New Product Commercialization
When clients consider introducing new products or services to the marketplace, they can face considerable uncertainty in technical performance, production and service delivery costs, and ultimately, market sales. Cascade uses a systematic approach to characterize these key uncertainties, and to better understand the risks and impediments to successful product commercialization. Our consultants have conducted commercialization analyses for clients in a wide range of industries, including electric power generation, biotechnology, and office equipment.
Cascade’s approach includes the following elements:
Cascade’s approach is particularly valuable when the “new” product or service truly has no counterpart in the market. It is not an update or a variation on an existing product or service. Rather it is a novel offering either in the sense of an entirely new way of meeting existing requirements or in the sense of meeting new requirements. The systematic approach provides a way to understand commercialization issues and potential in such highly uncertain environments.
- Evaluate product cost and performance. What are the estimated costs of producing the product or service, and what is likely operating performance when introduced to the market? Is there an anticipated “learning curve” as the client gains production experience over time?
- Estimate market potential. Cascade works with the client to develop a credible model of product and service markets, and simulates the likely purchasing decisions made by customers, given the product’s attractiveness relative to competitive offerings.
- Identify key performance targets. Using the results of the market models, Cascade explicitly quantifies key technical and market uncertainties, and identifies the most critical performance targets for achieving successful commercialization.
- Assess multi-party financial impacts. Cascade considers the costs and benefits to all parties who can play a role in successful commercialization – producers, customers, suppliers and taxpayers – to better understand the incentives and impediments to commercialization faced by each party.
- Design incentive structures. Carefully designed incentive structures among parties – such as tax incentives or other risk-sharing agreements – can often improve the chances for commercial success.
Designing Profitable Market Strategies
Cascade worked with Targeted Growth, Inc., a leading agricultural biotechnology company, to develop a framework to evaluate the commercial potential of its products. TGI has used the framework to identify critical product investments needed for commercial viability, given key uncertainties in both technical performance and future market prices. |