A quick search on Google reveals more than 100,000 results for the phrase "new product." For example, companies ranging from Apple to HTC are considering launches of new phones, and ThunderWorks, a leader in pet anxiety and stress solutions, plans to introduce a new leash for overexcited dogs. You may have seen Google itself promoting a new product, Google Glass—a set of spectacles that will enable users to take pictures and videos and share them through their devices.
Despite the wide range in output, all these firms have something in common—each has performed some financial calculations to determine whether the new product has profit potential. Based on its trend toward success, no doubt Google has calculated the amount it needs to charge to make an adequate profit margin on its device. But it is possible many firms have not examined their new product’s market structure to determine how this product will align with their corporate strategy.
The success or failure of a product is only part of the story. The important questions are:
- How will this new product affect the company?
- How will the product fit within the company’s current strategy?
- Will the product fundamentally alter the company’s direction?
- What is the size of the market for the product?
- What is the cost structure of the market?
- What kind of problems will the company face when producing the product?
- Will the company encounter regulatory or antitrust issues?
- How can it deal with niche competitors?
How well have you thought through the nature of the market for your company’s new product as it relates to corporate strategy? In the Accenture Academy course Formulating Corporate Strategy Based on Market Structure, you can look beyond the analysis of net present value to examine markets and explore how they influence your decision to launch new products. This type of analysis can help you and your company choose the projects that best align with your corporate goals.