StellarPeers is a community platform that helps professionals prepare for interviews. We think the best way to prepare, is to work through questions and practice mock interviews as much as possible. We meet weekly to discuss product management interview questions on product design, product launch, strategy, marketing, pricing, and others. Last week, we worked on a product design question.
What is this question about?
This product management interview question tests whether you understand the process of going from customer needs to product development. This process involves determining who the customer is, understanding what they want to accomplish, defining multiple use case scenarios, prioritizing what to build and having good business acumen.
What is the interviewer looking for?
The interviewer is evaluating you on the following:
- Can you empathize with customers? Can you articulate their needs, feelings, and expectations?
- Are you able to provide multiple and diverse use case scenarios?
- Is your answer structured and logical, or do you ramble?
- Do you go beyond generalities in your solutions and provide detailed descriptions?
- Can you provide ideas that no other candidate has mentioned?
- Are you confident and sound credible? Would engineers and other team members follow your lead?
How to structure your answer?
One way to structure your answer is using the CIRCLES Method™ by Lewis C. Lin. A detailed description of this method is in the book Decode and Conquer. This approach is useful in helping you think and answer in an organized and exhaustive way.
The steps of this method are:
C — Clarify. Ask clarifying questions to narrow the scope.
I — Identify the users/customers as personas such as food lovers, soccer moms, etc.
R — Report on the user’s needs (use cases). A use case is an activity that a user would like to do relative to the product.
C — Cut through and prioritize the use cases based on attributes such as revenue, customer benefit, complexity, etc.
L — List solutions.
E — Evaluate the tradeoffs of your solutions.
S — Summarize:
- State which solution you would recommend.
- Recap what the solution does and why it is beneficial.
- Explain why you prefer this solution.
How to quickly think of several use cases?
Use cases are at the heart of this question. Without use cases, you will not understand what you need to solve. It is important to have a strategy that triggers ideas fast. In a previous post, we described methods that can help spark ideas for use cases and solutions.
INTERVIEWEE: Is the goal of designing this ice-cream stand to maximize revenue or profit?
INTERVIEWEE: And, will the ice-cream stand be open only during the summer or throughout the year?
INTERVIEWER: Let’s say it is open during the summer season.
INTERVIEWEE: Would the ice-cream stand be in one location in the park or does it need to be mobile?
INTERVIEWER: What do you think?
INTERVIEWEE: My instinct tells me that it should be mobile to cover as much park ground as possible, but I don’t want to jump the gun. I will decide on that after analyzing customer needs.
INTERVIEWER: Fair enough.
INTERVIEWEE: I would like to start by identifying who the customers are, what motivates them to visit the park and scenarios in which they may want to buy an ice cream. This will reveal needs or frustrations relative to wanting to buy ice cream. Then I will brainstorm ideas for design and monetization for the stand that address the customer’s needs. How does this sound?
INTERVIEWER: Sounds good, go ahead.
INTERVIEWEE: Okay. All kinds of people visit Central Park: friends, families, single people of all ages, tourists and city employees. I will focus on all visitors except for city employees since they are the minority. In general, people visit the park for leisure activities and to have fun. Now, let’s look at possible situations in which customers may want to buy ice cream.
Friends visit the park to play team sports or relax together on the grass. They may want an ice cream if a stand is nearby. Usually, one or two friends will get ice cream for the group. The main frustrations or pain points in these situations are:
- leaving the group to buy ice cream spoils the fun,
- not knowing which flavors are available,
- remembering which flavor of ice cream friends want,
- the complexity of paying for multiple people,
- and making multiple trips for large orders.
Parents will most likely walk to the ice-cream stand with their children. Waiting to order with kids can be stressful for parents since they have to supervise. Children may wander off if not watched. So one pain point for families is supervision of their kids while ordering ice cream.
Individuals may go to the park to relax or read a book. They may have found a terrific spot and do not want to give it up. If they want to get ice cream, a pain point for them is leaving their spot to get an ice cream.
Other types of individuals might be at the park to people-watch or to be around people because they are lonely. So for them waiting in line is not a problem because they can socialize.
Going to an ice-cream stand is not inconvenient for tourists. It is part of the park experience. But, if pressed for time and the line is long, they may not want to wait to buy an ice cream.
In general, I think most people would like the following ice-cream stand experiences to be better:
- Tasting ice cream before buying, not just one but several flavors.
- To not feel rushed when deciding on an ice cream flavor when there is a line.
I see commonalities in pain points in the scenarios above. They are:
- Convenience. Most people would prefer to have the ice cream come to them.
- Speed. In most cases, people want their ice cream fast, except in the case of the single person who wants to socialize.
- Before ordering, most people want to know which ice-cream flavors are available, what they look like and how they taste.
- Individuals making group orders would like help carrying the ice creams back to their friends or family.
- A simpler way to pay when buying for a group.
Since these pain points span across the different customers, I will design the ice-cream stand to meet these needs.
