OPTIMISED FOR A NO-GO
Consider a product manager tasked with launching a new product in a specific country. With a clear understanding of responsibilities and marketing options, the manager carefully assesses all available tactics. After conducting thorough research and predictive modelling based on an optimal mix of marketing variables—such as price, packaging, and communication strategy—the data reveals significant market potential in terms of buyers and purchase frequency. So far, so good.
However, the real challenge arises when building the business case and assessing the investments to reach buyers by creating both mental and physical availability for the product. While increasing communication and sales efforts can drive growth to some extent, will they always generate a sufficient return on investment (ROI)?
Despite working with a marketing agency to explore various strategies and investment levels, many product managers do realise that the simulations fail to show the product breaking even or becoming profitable. The projected reach for each scenario simply isn’t elastic enough to yield a positive ROI.
In this situation, what’s the best course of action? Should you take a chance and proceed with the launch, or trust the model’s predictions? When all combinations of marketing mix variables point to a loss—and if the model is valid—the prudent decision would be to hold off on the launch, thereby reducing the risk of failure, a common outcome for many new products.
DREAM YOUR OPTIONS
But what if there were ways to leverage more strategic opportunities that go beyond the product manager’s scope and budget? You would naturally seek high-impact solutions that incur minimal cost.
One example is partnering with a mega-influencer such as Cristiano Ronaldo, who commands a following of over 600 million people. Such a partnership would undoubtedly generate significant awareness. However, with costs exceeding €2 million for a single sponsored Instagram post, this option is typically out of reach for a country-specific product manager. Yet, the dynamics would shift if the investment were shared across multiple regions—requiring decisions from higher organisational levels.
REMAP YOUR PATH TO SUCCESS
Building awareness with a mega-influencer is just one example. Developing or entering a new sales channel could be another. However the examples should highlight how strategic decisions could create economies of scale in building awareness and potentially alter the profitability equation for a new product launch.
In our daily work, we often see a strong focus on forecasting sales volumes to inform business cases and support go/no-go decisions. However, sales forecasts rely on a multitude of factors that need to be considered to truly understand the ROI and make informed decisions. Most of these factors are tactical in nature and fall within the product manager’s area of responsibility.
Despite sophisticated marketing operations, few forecasts confidently predict a product’s profitability, particularly in highly competitive markets where new product failure rates are high. This is why we are convinced that strategic options should also be considered in volumetric forecasts to uncover potentially profitable paths. Only by anticipating and thoroughly researching these possibilities (such as understanding the relation of product buyers with influencers) can they be accurately modelled and factored into decision-making processes – which would include respective people high up in the organisation in case of more strategic options to be considered.
Ultimately, sustainable success may not lie solely in identifying potential product failures and avoiding launches, but in finding ways to turn a launch profitable—even when it seems unlikely. In this context, volumetric modelling should focus not only on tactical optimisation but also on exploring and evaluating strategic opportunities that could transform a potential no-go into a profitable launch.
