What will be the strategy to launch a product that already captured around 70-80% of the students market? The catch is "As the students are graduating, new students are also coming in." Take an online furniture rental company for reference.

Microsoft product launch question: What will be the strategy to launch a product in which there are already established players for the students market and they have captured around 70-80% of the market (The catch is "As the students are graduating, new students are also coming in") - Take online furniture rental company for reference

Answers:

Clarify

Product: Online platform provides students the ability to rent the furniture while in school.
Target market: Student in the US
Existing rivals have captured around 70-80% of the market
The phase of product lifecycle (Introduction, Growth, Maturity, Decline) => Introduction

Goals

Raise awareness
Validate our product

Strategy:

Identify our USP
- Most of the rivals would buy the new furniture and allow students to rent them while in school. Then the company will do some things to renew the furniture to make sure the lifetime of each furniture is high.
- Instead of being a supplier, we could be a platform. This means we would allow people who own furniture to lease to earn money. The students who want to rent, they can come to us and select what they want. We will be in charge of the quality assurance, delivery, and payment system.
- Offer a combo (full set of furniture for a room, ...)
Narrow down the customer segment:

- We will focus on international students who are not too familiar to the US.
- Instead of diversify the market, we should focus on cities having a lot of universities
Lower Price
- We should lower the price as much as possible. For students, price is one of the key factors they will think of while making a consideration.
Potential Risk
- Low quality because of overused => Validate the quality before allowing people to lease. Find a way to renew them
- Supply is not enough => We can own some furniture to back up
Metrics
- Acquisition (Focus)
- Activation (Focus)
- Retention
- Reference
- Revenue

Plan
1. Pre-launch

Partnership
- Establish a relationship with the international department of universities to offer special promotion for international students when using our service.
- Establish a relationship with suppliers to make sure we have enough supply especially when the semester begins.
- Establish a relationship with study abroad agencies around the world to suggest us to their customers, international students.
Marketing
- Focus on marketing in school having a high rate of international students
- Focus on digital advertisements involving studying abroad keywords because students would spend a lot of time on the internet to search for their oversea study.
- Push marketing campaign when students are finding their houses for a new semester
KPI
- # of partnership with study abroad agencies around the world
- # of partnership with international department
- # of supplier

1. During-launch

Partnership
- Keep good relationships with students by helping them set up the furniture.
- Keep good relationships with suppliers by helping them improve the furniture and deliver it to students.
- Keep good relationships with international departments and agencies to make sure our product is the first example coming to their mind.
Marketing
- Marketing through our partners’ network
- Offer a good scholarship for international students to do branding
- Focus on digital advertisement because students would spend a lot of time on the internet.
KPI
- # of reach from different sources
- Convert rate
- $ for MKT
- # of orders
- # of suppliers

1. Post-launch

Small gifts to thank and remain in good relationships with our partners.
Keep in touch with our students.
Compare the metrics of data collected pre-launch and during launch to measure the performance.
Determine what went well and what needs improvement.
Optimize the cost for MKT in each channel.

Conclusion

Because we are the new one of the market, instead of trying to increase revenue, I think we should focus on increasing users' awareness about our product and validate our assumption.
To do that, we should:
- Partner: Establish good relationships with our partners involving international students.
- Marketing: Spend more effort on marketing to raise the awareness of our students about our product.
- KPI: Focus on Reach and Engage metrics

rahul_g · Answer 2 · 2020-04-26T05:18:26+0000

What will be the strategy to launch a product in which there are already established players for the students market and they have captured around 70-80% of the market (The catch is "As the students are graduating, new students are also coming in")

- Take online furniture rental company for reference

What's the goal here?