Here are some ideas:
- Instead of people coming to the ice-cream stand, we can use tricycles, with coolers attached to the back, delivering ice cream to people and preparing scoops on the spot. We can have an app that locates customers, and lets them order and pay for ice cream. The nearest tricycle can reach them within minutes. The tricycles and app solve the customer’s problem of locating and going to an ice-cream stand, having to wait in line, knowing flavors before buying, carrying multiple ice creams when ordering for a group and simplifies payment. This solution meets all the common pain points.
- Ice-cream vending machines could be distributed across the park to make it more convenient for people to buy ice cream.
- Instead of using a traditional rectangular ice-cream stand, we could display flavors using mini stands positioned around the periphery of a circular shape. Customers can go from one mini stand to another, tasting flavors served by workers behind the stands. This solution addresses the problem of long order lines and the need to taste before buying.
- Create a separate a ‘sushi boat’ style sampling stand. People could sample ice cream flavors as they sail by. When ready they can order from the main stand. The sampling stand solves the problem of tasting before buying.
- Circus-style performances can be used to entertain customers while they wait in line. As an idea, positioned on a stage floor is a dish of ice cream; and high above, performers take turns bungee jumping to see which of them can take a bite of ice cream before rebounding back. The entertainment will keep children close by their parents while they wait in line. It also keeps the fun going, which is one of the main reasons people go to the park.
To decide which solution to use, I would like to compare their pros and cons and translate that comparison to impact vs. cost.
Let me list the solutions:
- Tricycle ice-cream stands
- Vending machines
- Mini ice-cream stands around the periphery of a circular shape
- Boat style ice-cream tasting section
- Circus-style performances
I will use a table to track pros and cons for each idea and evaluate how they score relative to impact vs. cost. I will use a score of 1 to 5 for impact and cost.
(The interviewee creates the tables below and writes down the solutions for each row in the idea column. Then for each solution, the interviewee lists the pros, cons and explains his evaluation of impact vs. cost.)
A visual comparison will make our process of selecting the best solution easier. So, I will use a 2x2 matrix chart for that.
(The interviewee draws the following 2x2 matrix chart).
From this chart, the best ideas are the Circus-style Entertainment and Tricycle Stand ideas. Both have high impact scores, with the Tricycle idea just a bit higher than the Circus-style Entertainment idea. But, the Circus-style Entertainment idea costs less. So which one should we pick to implement?
To break the tie, I will consider the risk aspect. The Circus-style Entertainment idea seems less risky to me. It can be dismantled anytime without risking long-term financial loss. The Tricycle idea, however, requires capital investment — it is an upfront commitment. And, if it does not work, it can have a long-term financial impact. So, I will choose the Circus-style Entertainment idea, because it is almost as impactful as the Tricycle idea but costs less and carries less risk. What do you think?
INTERVIEWER: I agree. So now tell me how you would monetize your ice-cream business.
INTERVIEWEE: Okay. So, profit equals revenue minus cost. And, revenue equals price times volume. So to maximize profit, we need to maximize revenue and minimize cost. And, to maximize revenue, we can either increase price or increase volume or both.
We also need to think about the competition. Ice cream in Central Park is a commodity. To make the price higher than competitors, I will have to work very hard to convince customers to buy from me instead of my competitors.
I think a more effective strategy to attract customers is by making the price a little lower than my competitors and provide greater value. I am proposing competing on a price/value ratio, the lower the ratio, the better for the customer. And as my number of customers increases, my costs for ice cream ingredients will become lower, enabling me to make increasing profits.
The Circus-style Entertainment idea provides the fun my customers come to the park for, therefore providing greater value than my competitors.
Also, I think streamlining the ordering and payment process for ice cream would add value to my customers and increase monetization. Here are some ideas:
App to pre-order, pay and deliver ice cream
With an app, customers can pre-order, pay, and optionally have ice cream delivered to them. The app design should be well thought out to make the presentation of flavors appealing. And, the navigation and interaction flow should be very intuitive.
An hourly lottery to win free ice cream
Marketing our business would also be necessary for monetization. One idea is to have an hourly lottery to win free ice cream. This would appeal to customers expectations of having fun at the park. Customers can sign up for the lottery through an app. App notifications will be used to build suspense. And, a sharing mechanism can be built into the app to increase word of mouth.
Between the app and lottery idea, I would choose to implement the app for pre-ordering, paying and delivering because it has a more direct impact on monetization.
To summarize, after analyzing scenarios at the park in which people find themselves wanting ice cream, I synthesized a list of common customer needs. I proposed several ice-cream stand ideas to address these needs and chose the best one based on impact vs. cost and level of financial risk. The best idea was the Circus-style Entertainment (bungee jumping) addition to the ice cream stand.
To monetize the ice-cream stand, I recommended an aggressive pricing strategy, to sell at a lower price than competitors while providing greater value. The goal of this strategy is to increase demand for ice cream, hopefully stealing competitors’ customers, and to leverage economies of scales to reduce production costs. This combination will increase profit margins. I also recommended streamlining the ordering, payment and delivery of our ice cream via a mobile app. If I were to implement this app, I would start with the implementation of the ordering process. This would allow us to roll out the app quickly to increase monetization and get feedback from customers for agile improvements.
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