardized products: When the industry products are standardized, the customers can find an equivalent product, thus giving them more negotiating leverage.
  • Low switching cost.
  • Backward integration, if customers find their vendors too profitable.

(2) SuPorterppliers: Similar to customers, powerful suppliers can derive more value by charging higher prices, limiting their quality of services or shifting their costs to industry participants. Microsoft is one such example. It dictates the PC market, and eroded the profitability of the PC makers by raising the prices of the Operating System (OS). It is near monopoly in the OS market because of its concentration than the industry in which it operates. Fragmented PC market is another reason. Suppliers enjoy such bargaining powers when:

  • the switching cost is high
  • they do not depend heavily/entirely on one industry
  • there is no substitute for them
  • they can threaten forward integration

(3) Competitors: Rivalry among the players impacts the industry’s profitability through price discounting, new product launches, services offerings and advertisements. The degree to which it drives down the profitability depends on the intensity of the competition. The intensity is highest when:

  • There are too many players, approximately equal in size, supplying almost same kind of offerings.
  • Industry growth is slow.
  • Exit barriers are high.

Rivalry solely on price is destructive to the profit margins.

(4) New Entrants: New bees bring new capacity and ideas to the industry. They can pose a threat when they aim to gain market share. They affect the industry players’ price, cost and rate of investment. This especially holds good for entrants diversifying from other markets. These new entrants can shake up the competition by leveraging their existing capabilities and cash flows. Very good examples are Apple (iTunes in the music industry), Pepsi (bottled industry) and Microsoft (internet browser industry). The threat of new entry limits the industry’s potential profitability.

Barriers to entry are the key to new entrants. These barriers can be supply and demand side of the game, capital requirements, switching cost, access to distribution channels, government regulations, to name a few.

(5) Substitutes perform same/similar function that an existing industry product does, but by different means. For example, e-mail is a substitute of express mail. Substitutes are always present, but they can easily be overlooked. They can impact the profitability by putting a cap on it and increase the threat to a great extent when:

  • the price-performance trade-off of the substitute is better and attractive, and
  • the switching cost to a substitute is low.