How to diagnose market response to product launches?
Diagnosing market response to product launches is a common application of RCA in internet businesses. It involves a structured approach to understand why a product's market performance met or did not meet the expected goals.
Let's apply the RCA steps to a specific example:
Example:
Consider a scenario where an e-commerce company in India launches a new line of fashion apparel, expecting to hit a revenue of ₹30 crores with high customer satisfaction ratings in the first month. However, the actual revenue was only ₹15 crores, with mixed customer feedback.
Using the RCA approach:
- 1. Identify Metric Hierarchy: The top-level metrics are Revenue and Customer Satisfaction. Revenue is further dissected into impressions, click-through rate (CTR), conversion rate (CVR), and average order value (AOV). Customer Satisfaction is analyzed through customer reviews and ratings.
- 2. Conducting EDA: The team examines each component of the metric hierarchy. They notice a high volume of impressions but lower than expected conversion rates and average order values. Customer reviews point to specific issues with product quality and sizing.
- 3. Formulating Hypotheses: Based on the EDA findings, the team develops hypotheses about why the revenue was lower than expected and why customer satisfaction was mixed. Hypotheses may include pricing strategy, product quality issues, or insufficient marketing efforts.
- 4. Deciding on Statistical Technique: To validate these hypotheses, the team might select appropriate statistical techniques. For the sales data, correlation analysis could be used to understand the impact of pricing on sales volume. For customer feedback, text analysis could be employed to identify common themes in reviews.
The analysis might indicate that while the product was viewed by many, the conversion rate was impacted by higher than expected pricing and competitive alternatives. The customer feedback highlighted quality concerns, affecting the overall satisfaction and repeat purchases.
Takeaway:
Effectively diagnosing market response to product launches through RCA requires a deep dive into both sales performance and customer satisfaction metrics.
By breaking down these top-level metrics into their contributing factors and analyzing them systematically, businesses can uncover specific areas for improvement.
This insight is crucial for refining marketing strategies, pricing, product quality, and customer service in future launches, ultimately leading to more successful product launches and sustained growth in the competitive internet business market.