Creating a Product Business Case

1. Creating a Product Business Case CREATING A PRODUCT BUSINESS CASE HOW-TO GUIDE

2. 2 Creating a Product Business Case How-to Guide A Product Business Case is a plan written to justify a corporate product investment. It is common for an organization to recognize an opportunity to exploit with a new product, but the develop- ment of that product is outside of the budget. Perhaps funds do exist in the budget for new product development, but there is uncertainty or skepticism about the decision to invest. The Product Business Case becomes the mechanism for quantifying the opportunity and the risk, so the organization can make a quality decision about proceeding. This How-To Guide outlines what a Product Business Case is, describes the key concepts for creating an effective one and presents an action plan for doing yours. A Product Business Case is a formal document that contains the necessary information to enable the business to make a decision about investing in a product development effort. A good Product Business Case is thoroughly researched and provides all the relevant information presented in an easy-to-understand, accessible format to convince decision makers to invest. The Product Busi- ness case therefore will include sections that detail. Download the Demand Metric Product Business Case Template to guide you through the process outlined in this guide. HOW-TO GUIDE The Product Business Case Defined What the product is: a precise definition of the product. Who the product is for: the target market segments and their sizes for which this product is ideal. How it will compete in the market: how the product will enter and compete in the market against existing and expected competitors. Financials: a forecast of the revenue, profit & loss and how long it will take to break even on investing in developing this product. Why it is needed: a description of the market need that compels the organization to develop a product to address it. Creating a Product Business Case 2 Creating a Product Business Case How-to Guide A Product Business Case is a plan written to justify a corporate product investment. It is common for an organization to recognize an opportunity to exploit with a new product, but the develop- ment of that product is outside of the budget. Perhaps funds do exist in the budget for new product development, but there is uncertainty or skepticism about the decision to invest. The Product Business Case becomes the mechanism for quantifying the opportunity and the risk, so the organization can make a quality decision about proceeding. This How-To Guide outlines what a Product Business Case is, describes the key concepts for creating an effective one and presents an action plan for doing yours. A Product Business Case is a formal document that contains the necessary information to enable the business to make a decision about investing in a product development effort. A good Product Business Case is thoroughly researched and provides all the relevant information presented in an easy-to-understand, accessible format to convince decision makers to invest. The Product Busi- ness case therefore will include sections that detail. Download the Demand Metric Product Business Case Template to guide you through the process outlined in this guide. HOW-TO GUIDE The Product Business Case Defined What the product is: a precise definition of the product. Who the product is for: the target market segments and their sizes for which this product is ideal. How it will compete in the market: how the product will enter and compete in the market against existing and expected competitors. Financials: a forecast of the revenue, profit & loss and how long it will take to break even on investing in developing this product. Why it is needed: a description of the market need that compels the organization to develop a product to address it. Creating a Product Business Case

