As PM of LG, decide if you should launch a Smart Fridge.

Question

As PM of LG, decide if you should launch a Smart Fridge.

Asked at Google over a year ago

1.6k views

Asked at

1.6k views

How to answer Product Strategy questions

Interview Guide

Top Google interview questions

What is your favorite product? Why?89 answers | 263k views
How would you design a bicycle renting app for tourists?62 answers | 82.5k views
Build a product to buy and sell antiques.54 answers | 66.8k views
See Google PM Interview Questions

Top Product Strategy interview questions

Invite members
Invite by email

Add another

Sholanki · Answer 1 · 2019-08-20T15:59:59+0000

1) What is my goal? - Revenue

2)Lets define what smart fridge is- 1) Ability to connect with wifi 2) Ability to give an update about things that are stored in fridge 3) Performs voice commands 4) Ability to integrate with another smart device/Play songs 5)Ability to shop(replenish orders) using the internet to maintain inventory. 6)auto detects food and control temperature on its own. These are the above features that I can think of. Let’s now dive into a business strategy model to decide whether LG should launch and then if the answer is Yes, we will highlight on some high-level next steps:

As our exercise is to understand industry attractiveness and likely profitability, I would like to use Porter's Five forces as 5 pillars to analyze our situation before we summarize my recommendation on launch.

1) Competitive Rivalry:

a. What is the competitive market looks like? - LG has a high market share in household and B2B market for all kitchen appliances and electronics. Also, I think being a market leader, it also has control over B2B customers and ties ups, supplier of any electronic parts. Further, I believe there is no smart fridges available which is capable of doing the above tasks that we have defined earlier. So the if LG launches I think LG may get advantage on following:

i. No aggressive price cuts- no competitive rivalry as such

ii. No problem of supplier

iii. No big budget for gorilla marketing-market isn’t saturated with Smart fridge

2) Supplier Power: The more we can choose from the better we have advantage. The more power LG has, the less challenge when it comes to supplier increasing price of product. One thing to consider, while making the smart device, how many tech companies should LG needs to work with like Google Search, Alexa shopping, Voice commands, etc. I think LG has a good reputation of strong electronics company and I don’t see why will Google/Amazon will not tie up with LG for integrations. It’s a Win-win situation.

a. Win-win with supplier, many companies to choose from and hopefully willing to partner as they may get more ingress points for their services.

3) Buyer Power: Now here I would like to do a quick deep dive on are we focusing on 1) households 2) B2B (Restaurants/Grocery services). A smaller and more powerful customer base means that each customer has more power to negotiate for lower prices and better deals. A company that has many, smaller, independent customers will have an easier time charging higher prices to increase profitability. So I would like to focus on household and then extend the same concept to B2B later.

a. Big customer base and low power of customer to negotiate

b. Later extend to B2B, also a huge market segment to expand to

4) Threat of substitute: I don’t think smart fridge exist at this point, there are some fridge which does a few work but what we have explained in our smart fridge definitions.

a. Advantage of no substitute in the market

5) Threat of new entry: LG’s position can be affected by people's ability to enter your market.Now, we want to talk about market regulations and technology. I think LG has the skillset to build smart devices as it has a good footprint in building smart phones. I think other competitors who are good electronics company may build a good product or appliances but do not have edge over smart devices/technology than LG. Lastly, there is no such regulations that I think we should be concerned for. So two points here:

a. LG has the skillset to build smart devices and other companies may not have the edge at this moment

b. No regulations relevant threats

Considering all the above, I think LG should launch a smart device and should take the advantage of early adopters and innovators (~15%) and enter into Household market first and then move to B2B segment. LG should also consider upgrade options for existing fridge owner as it may lower additional acquisition cost for marketing. Further, LG should consider adopting a “Customer value-based pricing” to include in launch strategy.

seven · Answer 2 · 2024-09-06T06:10:57+0000

I’ll answer this question in a couple of parts:

List out questions that could provide me better context
List out my assumptions and what I know now
Talk about LG as a company, its mission, product lines.
Talk about some goals that LG would be having now and prioritize one.
Do a SWOT to understand some opportunities of LG. Do some analysis on market landscape and trends.
Do an analysis to determine current user journey for current fridges. Understand any painpoints and/or opportunities.
Based on our findings in #5 and #6, determine what are opportunities for LG for new products or improvements to current ones.
Is “smart fridge” in the list of opportunities in #7 ?

My Answer

Questions for better context I’d ask if I were interacting with a live interviewer:

LG as in LG company that sells electronics and appliances?
Am I the VP or director PM at LG?
Who is the audience that will listen to my decision if I should launch a smart fridge?
Why are we interested in launching a smart fridge?
What problem are we trying to solve with this idea?
For whom is the smart fridge for? What markets?
Are there any business objectives or business goals we care about now?
What is the definition of a smart fridge? Are we aligned on it?

