Profitable Product Selection

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This presentation covers the basic methods used to evaluate which new or existing products to develop. It uses basic business tools like roadmaps, SWOT Analysis and product selection matrices to help evaluate the most profitable products from a field of promising candidates.

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<ul><li> 1. Profits, Products and Promises Profitable Product Selection July 30, 2014 </li></ul> <p> 2. Our talk today is about business fundamentals used to select products for development. Its important to be objective about the products we choose to develop. They have a major impact on our companys profitability. We wont talk about any one selection process or method. Were going to stick to time-honored basics that are a part of good decision making. 3. Real Quick What do we mean by business fundamentals? For our discussion it relates to how we identify new opportunities and product lines. This talk is intended to get you thinking about the basics. 4. Have the business fundamentals been observed? What is the launch budget and timeline Is the right infrastructure in place? and so on Ask the Right Questions! From Our Product Launch Discussion- 5. The Importance of Fundamentals Increased company revenue and profitability Increased Brand Equity and Awareness Incredible competition these days Low barriers to entry 6. Step 1- Create a Map Mission- How we attain our Vision Roadmap- The Plan and Direction Vision- Our Corporate Aspiration 7. Roadmap Examples www.nestle.com 8. Vision Example To connect People to what's important in their lives through friendly, reliable, and low-cost air travel. www.southwest.com 9. Mission Example The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. www.southwest.com 10. The Corporate Map Will the product make a profit? Resources Do we have the time and budget? Knowledge Do we have domain knowledge? Values Does the product fit our vision/mission? 11. The Competitive Map Competition Do we have serious competition? Trends Who will buy it? The Market Do we have a potential product? 12. What Do People Say We Need? What do our customers and sales/marketing people say we need? Listening vs. Hearing Is a small group of people shouting? Is there a legitimate need/requirement? Is this an enhancement or new product? Oh man, is this a pet project? 13. And while were on pet projects Pets have been the undoing of many good PMs, so, Have a visible corporate sponsor Have clearly defined goals Keep everyone informed of progress/pitfalls Be prepared for the worst 14. A Few Bigger Questions Several things will impact our research: Demographics Society and Culture Politics and Legal Issues Technology Economic Global Business 15. The Market Once you understand the bigger picture ask: What will the product be? What sort of features will it have How big is the market? And do you need special features for different markets? Are there business and cultural barriers? Can the market be reached? 16. Porters Five Forces Competition Threats from Substitute Products Bargaining Power of Buyers Threats from Direct Competitors Bargaining Power of Suppliers 17. A Couple of Quantitative Tools SWOT Analysis Strength, Weakness, Opportunities, Threats Strengths and Weakness- Refers to the product idea and your company (Internal) Opps and Threats- Refers to your market and competitors (External) Tells you how your company compares to the competition Gives you an idea where you are today 18. Product Selection Matrix A product selection matrix will help narrow down your choices: Criteria Weight Product A Product B Product C Looks Good 3 2 (x3)= 6 5 (x3)= 15 1 (x3)= 3 Creates Value 5 5 (x5)= 25 5 (x4)= 20 4 (x5)= 20 Good Margins 4 1 (4)= 4 3 (x4)= 12 4 (x4)= 16 Total 35 47 39 19. Oh Yeah, How Much Will it Return? Net Present Value (NPV) Tells you how much dollar invested today will be worth at some point in the future Its a good way to compare multiple products and whether to build, partner or buy Excel function is =NPV Return on Investment (ROI) Tells you in percentage terms how much a product has returned v. its initial investment Requires accurate forecasting of both development costs and sales revenue You can use ROI as a screening method to approve new product development Excel function is =IRR 20. Build, Buy or Partner Build The product be built in- house with existing resources Can go to market quickly Maintains profitability Maintains your company reputation Buy/Partner Product already exists Product expertise is not in- house Teams up against a common competitor Maintains profitability Enhances your reputation 21. And the really important question Do you have the Time People Resources Know-How To pull it off? Quality Scope Cost Time 22. A Word About Disruptive Innovation Do you have the opportunity to introduce a new product that: Addresses simple applications at bottom of your market, Moves relentlessly up the market And dislodges established competitors?1 1Clayton Christensen- The Innovators Dilemma 23. Disruptive Innovation- Computers 1960s Mainframe 1970s minicomputer 80s/90s Desktop Computer 00s Smartphones 24. The Take Home Message Understand your company aspiration- it gives you a better idea what to develop. Understand your competitors- it gives you a better idea of what to develop and whether youll be successful. Understand your customers- it gives you a better chance of success. Understand your resources- it will keep you profitable 25. And now for a little inspiration ...decide...whether or not the goal is worth the risks involved. If it is, stop worrying.... - Amelia Earhart 26. Must Reads Michael Porters Competitive Strategy Daniel Golemans Emotional Intelligence Clayton Christensens The Innovators Dilemma 27. Thank You! info@aperturepm.com www.aperturepm.com </p>