Stiff Competition: Ways to Determine if a Product is Truly Viable

Your organization has done it. You’ve developed a product so engaging and comprehensive that it is going to take over. It will sell itself through every channel, in every region, and the balance sheet will boom. Stakeholders from the C-suite to the analysts are fully behind the strategic direction of the product and the future of the organization. It seems like nothing could go wrong once the product is fully ready and able to launch.

But what if it does?

Regardless of our best intentions and forecasts, everything does not always go as planned. Just because there is momentum behind a new product does not mean it will be a success. While there is no way to guarantee results, there are ways to try to dive deeper and ensure the best chance for success. Take note of these key areas for your organization to be aware of before launching your product.

Trying to fully understand and articulate the entire market demand for a potential product is a daunting undertaking. Naturally, firms will have their own methods to deduce what the most accurate TAM is before pursuing a formal product launch, but for this exercise, here are some additional areas to consider. The natural first step would be investigating either Serviceable Addressable Market (SAM) or Serviceable Obtainable Market (SOM). Serviceable Addressable Market will provide a better indication of the market acquisition prospects for the true interest in the product. Serviceable Obtainable Market outlines how much share a product could capture. As you might suspect, moving from TAM to SAM to SOM will shrink the overall number. While a smaller overall figure might seem disheartening, it will strengthen the confidence in the overall product message.

Should the opportunity to further dissect TAM prove unlikely or ineffective, consider utilizing a sensitivity analysis on your TAM. A sensitivity analysis will provide different outputs based on a specific variable associated with the model. Our recommendation would be to create a neutral projection to start, followed by adjustments on one variable, lowering it for a conservative projection and raising it for a stretch goal. The variable itself is up to your organization, but items like market share are a good place to start. Keep the percentage shift relatively tame, but feel free to change pertinent variables as needed (e.g., channel performance). Ideally, this will bring forth a more holistic view of the potential outcomes associated with your product prior to hitting the market. If your organization has any lingering concerns, this might be a good opportunity for the product strategy to be reworked. Just because there are warning signs does not mean the product is going to be a failure, but it is important to account for any potential issues and shore them up prior to launch.

More than likely there has been some variation on the product your organization is producing that has either previously been or is currently in the market. This is both good and bad news. The bad news is that first mover advantage is gone and you could find yourself competing with a similar, rival product. The good news is that you can learn from your product’s predecessors and improve upon it. The key is asking the right questions. For example, how did they enter the market? What was the initial performance? What, if applicable, is the current forecast? The challenge is finding the answers to these questions (through analyst reviews, news about a specific product or firm, or even conversing with other firms if legally allowed) and utilizing them to your advantage. Be creative. The information is out there in some capacity.

Beyond looking specifically at a rival product, take a deeper dive into the marketplace. What products are trending, how is the economy of the target region doing, and what macroeconomic events are affecting the market? Answers to these questions will allow you to take a thorough look at how likely it is that your product will be successful or at least prepare your organization for the reality that there may be some bumps in the road as your launch gets underway.

Different channels require different strategies. Selling a product to a family office versus a private bank are completely different experiences. Furthermore, expectations for investment should be varied by each channel. The likelihood of success for each channel will be different as well and it is important to take all these factors into account when thinking through the pipeline of an upcoming product.

Let’s start with the channel itself. Will a specific channel be amenable to a certain product? Why or why not? Why would one channel prefer it to another? For tax purposes or for risk appetite? These factors (and many more) need to be considered prior to launch. In terms of how to get there, start with your Finance and Sales teams. Finance should have the best understanding of how products have performed in various sectors. Ideally, there will be a comparison among your organization’s portfolios.

Sales also makes for a great resource to understand at a personal level how different advisors or clients will react to a new product. An organization’s Sales team should have an understanding of trends in the marketplace. It’s critical to lean on them to understand if a potential product is going to be a hit and in which channel it has the potential to be the most successful.

Overall, while it may feel like this article is throwing cold water on launch ideas, it’s not. While enthusiasm and optimism for a new product is exciting, it is worthwhile to take a step back and prepare for a reality that is not as positive. Not every product is a hit, and it is critical to not get caught up in the excitement of a launch without doing your due diligence. Adding more grounded realism, granular thinking, and exploration through all the possible scenarios will help prepare your organization for what will happen once your product has hit the market.

Looking to put your product or potential launch under a microscope? Please contact us here to learn more about how we can help your launch.