PRODUCT MANAGEMENT AND STRATEGY Simone Giacometti March 1, 2014

About Me • Simone Giacometti •  Technical Product Manager @ vLamp • Working mostly with startups • Web developer turned product manager • MBA and comp sci degrees • Enterprise Architect • ScrumMaster

Inspiration “In a startup, both the problem and solution are unknown.” Eric Ries “The only way to win is to learn faster than anyone else.” Eric Ries “Organizations are successful because of good implementation, not good business plans.” Guy Kawasaki

What to ask • How can you be profitable? •  Is sustainable competitive advantage attainable? • Are there core competencies?

Banks, Carl. The Walt Disney Co. Scrooge McDuck [image]

FIVE FORCES ANALYSIS Competing for advantage

Five Forces Analysis • Michael E. Porter - 1979

•  originally an engineer, then an economist specializing in strategy

•  Looks at micro environment • Determine the competitive intensity and attractiveness of

a market • Unattractive market if combination of 5 forces affects

profitability

Five Forces

notedesk.com Five Forces [image]

Potential Entrants • Competitors will come if market is attractive

• High threat if easy for other players to enter market •  Are there barriers to entry?

• How can you make it unattractive?

• How can you make it hard to replicate?

Substitutes • Will there be other types of products that will satisfy your

target customer needs? • Decrease chances for people to switch

•  Increase switching costs! •  Perceived level of differentiation •  Quality and usability is important

• Examples: •  VOD vs DVD •  Mp3 vs CD

Buyers • Do customers have bargaining power or leverage? • How many options do customers have?

•  High threat if many

• Decrease their options •  Increase switching costs •  Make it unique •  Provide rewarding experience

Suppliers • Do suppliers have bargaining power? • Are there many options for suppliers to sell to?

•  High threat if many

•  Is talent hard to get or keep? •  High threat if so

• Examples •  Movies theaters for Fandango •  Venues and artists for Live Nation

Rivalry • How many firms in the space?

•  Is sustainable competitive advantage attainable?

•  Is it expensive to advertise?

STARBUCKS

Starbucks – Entrants •  Inexpensive to open a coffee shop • People love coffee shops = people love to open coffee

shops •  Low overhead and risk • Can be autonomous, supplementary income • High threat!

•  Focus on core competencies •  Protect territory •  Brand equity

Starbucks – Substitutes • Coffee is a drug. • Been around for hundreds of years • Resisted energy drink and juice trends •  Low threat

Starbucks – Buyers •  Threat is high since there’s lot’s of options to buy coffee

•  Other coffee shops •  Donut shops •  Vending machines •  Convenience stores •  Make it home •  Get it at the office

•  Focus on locations, convenience, experience, quality, brand, differentiation, cost

Starbucks – Suppliers •  Farmers get rich with Starbucks •  Low threat

Starbucks – Rivalry •  Lot’s of brands and coffee shop options • What’s the product differentiation? • Advertising is important

Starbucks Summary • Entrants: High

•  Protect territory, focus on core competencies, brand equity

• Substitutes: Low • Buyers: High

•  Loyalty, experience, convenience, quality

• Suppliers: Low • Rivalry: High

•  Brand equity, differentiation, advertising

Starbucks Strategy • Core competencies • Convenient locations • Great experience • Consistent coffee and service • Brand equity

WHATSAPP

WhatsApp - Entrants • Easy to build messaging platform but

•  Hard to gain adopters •  Hard to make money

• Currently low threat thanks to large user base

WhatsApp - Substitutes • Various options for communicating

•  Phone, photo, video, snaps, tweets

WhatsApp – Suppliers • Many options for messaging • Adoption is based on

•  If contacts are using it (catch22) •  User experience •  Price

•  Threat is high •  Make it easy to find friends •  Make it easy to sign up (just phone number!) •  User experience •  Affordable

WhatsApp – Buyers • No ads, current buyers are paid users • Many options for messaging • Adoption is based on

•  If contacts are using it (catch22) •  User experience •  Price

•  Threat is high •  Make it easy to find friends •  Make it easy to sign up (just phone number!) •  User experience •  Affordable

WhatsApp – Rivalry •  Intense rivalry • Skype, BBM, Facebook, FaceTime, Viber, Tango, …

WhatsApp Summary • Entrants – High threat

•  Easy to build messaging app

• Substitutes – Medium threat •  Lot’s of ways to communicate

• Buyers – Low threat •  Large user base

• Suppliers – Low threat •  Large user base

• Rivalry – High threat •  Lot’s of messaging apps

WhatsApp Strategy • Protect and leverage large user base

• Easy to sign up

• Easy to find friends in address book

• Great user experience

• No brand dilution, known for messaging

YELP DEALS

Yelp Deals - Entrants • Deals can be profitable

•  Fairly easy to create deals site

• High threat

Yelp Deals - Substitutes • Social contests

• Coupons

•  Loyalty programs

• High threat since there’s lot’s of alternatives

Yelp Deals - Suppliers • Many options to offer deals

• Yelp is essential for local businesses •  Why give discounts to users that are planning to come anyway?