3. 3 Creating a Product Business Case How-to Guide Product Business Case Fundamentals HOW-TO GUIDE Creating a Product Business Case Narrative — A Product Business Case tells a story about how you will bring a product to life; it is not a checklist. Therefore, the readability of the document is important. Different authors often write different sections of the business case, so make sure all sections have good internal consistency because they are highly interdependent. For this reason, designate one person to edit the entire document. Research — The best Product Business Cases are well researched. Conduct thorough research to find objective, industry information that supports your business case. The more third party, objective data you can find and include, the more credible your business case becomes. Quantitative data is excellent, but also include qualitative data, particularly if it comes from an industry expert or respected source. Objectivity — A business case is an objective and fact-based document, so make sure that you address both the up side and down side of the product investment. The temptation is to only cover the upside in your business case, but doing so will cause decision makers to doubt the credibility and completeness of your business case. If research reveals negative data, don’t ignore it; rather, include it in your business case and present an argument for how your product will mitigate any negative research findings. Format — Make your Product Business Case accessible to the many people who will read it and influence its acceptance. Bring it to life with graphics, tables and figures. Use headings and sub-headings to organize the text. Avoid a document that consists of multiple pages of unbroken text. Apply the following core concepts to develop an effective, credible Product Business Case: Download the Product Business Case Template to document your business case, using the following set of steps to complete it: The discipline of your product planning process will help you avoid the critical design, develop- ment and launch flaws that can cripple a new product. Regardless of how compelling the oppor- tunity or innovative the product, there are flaws. The rigor of your planning process will help you detect them, mitigate the risks, identify the critical success factors and make the best possible decision you can make based on the available information. Bottom Line 3 Creating a Product Business Case How-to Guide Product Business Case Fundamentals HOW-TO GUIDE Creating a Product Business Case Narrative — A Product Business Case tells a story about how you will bring a product to life; it is not a checklist. Therefore, the readability of the document is important. Different authors often write different sections of the business case, so make sure all sections have good internal consistency because they are highly interdependent. For this reason, designate one person to edit the entire document. Research — The best Product Business Cases are well researched. Conduct thorough research to find objective, industry information that supports your business case. The more third party, objective data you can find and include, the more credible your business case becomes. Quantitative data is excellent, but also include qualitative data, particularly if it comes from an industry expert or respected source. Objectivity — A business case is an objective and fact-based document, so make sure that you address both the up side and down side of the product investment. The temptation is to only cover the upside in your business case, but doing so will cause decision makers to doubt the credibility and completeness of your business case. If research reveals negative data, don’t ignore it; rather, include it in your business case and present an argument for how your product will mitigate any negative research findings. Format — Make your Product Business Case accessible to the many people who will read it and influence its acceptance. Bring it to life with graphics, tables and figures. Use headings and sub-headings to organize the text. Avoid a document that consists of multiple pages of unbroken text. Apply the following core concepts to develop an effective, credible Product Business Case: Download the Product Business Case Template to document your business case, using the following set of steps to complete it: The discipline of your product planning process will help you avoid the critical design, develop- ment and launch flaws that can cripple a new product. Regardless of how compelling the oppor- tunity or innovative the product, there are flaws. The rigor of your planning process will help you detect them, mitigate the risks, identify the critical success factors and make the best possible decision you can make based on the available information. Bottom Line

4. 4 Creating a Product Business Case How-to Guide Action Plan STEP 1 - Identify 1 3 Identify 7 Write 6 4 2 5 Determine Complete Competition Develop Present Know the Market Oppor- tunity You Are Targeting Identify the market opportunity or need this product will address. Provide an opportunity statement that explains the nature of the opportunity or underlying need the product will address. Discuss in detail the market for this product, its size and expected growth. In this section, it is important that you not only state the facts, but also your insight on why this is the right market and from where the initial customers will come. Market Requirements Document V I E W R E S O U R C E 4 Creating a Product Business Case How-to Guide Action Plan STEP 1 - Identify 1 3 Identify 7 Write 6 4 2 5 Determine Complete Competition Develop Present Know the Market Oppor- tunity You Are Targeting Identify the market opportunity or need this product will address. Provide an opportunity statement that explains the nature of the opportunity or underlying need the product will address. Discuss in detail the market for this product, its size and expected growth. In this section, it is important that you not only state the facts, but also your insight on why this is the right market and from where the initial customers will come. Market Requirements Document V I E W R E S O U R C E

5. 5 Creating a Product Business Case How-to Guide Action Plan STEP 2 - Develop 1 3 7 6 4 2 Develop 5 Identify Write Determine Complete Present What Is Your Competitive Advantage and Uniqueness? Develop positioning, pricing and a product marketing strategy for the product. As you do so, ensure that you create a competitive advantage by exploiting the uniqueness and differentiation this product will have when it is launched. V I E W R E S O U R C E Product Marketing Plan Playbook Competition 5 Creating a Product Business Case How-to Guide Action Plan STEP 2 - Develop 1 3 7 6 4 2 Develop 5 Identify Write Determine Complete Present What Is Your Competitive Advantage and Uniqueness? Develop positioning, pricing and a product marketing strategy for the product. As you do so, ensure that you create a competitive advantage by exploiting the uniqueness and differentiation this product will have when it is launched. V I E W R E S O U R C E Product Marketing Plan Playbook Competition

6. 6 Creating a Product Business Case How-to Guide Determine a set of objectives this product should achieve when it is launched. Your objectives for this product should have consistency with the corporate strategy and vision. Typical objectives for a product include revenue, market share, profit, initial orders or market leadership perception. Recognize that some of these objectives conflict with each other. Action Plan STEP 3 - Determine 3 Determine 7 6 4 2 5 1 Write Complete Develop Present Identify Have Consistent Objectives for Your Product Launch Product Development Strategy Scorecard V I E W R E S O U R C E Competition 6 Creating a Product Business Case How-to Guide Determine a set of objectives this product should achieve when it is launched. Your objectives for this product should have consistency with the corporate strategy and vision. Typical objectives for a product include revenue, market share, profit, initial orders or market leadership perception. Recognize that some of these objectives conflict with each other. Action Plan STEP 3 - Determine 3 Determine 7 6 4 2 5 1 Write Complete Develop Present Identify Have Consistent Objectives for Your Product Launch Product Development Strategy Scorecard V I E W R E S O U R C E Competition