Assuming the idea to capture a slice of the pie

Understand the market

Furniture rental for the stay while they are studying
Most dorms already provide the basics so you're looking at people who are staying outside Uni on rent ( those staying at home dont need furniture) - These will be mostly students from out of city or expats
High switching cost given the nature of product - you're almost always using the product and little to no maintentenance

Who's the TG? Students

Owners of rent places
1. Want to maximise rent/reduce costs
2. Want students to occupy right away immediately after the previous one leaves
3. has multiple spaces to rent often
4. old in their 40s/50s, don't have the health to do heavy lifting
5. movement of furnitures often damage their apartment
6. ownership of funiture - own parts of the furniture and most needs to be moved in
Students
1. Cost conscious: want to save money on expenses like stay etc
2. Mostly from out of town so don't know the town well, find the place they want to rent after going their
3. Short on time to plan
4. lazy
5. 2 types
  1. Existing: already stayng on rent and have rented out furniture
  2. New: About to join
  3. leaving: Leaving uni

Problem

You want to break into the market - Establishes players have already captured the market.

Which TG to go after?

Given the high switching cost going after existing student is going to be a blood bath, you'll have to work harder for lesser conversion

Go after new students, pain points:

1) Logistics of pick up and return + arranging the furniture

2) Owning furniture is a problem since you need to move it again/pay for it when you relocate/move out

2) Deposits tend to be high and often there is no visibilty on damages fees

3) Sharing expenses is a pain since usually individuals rent it out - some furniture is common and some is individual

4) figuring out sizes of the rooms and what would fit/how it would look is challenging

landlord pain points:

1) Furniture is expensive and they need to pay the full fees upfront - often they compromise, which means guests can have issues

2) Movement of furniture causes damage

3) Students may steal furniture/damage it, hence they want to minimise furniture and need to audit from time to time

Goals

Maximise market share = % of students new student renting from us

Product

Student facing

1) Free delivery and pick up of furniture on renting out for a year - this will ensure students are able to move in and out easily (adoption)

2) Free relocation once a year in case the student wants to switch houses etc ( adoption)

3) optional: insurance, students can opt for insurance which will covers minor costs of damages ( adoption)

4) Shared expenses: Students can rent furniture as a group and split the payments ( adoption)

5) Referral for students: students can refer students to use the rental service and earn credits that can be used to pay rent (growth)

6) Virtual mapping of the room: Students can use AR to virtually place furniture in the room to understand if it'll fit

Will pick all except 6 - not all students are super concerned with how the apartment looks - will have limited reach/impact.

landlord facing

1) Tie up with landlord for furniture rental: Some furniture is permanent in the rental, landlords have to pay a fixed monthly fees. The fees charged would be more economical than to students since cost of it will be lower owing to no relocation expensses and a landlord typically will own multiple houses

2) insurance: Landlords can opt for insurance WRT furniture to ensure they don't need to worry about it

3) Landlord referrals : landlords can refer other landlords and earn some free credits

Strategic calls to be made

Acquisition strategy

Students

1) Tie up with universities to offer aggresive rates to incoming students

2) Tie up with landlords and real estate agents to refer potential new student

3) Post on craigslist/other boards where students might go looking to rent apartment

4) optimise ASO and SEO for discovery of app/website

landlord

1) call all landlords with apartments listed for rent on craigslist

2) Offer special discount to owners for referring other owners

Product

Already covered above

Retention

Students on renewal of their annual furniture rental can get a discounted rate of rental

Beta papa · Answer 3 · 2020-04-25T13:56:59+0000

Let's clarify the problem:

The customer segment is college students who rent places like university towns for the period they finish their education.
The furniture rental companies rent out studio furniture pieces for a monthly fee so students don't have to purchase them. Their revenue model guarantees continued income from new students and the advantage to students is that they don't have to worry about the maintainence and wear and tear.
Problem also states that there is existing competition with the market saturated with 70% players in the market.
We now need to devise a strategy to break into this market (ex. furniture rentals) with our new product.
Let's assume we are launching this product in UK

Goal:

Break in to market of furniture rentals in university towns. For MVP, restrict to 2 key university towns of Cambridge and Oxford.

Strategy:

Step 1: Identify the customer segments.

A) College students B) Dorms and student accomodations

Outcome: This step should reveal total addressable market, serviceable addressable market and share of market.

Step 2: Competition Analysis

A 2-pronged approach to identify:

- Key strengths and weaknesses of the competitors.

- Survey students and B2B segment to identify their pain points.