•  There’s friction to load deals •  It’s not easy to create a deal

• Medium threat

Yelp Deals – Buyers •  Lot’s of places to find discounts

• Yelp is not known for deals

• Medium threat

Yelp Deals – Rivalry •  Intense competition • Make it easy to find • Perceived differentiation • Brand equity

Yelp Summary • Entrants – High • Substitutes – High • Suppliers – Medium • Buyers – Medium • Rivalry - High

VALUE CHAIN What are the value-adding activities?

Value Chain • Create value that is larger than cost

• Primary activities + support activities -> margin

Value Chain

Image Credit 2009 Dinesh Pratap Singh

GENERIC STRATEGIES Scope vs Strength

Generic Strategies • Scope

•  Focus on market size and composition

• Strength •  Focus on core competencies

• Consider 3 Dimensions: •  Market segmentation •  Product differentiation •  Product cost

Generic Strategies

“Hole in The Middle” Problem • Broad market is profitable

•  i.e. The Home Depot

• Small market is profitable •  i.e. Exotic hardwood floor stores

• Moderate market is NOT profitable •  i.e. Mom & Pop hardware stores

Examples in online dating Segmentation

Differentiation

Cost Leadership

BLUE OCEAN STRATEGY Make the competition irrelevant

Blue Ocean Strategy • W. Chan Kim and Renée Mauborgne, Professors at

INSEAD

• Companies succeed not by battling competitors, but by creating ″blue oceans″ of uncontested market space

New Demand • Unlocking new demand and making the competition

irrelevant.

Value Innovation • Aligning utility, price, and cost • Differentiation + low cost

Copyright blueoceanstrategy.com

Four Actions Framework Determine what is available and what is/isn’t important to target customer 1.  Reduce

Factors below industry standards

2.  Eliminate Factors not needed

3.  Raise Factors needed above industry standards

4.  Create Factors needed that industry does not offer

Strategy Canvas

NINTENDO WII Blue Ocean Strategy Example

Video Game Industry • What is the market segmentation?

•  Focused on hard core gamers

• Ruled by PlayStation and XBOX

Bring New Gamers • Can we bring new people to video games?

•  i.e. can we create new demand?

• Who is this persona?

New Demand • Define persona(s) • Casual, non-core gamers • Women •  Families

What does persona want? •  Fun and easy user experience

• Certain types of games

• Doesn’t take much time to play

• Doesn’t care about hardware or performance

• Doesn’t care about video quality

What are current factors? • Price • CPU performance • GPU (graphics card) performance • Video quality • Storage • Game collection • Ecosystem • User experience

Strategy Canvas

Introducing Motion Control Gaming

Missed Threats & Opportunities • PlayStation Move

• XBOX Kinect

• Roku

• SmartTVs

• Mobile games on tablets and smartphones

Other Examples • Netflix vs Movie rental industry

•  No late fees •  Available in remote areas

• Airbnb vs Hospitality industry •  Private homes into cheap available rooms for rent

•  ZipCar vs Car rental industry •  Subscription to rent by hour •  Convenient and easy

TECHNOLOGY ADOPTION CURVES

Who are they? •  Innovators

•  Enthusiasts, more prosperous and more risk-oriented

• Early adopters •  Visionaries, younger, more educated, less prosperous

• Early majority •  Pragmatists more conservative but open to new ideas

•  Late majority •  Conservatives, older, less socially active

•  Laggards •  Skeptics, very conservative, oldest

The Chasm

The Chasm • Early adopters -> Early majority

•  Different expectations

• Will become de facto standard if adopted by early majority

• Understand product life-cycle management

• Understand target market

•  Focus on one group at a time

Suggested Reads

Thank You! Simone Giacometti Technical Product Manager, vLamp simone@vlamp.com www.vlamp.com @SimoneMBA /in/simonemba