3. Structuring Research and Analysis for Strategic Decision-Making

This section covers structuring research to support strategic decision-making at the board level. We'll explore identifying long-term trends (macro trends) versus short-term hype and analyzing competitive advantages, allowing for well-informed decisions that guide product and market strategies effectively.

Understanding Macro Trends: Differentiating Between Hype and Sustainable Trends

A foundational element in strategic research is distinguishing trends with longevity from fleeting hype. Not every innovative or market-adopted product is likely to succeed long-term. Making this distinction prevents hasty decisions and helps leaders focus on genuinely impactful moves.

Case Study: Among Us – A Hype-Driven Success

Consider the game Among Us, which gained sudden global popularity during the pandemic, even though it had existed for two years prior. In its peak month, it saw an extraordinary 68 million mobile downloads. However, this popularity was largely fueled by social isolation and the appeal of connecting with friends remotely, making it more of an anomaly than a new industry trend. Today, Among Us has a smaller, more stable user base, illustrating how temporary circumstances created a hype rather than a sustainable trend.

Lessons Learned from Among Us:

Low Barriers to Entry: It’s a low-complexity game, developed by a small team. This made it easy for competitors to enter the market with similar products.
Context-Driven Success: The pandemic played a significant role in the game’s virality.
Weak Monetization: Among Us’ monetization is limited, indicating that sustainable products often have robust revenue strategies beyond viral success.

Another Example: Electric Scooters

The electric scooter business also surged, with brands like Lime initially expanding aggressively into markets worldwide. Despite demand for urban mobility solutions, the electric scooter market faced significant profitability challenges due to:

High Operational Costs: Maintenance and battery replacement costs were prohibitive.
Low User Perception of Value: Users struggled to perceive enough value to justify the price.
Regulatory Challenges: Cities often struggled to adapt local laws to accommodate the influx of scooters, slowing the business model’s adoption.

These examples highlight the importance of analyzing market trends within regulatory, operational, and societal contexts before committing resources.

Key Reflection Points

To better assess whether a product or service represents a genuine trend or a hype-driven anomaly, consider these questions:

Has a similar pattern occurred in other segments? Learn from parallels across industries.
Is there an opportunity to import these trends into your market? For example, as battery technology advances, applications in other areas like vehicles or tech may become feasible.
What is the regulatory landscape? Anticipating regulatory hurdles can prevent substantial setbacks or highlight opportunities for market positioning.

User Acquisition Strategy: Understanding Competitive Edge

A common misstep in evaluating market opportunities is underestimating the unfair advantage established players have, particularly in user acquisition.

Case Study: Hyper-Casual Games

Hyper-casual game publishers benefit from vast user bases and low-cost, performance-driven marketing tactics. Companies with extensive gaming portfolios can afford to cross-promote users across games, keeping acquisition costs low. For example:

Cross-Promotion: With a substantial user base, publishers drive users between titles, enabling cost-effective scaling.
Scale of Economies: Their marketing optimization and spending power create a significant entry barrier for new entrants.

Case Study: Portfolio-Based User Acquisition

Another example involves larger game publishers with diverse portfolios aiming for long-term user acquisition efficiency across multiple titles rather than focusing on individual games. This strategy allows companies to prioritize category dominance over short-term profitability by absorbing high acquisition costs initially and targeting lifetime user engagement across their games.

Understanding such models is essential; attempting to compete without the resources to match these user acquisition strategies can lead to unsustainable business costs.

Itaú’s bike-sharing service across São Paulo illustrates another form of competitive strategy, prioritizing brand awareness over immediate profitability. As São Paulo restricts traditional advertising, these bikes double as mobile advertisements. For Itaú, the primary goal is brand presence, not short-term profitability. This insight is critical in evaluating the viability of similar models without understanding the primary objectives of the companies involved.

Mistakes to Avoid in User Acquisition Analysis

To assess if a product is driven by hype or sustainable trends, avoid these common errors:

Failing to recognize the leader’s competitive edge: Established players often operate on economies of scale that are hard to replicate.
Overlooking portfolio-driven strategies: Many large players focus on portfolio-wide metrics rather than individual product performance, which can mislead competitors assessing profitability on a product-by-product basis.

Utilizing Research Frameworks for Robust Analysis

To ensure a sound foundation for decision-making, leverage frameworks like the Business Case, Lean Canvas, and Market Matrix. Each provides a structured approach to assessing market opportunities and trends from different angles, helping teams cross-reference insights and validate the feasibility of new ventures.

Business Case: Essential for understanding financial and operational feasibility, including cash flow projections and payback periods.
Lean Canvas: Useful for mapping out potential projects, aligning team goals, and evaluating risks and opportunities.
Market Matrix: Aids in assessing market consolidation, competition, and innovation, offering a comprehensive view of industry positioning.

Conclusion

Accurate market analysis involves assessing a blend of trend sustainability, competitive advantages, and strategic positioning. By recognizing genuine trends and utilizing advanced research frameworks, Product Leaders can make strategic decisions that align with both short-term goals and long-term company vision.