Updated: Jan 10, 2020
Framework for innovation: Is there a way to systematically test the viability of a new product? I outline an imaginary product to formulate questions that one should consider on the road to product-market fit. From idea to MVP, I highlight questions and exercises to develop nuanced ways of thinking about product development and launch. Many of these concepts warrant tomes of analysis, so consider this a tool to jump-start your process.
Product description: CharmantX is the definitive online source for in-depth reviews of beauty products that you use every day. The product is a content driven online property that features recommendations for major cosmetic categories (e.g lipstick, mascara) via in-depth unbiased written reviews (e.g. The Wirecutter) produced by vetted by experts such as chemists and makeup artists featuring high-quality photography with professional models. It’s not just another beauty blog, but a place for trusted recommendations based on rigorous testing methodologies. The persona is a savvy woman who values quality, but does not want to sift through the crowded, chaotic internet to find the best products for her everyday life.
Phase 1: Market Research & Competitive Research
Understand the incumbent industry and any long-tail competition or ancillary players
Market sizing - in this case one does not have to think too much about this since the market is nearly infinite. Familiarize with TAM/SAM/SOM - I like this simple primer on those concepts.
Competitors or suppliers - ask yourself about distribution as you learn about the market
Incumbent industry: L’Oreal, Coty, etc. The cosmetic industry is dominated by a few large, well-established multinational companies.
New competitors and innovative distribution channels: Understand the top ecommerce and content oriented D2C cosmetic brands as well as top independent beauty blogs - there would be a long tail here so focus on the popular sites/brands
Why now? Assuming the product doesn’t already exist, ask why the product does not exist in the marketplace? The answers to that question may reveal the hurdles that you need to overcome to build the product.
You can see how I start top-down by thinking about the size of the market on a consumption level then move from the dominant cosmetic companies to the long tail of the ecommerce/content oriented cosmetic/beauty brands (Glossier, ipsy). What are the surprises? I learned that many of the high-end brands that seem niche (Kiehls) are actually owned by companies like L’Oreal or Coty. What does that tell you about the market and product?
Phase 2: MVP & Monetization Strategy
How does industry and competitive analysis inform the product? Does the industry and market tell you that there will be at least some appetite for the product. In this case, the answer is probably yes because of market size, which is expected to reach over $800 billion in 2023. However, that does not guarantee success. The large market size comes with the challenge of an extremely competitive, noisy market In some cases, there may not be an established market - a greenfield. That does not mean it is a bad idea.
Product research Locate the top 10-25 ecommerce/content cosmetic sites - you probably have many names from step 1. Understand their content strategies - assumes that the basis for ecommerce is content. What is missing? Are they trusted by the audience for product expertise? What do consumers love about their products? Example: How did Emily Weiss build the audience for Into the Gloss so quickly? What do the ecommerce sites lack. In this case, objectivity, transparency. What content do they use to sell/educate their market?
Use a spreadsheet to track critical information - name of website, monetization strategy, content structure, overall look and feel.
MVP based on excel findings. If the excel exercise tells you that ads make the site look clutter, go for a clean look. If content feels overtly promotional, go long on content and short on pushing the product, save for the critical affiliate buy button. The Only Mascara You'll Ever Use Again - population of ~1K plus brands, using some sort of qualification, select a sample size of 50 mascaras, in depth product reviews of all, feature top 15 names, and written reviews for the top five because there will be different preferences. Number one product is featured with runner ups for unique, popular features (waterproof). Site is clean, with lots of product and ingredient information (does the audience event want all that ingredient information - don't assume - test this!). Carefully choose the first product to review based on the top cosmetic sellers with the highest churn (i.e. products that are consumed frequently). Choose a line-up of products to review later based on season - lipsticks in winter, etc
Monetization - Probably an affiliate model, but how do you execute this? Think beyond the affiliate model - how do you stay true to the nature of the product, but also build a lucrative business model. Model out some unit economics: With X number of clicks, Y % conversions, and Z affiliate rate, how much revenue can be generated from one post? What is the upside assuming a fully built out product? Is there unlimited revenue potential? What is the ROI on one post vs. 20 posts? At the moment, don't worry about how you will get the site visits. Build some scenarios out - X′ - so you can understand the breakeven, midpoint, and maximum upside .
Cost - What are the raw costs to produce one review? How do you go about finding vendors? Make some calls to ask about rates. Is your current physical location an ideal place? For example, Los Angeles is a great place to start because of the entertainment industry - many models, photographers available for employment. How do you find a cosmetic chemist and convince them to work?
Phase 3: Establishing initial traction.
How do you creatively and cost effectively seed high-quality traffic to the site. How can you bolster expensive content through low/no-cost amplification?
I actually started this blog post wanting to do a quick review of the book Traction - How Any Start-Up Can Achieve Explosive Growth. I thought the best way to articulate the concepts would be through a case study. It's one of the most practical business books I've ever read. It's short on the work hard, play hard advice on long on agile strategies. Check out this slide share outline.
The book discusses attainable channels to get "traction" AKA users or paying customers in the market. Underlying each channel is the concept of very scrappy, agile testing. Only have 10 users? Produce two different types of newsletters and A/B test. Even a small sample size can lead to useful findings. There are not actually statistics police watching over you (I took many, many stats classes so I have to say this).
SEO - we're a competitive bunch
Viral marketing - who knew that there is actually strategy behind this
PR - how to pitch and not irk PR people
Search Engine Marketing - I've heard of it, but I don't understand it
Social & Display Ads - pretty pictures
Content - this chapter changed how I view marketing