Outcome: This step should reveal key baseline features, performance features provided by competitors, their revenues, delivery models, channels they use and churn rate.

Student qualitative survey should provide information on pain points (ex. furniture repairs, online payments, return process simplification etc).

Step 3: Identify features that are valuable ( high user satisfaction and very important)

List the features that make the product a differentiator in the industry and list all the use cases based on data above. Example:

a) Quick and simple online purchase. (Basic Feature)

b) Expedited delivery. (Basic Feature)

c) Simple returns (Performance Feature)

d) Referral scheme (Wow factor)

e) Quick zero cost repairs (Wow factor)

Implementation Plan:

The implementation plan may be split into 2 major categories, operational and IT. Operations team will manage phyiscal operations, pick-pack-ship operations, carriers integration etc.

Whilst the web portal or app in IT will be customer centric to book furniture, pick a delivery slot, repairs and returns.

The implementation discussed here is specfic to IT assuming the company has already a well established backend operations.

Pre Launch:

Identify metrics that matter most

Maintain different numbers for B2C and B2B customers.The metrics that are relevant could be:

a) Customer acquisition : New customers acquired from launch. This should also consider initial acquisition costs.

b) Revenue and Profits : Revenue numbers.

c) Return on Investment : Value delivery calculation over time.

d) Inventory Costs : Since there is an investment on furntiture, costs (fixed and variable) could be high. We need a way to track these.

e) Customer Lifetime Value: Considering the cost of furniture, repairs and monthly subscription fee, need to calculate how much revenue a customer generates over a period of 3 years.

f) Product Market Fit: Though its not a metric, its a comparative analysis how well the product is being received by customers in comparison to competitors and where the growth areas are- which is something that needs to be done iteratively.

Partner collaboration

Partners could be operational like carriers or marketing like colleges.

Marketing

Fine tune and/or define the core product offering, pricing, placement (channels) and promotion opportunitites.

Prototype

Now is an opportunity to prototype the app and get feedback from customers. This should be both qualitatitve and quantitive (ex. how many sign ups o nlanding page).

During Launch:

MVP Delivery and Focus Test Groups

Product launch with features and use cases defined with. a pre release to already signed up customers. Test the product with focus groups to identify how well each feature is received and see if they are keen on buying it.

Iterate and Repeat

Identify features that may not be designed well or features that dont matter to trace back to either pivot or improve.

Distribution

This stage needs that a product is orcherstrated through social media, messaging boards so it catches attention. Partners could promote using 2-way promotion scheme.

Post Launch:

Record

Record captured metrics and assess results.

Focus on improvement

Identify 20% of revenue generators and see the 80% problems they have.

Plan your roadmap

Your backlog should have high severity defects/improvements, features that competitiors have introduced, performance and scalability etc.

Summary

In summary, though the market is saturated, with research it may indicate either there are areas of improvement or niche services that may be added. With product strategy nailed, benefits ascertained by customer feedback at crucial stages, following a fail-fast and fail-cheap attitude, we wil be able to draw conclusions into how well it is received, the scope for improvement and overall company strategy.

hjc · Answer 4 · 2020-09-10T02:19:47+0000

Clarification

Let me verify my understanding of the current furniture rental user journey:
- Student (2nd year in colledge) Need to move out of dorm and find a place to live.
- Student find an unfurnished apartment
- Student contact the rental company, select the furniture set and sign a lease (at least 1-year, can be renewed)
- Student hire movers to pick up the furniture, and move into the apartment.
- Student pay the rental company on monthly basis
- When Student moves out, student contact rental company for return.
- Student hire movers to move the furniture back to rental company, pass inspection and terminate the contract.
Is the above flow correct? [Yes]
Are we talking about the entire US market? [Yes]

Analysis

In the current model, there are 3 stakeholders involved in the furniture rental transaction:

Student: makes the rental decision, use the furniture and is responsible for the transportation, and preservation of the furniture during rental.
Landlord: offers the unfurnished apartment. Not actively involved in the transaction.
Rental company: offers the furniture for rental