7. 7 Creating a Product Business Case How-to Guide Identify who and what will compete with your product. Research the specific strengths and weaknesses of each competitor, indicating the advantage you have over each. Once your product is launched, describe the anticipated competitive response and how you will maintain your competitive advantage. Avoid the trap of assuming there is no competition just because there is not another company that will compete directly with you; in this case, the competition is the status quo. Action Plan STEP 4 - Competition 3 7 6 4 Competition 2 5 1 Write Determine Complete Develop Present Identify What Is Your Competitive Advantage? Competitive Analysis Tool V I E W R E S O U R C E 7 Creating a Product Business Case How-to Guide Identify who and what will compete with your product. Research the specific strengths and weaknesses of each competitor, indicating the advantage you have over each. Once your product is launched, describe the anticipated competitive response and how you will maintain your competitive advantage. Avoid the trap of assuming there is no competition just because there is not another company that will compete directly with you; in this case, the competition is the status quo. Action Plan STEP 4 - Competition 3 7 6 4 Competition 2 5 1 Write Determine Complete Develop Present Identify What Is Your Competitive Advantage? Competitive Analysis Tool V I E W R E S O U R C E

8. 8 Creating a Product Business Case How-to Guide Action Plan STEP 5 - Present 3 7 6 4 2 5 1 Write Determine Complete Develop Identify You should also describe the purchase process, documenting each phase and estimating its duration as illustrated in this example: V I E W R E S O U R C E Purchase Process Diagram Present Present a detailed customer profile that describes the target customer you need to reach with your product development, communications and PR efforts. The purpose of this profile is to understand when, why and how a buyer will buy your product. In this section of your business case, you will explore the differences, if any, between the purchaser, recommender and user of your product. A Detailed Customer Profile Helps You Reach Your Target Competition 8 Creating a Product Business Case How-to Guide Action Plan STEP 5 - Present 3 7 6 4 2 5 1 Write Determine Complete Develop Identify You should also describe the purchase process, documenting each phase and estimating its duration as illustrated in this example: V I E W R E S O U R C E Purchase Process Diagram Present Present a detailed customer profile that describes the target customer you need to reach with your product development, communications and PR efforts. The purpose of this profile is to understand when, why and how a buyer will buy your product. In this section of your business case, you will explore the differences, if any, between the purchaser, recommender and user of your product. A Detailed Customer Profile Helps You Reach Your Target Competition

9. 9 Creating a Product Business Case How-to Guide Action Plan STEP 6 - Complete Complete a break-even analysis and risk assessment for the product. Present all the underlying assumptions, such as product pricing, margin and a sales forecast. Further- more, it is useful to discuss how sales will occur, whether using existing sales channels or through new ones. If the latter, discuss the cost of developing any new channels required to sell the product. In addition to the financial detail you provide here, include a product development budget in this section. V I E W R E S O U R C E 3 7 6 Complete 4 2 5 1 Write Determine Develop Present Identify Determine Your Break- Even Analysis and Risk Assessment Competition 9 Creating a Product Business Case How-to Guide Action Plan STEP 6 - Complete Complete a break-even analysis and risk assessment for the product. Present all the underlying assumptions, such as product pricing, margin and a sales forecast. Further- more, it is useful to discuss how sales will occur, whether using existing sales channels or through new ones. If the latter, discuss the cost of developing any new channels required to sell the product. In addition to the financial detail you provide here, include a product development budget in this section. V I E W R E S O U R C E 3 7 6 Complete 4 2 5 1 Write Determine Develop Present Identify Determine Your Break- Even Analysis and Risk Assessment Competition

10. . 10 Creating a Product Business Case How-to Guide 3 STEP 7 - Write 7 Write 6 4 2 5 1 Write the Executive Summary section of your business case last, but place it first in your document. Summarize the key conclusions made in each section of your business case document, and include your overall recom- mendation for proceeding with development of the product. Include a timetable for product development and launch. Determine Complete Develop Present Identify Action Plan Product Business Case V I E W R E S O U R C E Complete Your Product Business Case & Executive Summary Competition

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