Assumptions and what I know
1. Assumptions
  1. LG = LG electronics and appliances
  2. Assume I am the PM Director at LG
  3. Assume my audience is the CEO.
  4. Assume that the person asking this question doesn’t know what problem we’re trying to solve or why they’re interested in launching the smart fridge.
  5. Assume it’s up to me to know what LG business goals are right now. I should make my best estimation.
  6. Assume definition of a smart fridge = a fridge that is integrated with tech, like a smart phone. A fridge that has its own app, where you are able to do several things from your phone, some potential features:
    1. change internal temperature of freezer and fridge
    2. turn on/off lights
    3. see the inside of fridge to see if you have milk and tomatoes
    4. Know the weight of specific compartments in the fridge so you can know how much of an ingredient/food you have left
    5. Your app will send you notifications to let you know if some food is starting to rot or about to be expired.
  7. What I know
    1. I know that I am a Product VP at LG who needs to present my decision to the CEO of the company as to whether we should launch a smart fridge or not.
LG
1. From what I know, LG is a worldwide electronics and appliances company. Their products include refrigerators, dishwashers, washers/dryers for clothes, TVs, Laptops and maybe even some smaller appliances like toasters.
2. Its' mission would be make everyday life at home easier and simpler.
Goals of LG
1. Some goals that LG or any company would have is increasing revenue, net profit for the business. Others would be increasing user engagement with the products, market expansion, increasing brand loyalty, staying at the forefront of technology.
2. LG is a very mature company and has a worldwide presence. So I don’t think our main priority right now is to increase brand awareness. We could pick the goal of increasing user engagement. I feel if we do this, revenue/money will inevitable follow.
Business analysis
1. Market landscape and trends
  1. Although we are a big player in the electronic and appliances space, there are also other big ones like General Electric or Whirlpool or even some tech companies like Apple or Samsung who don’t create home appliances but laptops. So it’s important to stay competitive.
  2. In the world of AI and “smart” everything (smart and connected cars, smart home with smart switch and lights, etc), I think it’s important to explore the idea of a smart product in LG’s product line.
  3. I’ve not seen much buzz on smart appliances, so there is an opportunity to make a great “Smart” product at LG.
  4. More and more people like to save time and be more productive, especially in the US. This is coming from some research I’ve done in my last job. Here we looked at how different markets in the world like to use their free time. The Asian market like to use their time to do more work, similar to the US. This was very different to EU markets.
    1. Given they want to be more productive and efficient, “smart” appliances would be a time saver and very innovative.
2. SWOT
  1. SWOT stands for strengths, weaknesses, opportunities and threats.
  2. As a company, our strengths are that we are very familiar with the appliances and electronics space. We have a robust supply chain and worldwide presence. We are a strong player in this space. Fridges are our fortey and we have infrastructure and teams to build them.
  3. Our weaknesses are that we don’t have much experience in the “smart” sector like Apple does for example. We do sell “smart” products like our laptops, but have not built a “smart” product from ground up. Making an appliance smart would take a good amount of effort to create. We might need to partner with 3rd parties to leverage their expertise in adding software and more electronics to our appliances to make them “smart”
  4. Given our presence in the appliances space, there is opportunity to leverage our existing teams and infrastructure to enter the world of smart products and revolutionize the kitchen for the world.
  5. As a key player in the electronics and appliances industry, our competition is always a threat.
Customer analysis
1. We looked at the business and market side of things. How about the customer perspective? For a fridge specifically let’s analyze their journey.
2. I am a user for a fridge. I wake up in the morning, make a cup of tea. I open the fridge up to take out my meal prepped lunchbox. I get ready for work and take the box with me. As my day ends, I think “I know today is meal prep day for the next few days so I know will cook today”. However, I forget if I have tomatoes and garlic for the recipe I want to prepare. I go home first, open the fridge and check. Turns out I didn’t have those ingredients. So I go back out to the store and buy them. This costs me an additional 15-20minutes.
3. From this simple story and if we think of other scenarious, we can already see some painpoints.
  1. I didn’t have a way of knowing what was in my fridge or not if I’m not at home.
  2. I didn’t think about making food until the end of the day. What if I had worked a bit more and by the time I went to the grocery store , it had closed already?
  3. If I didn’t know what to make one evening at work, I want to know what’s in my fridge so I know what to pick up on my way back home.
  4. I want to know if something in my fridge is close to expiring so I can eat it soon and it avoids spoilage.
  5. I also want to know if there is an optimized place of where I should place certain items. Maybe it’s just my fridge, but I’ve noticed every time I put a yogurt in the back, it almost turns solid, whereas if I put it near the door, it’s fine.
  6. I want to know if there is an issue with my fridge causing things to spoil inside.
Determine opportunities based on #5 and #6
1. Based on the business and customer research, I see an opportunity in creating a version of a “smart fridge”. From the customer perspective, we would be solving a problem. From the business side, we see that we are already in this space and can leverage our existing resources. We would need to spend $$ on adding the additional infrastructure for the added software or electronics, but I feel over the long term this will be a good investment. We want to remain competitive and be on top of market trends and technology. The world is going “smart”. People more and more want to be more productive and efficient.
Decision.
1. Yes, I recommend LG to consider launching a smart fridge based on my final thoughts in #7 which is backed up by my insights and research.