Product innovation is the process of creating new or improved products that offer value to customers and differentiate your brand from competitors. But how do you compare your product innovations to evaluate their performance and potential? In this article, you will learn some practical methods and tools to compare your product innovations based on different criteria and metrics.
Before you start comparing your product innovations, you need to define your comparison goals. What are you trying to achieve by comparing your products? Do you want to measure their market fit, customer satisfaction, profitability, or competitive advantage? Do you want to identify the best practices, the gaps, or the opportunities for improvement? Depending on your comparison goals, you will need to select the appropriate data sources, methods, and tools to conduct your analysis.
At the end of the day, an innovation needs to add value - create the WOW - at 3 levels: for the company, for the customer and the final consumer. In my experience, the main comparison is based on internal measures : ROI, turnover and the profit potential - in a perspective of 3 to 5 years. Next to that other measures are being used in the development process eg consumer purchase intention, customer feedback, benchmark results versus competition etc as a proxy for the WOW of the consumer/customer
Product Innovation can be seen in multiple ways. - Totally non existent & New Product Development ( Like walkman music player in 90s. When listening to music on the go was an innovative idea. It brought a new concept to customers. ) - Existing Product / Idea Improvement ( Like small iPods for music players, colored screen iPods etc. which added Value & Utility to Customers) When the concept of product is germinated, the most important point would be to see whether it is a totally new idea or if someone has already worked on similar lines. There starts the comparison with other existent products in the Market. The first and most important part would be, what Value addition customer is going to get.
Once you have defined your comparison goals, you need to choose your comparison criteria. These are the factors or dimensions that you will use to compare your product innovations. For example, you can compare your products based on their features, benefits, value proposition, target market, pricing, distribution, marketing, or customer feedback. You can also use more specific criteria, such as usability, functionality, design, quality, reliability, or sustainability. You should choose the comparison criteria that are relevant to your comparison goals and your product category.
The main comparison criteria will be financial: turnover and profit in a 3 to 5 year P&L , ROI and breakeven moment. During the product innovation process, a wider set of criteria will be used to select the best opportunities. Here we will also look into the fit with the company strategy, core capabilities and the opportunity to create a lasting competitive advantage and meaningful differentiation. This should be reflected in measures like consumer purchase intention and marketshare expectations.
The comparison would start with the Value Addition for Customer. It can be safer & easy use, benefits of products which no one else is offering, targeting a particular segment & also the price the customer is willing to pay. In FMCG sector, generally many players are already in market. So here the comparison could also be based on packaging. No scissor packaging can reduce time & the frustration of opening new pack of something. No Spill packaging will ease day to day life. Many times these minor points which are adding value to customer's day to day life make great comparison points even from customer's point of view. Once we know about the Value Addition points, then the financial, marketing and roi planning should be done.
The next step is to collect and analyze your data. You need to gather the data that will help you compare your product innovations according to your comparison criteria. You can use different data sources, such as market research, customer surveys, sales reports, product reviews, or analytics tools. You should also use different data types, such as quantitative, qualitative, or behavioral data. You should analyze your data using appropriate methods and tools, such as statistical tests, charts, graphs, tables, or dashboards.
Most financial data is coming from internal sources like extrapolations of sales data and profitability calculations. Tracking innovation success of previously launched products and linking these the related financial results is important to make the right estimates for future innovations. Consumer and custiomer insights are obtained through market research, using a variety of methods eg home placements, customer interviews, ...
The final step is to visualize and communicate your results. You need to present your comparison results in a clear and compelling way that highlights the main insights and findings. You can use different visualization tools, such as diagrams, maps, matrices, or scorecards. You should also use different communication tools, such as reports, presentations, or infographics. You should tailor your communication to your audience and your purpose, and use clear and concise language, visuals, and stories.
One image is better than a thousand words, so visual representation of results is of course prefereble to have a higher communication impact and better understanding by your stakeholders
Comparing your product innovations is not a one-time activity, but a continuous process of learning and improvement. You should use your comparison results to identify the strengths and weaknesses of your products, the best practices and the pitfalls, and the opportunities and threats. You should also use your comparison results to generate ideas and actions for improving your products, such as adding new features, enhancing existing features, changing pricing, adjusting marketing, or soliciting feedback.
Absolutely ! Product leaders don' thrive only because of 1 success ! The produce a continuous stream of new products that create the WOW at consumer or customer level with value propositions that deliver superior performance and raise the bar for competition. This is only possible by continuous learning and improvement of the way they work.
Comparing your product innovations is also not an isolated activity, but a contextual and dynamic one. You should not only compare your products internally, but also externally. You should benchmark your products against your competitors, your industry standards, or your customer expectations. You should also iterate your comparison over time, as your products, your market, and your customers evolve. You should monitor and update your data, your criteria, and your goals regularly, and adapt your comparison accordingly.
Once launched it is key to make sure your products remain competitive and relevant for your customers and consumers - as the context will automatically change post launch due to increased competition from copy cats. So it is key to benchmark and renovate your products to keep an advantage and superiority versus competition. Winning in the market is about Innovation & Renovation !
The essential task for a product manager is the understanding of his product portfolio and the development of the right strategy and action plans to deliver his company objectives. Innovation plays a key role in these plans to be capitalising on the ever changing markets - but in order to be successful and deliver superior value propositions that WOW in a durable way, you need to deliver the innovation to the market with the right activation approach, and keep the competitive advantage with constant renovation. This is the base for product leadership.