Product launching case

Framework New product
Recent activity on Apr 08, 2018
2 Answers
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Carlos asked on Apr 08, 2018

Hello everyone:

How would you proceed for a product launching case?

Company X is thinking in launching a new product they developed. Should they do it or not?

What do you thinkg about the following structure:

1. Product: characteristics (advantages, disadvantages), purpose, economics (price/unit, fixed costs (R&D, operation fees, marketing), variable cost/unit (production, distribution, commision), dependency on suppliers.

2. Potential market: size, growth, products (commodity or differentiation, prices), customers (segments, preferences,willingness to pay), competitors (share, response), distribution channels, barriers to entry (regulation, switching costs, access to distribution channels), company (capability to access customers considering competition, channels and barriers).

3. Strategies: where (regions, countries), how (distribution channels, marketing, pricing: gain market share, maximize profitability,...). Cost-benefit analysis for each option: reveneus, costs, cannibalization of current business, risks.

Thanks.

(edited)

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Vlad
Expert
Content Creator
replied on Apr 08, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

I recommend starting with clarifying the objective - Which metrics you need to achieve with the product? Then I will follow up with the structure:

Analyze the market:

  • Size and growth rates
  • Segments (geographical, customer, product)
  • Distributors / Suppliers
  • Regulation
  • Key market trends

Analyze our product:

  • The value proposition of a product (Core / non-core features),
  • Different use cases for the product (Business / private / government, etc)
  • Unit economics (Current unit costs and costs in relation to scale, Investments, ROI targets, Competitor / substitutes pricing)
  • Key capabilities to compete (Patent, distribution, etc)

Analyze the competitors:

  • Market shares, growth rates, profits
  • Product / customer / geographical mix
  • Products (Value proposition)
  • Unit economics (Value proposition vs. price vs. costs)
  • Key capabilities (Distribution, supply, assets, knowledge, etc)

Go-to-market strategy:

  • Channels
  • Time to market
  • Costs, benefits, and investments

Best!

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Sidi
Expert
updated an answer on Apr 08, 2018
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers

Hi Carlos,

This kind of question oftentimes gets terribly overcomplicatedby candidates. A couple of quick thoughts:

If profitability is the main objective, this is, in essence, an investment decision. You need to assess whether launching the new product will generate attractive returns (absolute AND relative to alternative ways to spend the capital!).

So roughly speaking:

1. Find out what the required return on investment of the client is (and under which time horizon)

2. Do the financial analysis and determine how much surplus needs to be generated in the target time frame to recoup the investment at the required rate (important to understand the investment need! R&D might be surprisingly low if the product is already developed, as you wrote).

3. Then do the business due dilligence to assess whether the product can realistically generate the required surplus. (this could be tackeld with a "classical" business situation framework)

Cheers, Sidi

(edited)

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Vlad

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