Role	Pain Points
Student	Shopping, moving the furniture in and out is a lot of work, normally young student hates it Complexity to manage 2 contracts (apt + furniture) instead of only 1 Cost for movers not cheap, assuming 100 dollars per move Furniture might be damaged during move, result in fines Apartment might be damaged during move, result in compensation to landlord
Landlord	Less return from unfurnished apartment Still need to take care of other maintenance of the apartment, such as plumbing, electrical, repairs

Assuming:

A set of furniture is worth 500 USD
Delivery cost 50 USD (handled by IKEA)
Student can sell it for 100 USD after 3-years (buyer responsible for move it out)

The TCO for purchase new furniture is 450 USD over 3 years, 150 USD /yr.

In the rental case, moving the furniture in and out already cost 200 USD, so the rental cost shouldn't exceed 250 USD over 3 years, otherwise it makes no financial sense to rent.

If we factor in that the furniture might not be new, and there is risk of damage fine, the rental cost shouldn't exceed 150 USD over 3 years.

Assuming the furniture can be reused for 4 times in whole life (already hard to achieve), the total return for the rental company is 600-500=100USD over 12 years, which is a very thin gross margin. (1%~2%).

Strategy

As analyzed above, the margin for this business is not great. It probably doesn't make sense to entry into this market by offering lower price.

Instead, I would like to propose to offer a new biz model to target the landlord.

Instead of contracting withe new student, I will contract with the landlord. As a result
- Landlord will be able to rent the house as furnished, which can cost 10% more, or 30 USD per month.(assuming a room cost 300 USD)
- Student will enjoy the peace of mind, and convenience
- Myself will charge 15 USD per month, and the furniture will last longer (assume 12yr to 15yr) due to less moving around, so the lifetime return can become 2150 USD instead of 100 USD.
By contracting with the landlord, this will open up new opportunity to tap into the rental maintenance market, for example, another 30 dollar per month, to keep the plumbing, eletrical, paint, carpet maintained. We can even tap into the rental broking market, by offering guarantee to landlord to keep the property filled.

Product

To recap, the product we will offer to the landlord is:

Basic: 15 USD a month, full set of furniture plus free maintenance of minor wear and tear during rent.
Premium: 30 USD a month on top, to maintain the rental property.
Ultra: We guarantee landlord 250 USD a month, and we may rent out the property at higher price.

KPI

The goal of the launch is to verify the viability of the concept and maximize market share.

Focus will be on user acquisition metrics:

# of contracted landlords
# of furniture rental contracts
# of service contracts
# of property brokerage contracts

Launch

Pre-launch:
- Location: determine the city/cities for the initial launch, which preferrably have large colledge student population and closer to the core team. For example, all university towns on the west coast.
- Timing: preferrably closer to the end of school year.
- Product
  - Legal and Regulation clearance
  - Partnership with furniture vendors, moving company to get preferencial price.
  - Establish support team (minimum size), process
  - Finalize business model, price, and contract template
  - Establish Website and support channel (phone, email, chat)
- Promotion:
  - Define incentive program
    - e.g. New use discount
    - e.g. Referral bonus
  - Define the marketing message
    - Such as "XXX helps landlords to make more and worry less"
Launch
- Promotion
  - Online:
    - Google search ads, targeted ads to relevant neighbourhood on FB, Nextdoor, etc.
    - Work with colledges to reach out to all incoming students and graduating students about the referral bonus.
  - Offline:
    - Physical ads in nearby neighborhood, like bus stop, community center, grocery store, etc.
    - Leaflets distribution in the colledges.
    - Local TV/Radio/newspaper coverage
- Operation:
  - Monitor support requests and resolve at the earliest.
Post-launch
- Product:
  - Analyze user acquisition, activation and conversion along the usage funnel.
  - Evaluate profit/margin to verify our pre-launch assumptions.
  - Analyze user feedback to iterate product offering
- PR:
  - Collect testimonies and PR
  - Continue Social Media campaign
- Operation:
  - Expand team
  - Prepare for rollout into more cities

Summary

In stead of competing with the existing player head to head, we plan to introduce an innovative business model to deal with landlords directly, and open up opportunity to higher profit/margin and user experience.