Use mathematical modeling to make products

There are two ways to behave, emotionally or rationally. When designing a product, make decisions perceptually, taking into account the acumen of a product manager. If the direction is wrong, time is consumed but there is no good result, and then stop loss and rollback, the window of opportunity may be lost.

How to build a product model? The author is currently thinking about using some mathematical modeling methods for product design, sharing it with everyone, and discussing it together. After leaving university, I discovered that the most important courses in university are advanced mathematics, linear algebra, and probability theory. Because they are very important for mathematical modeling, I have been trying to review them recently.

1. Principles of addition and multiplication

A more complicated matter can be divided into several steps. The principle of completing them includes the principle of addition and the principle of multiplication.

  • Principle of addition: To do one thing, there are N types of methods to complete it. There are M1 different methods in the first type of method, and M2 different methods in the second type of method…, in the Nth type of method there are M(N) different methods, then there are N=M1+M2+……+M(N) different methods to accomplish this thing.
  • Multiplication principle : To do one thing, it needs to be divided into N steps to complete it. There are M1 different methods for the first step, M2 different methods for the second step… and M(N) for the Nth step. Method, then there are N=M1* M2 * M3 * …… * M(N) different ways to accomplish this. The principle of addition and multiplication are the basic principles of mathematical probability.

2. Basic Model of Internet Products

All product designs and business models must be described in the simplest way, whether in a sentence, formula or model. Internet products can be roughly divided into node type and content type.

(1) Node type products (N * N)

N represents the number of nodes, and N * N represents the value of a node-type product. For example, WeChat Social is a node-type product, and the monthly active users of WeChat are 600 million, so the value of the WeChat product is 600 million * 600 million. The Matthew effect of node-type products is very obvious. The first place is often far stronger than the second place: Momo’s monthly active users are 200 million, so the value of Momo’s product is 200 million * 200 million, and its value is only that of WeChat. One-ninth. Social and tool products are more in line with the node-type product model. Node-type platform value = N * N, it can derive some secondary formulas:

 

(2) Content-based products (N * M)

N represents the number of nodes, and M represents the quality of the content. N * M represents the value of content-based products. The number of Weibo users is N, and M represents the number of big Vs. Weibo has 200 million monthly active users, but only a few thousand people die. So the value of Weibo is 200 million * thousands of people, far Much lower than WeChat. Information and video products are more in line with the content-based product model. Content-based platform value = N * M, it can derive some secondary formulas:

 

According to the derivative formula, you can specifically consider some product strategies:

 

3. Mathematical model of specific product

To abstract a product model, extract the most critical indicators of the business and describe them with a simple formula, and then separate the key indicators into executable product strategies.

 

for example:

 

4. Mathematical model of product revenue

You can’t last without benefits. Product revenue is an important part of product design. For product revenue, corresponding mathematical models can also be established to formulate corresponding product strategies.

(1) Value-added revenue model

Membership value-added is an important model of Internet revenue. Establishing a targeted model helps to formulate product strategies:

 

The above model can basically summarize the key points of member value-added revenue, and divide a huge revenue target into three dimensions: number of openings, ARPU value, and business payment efficiency. The key points can be further subdivided to facilitate the formulation of product goals and Strategy.

(2) Game/live broadcast revenue model

The revenue model of gaming/live streaming products is as follows:

 

(3) Advertising revenue model

The revenue model of advertising products is as follows:

 

5. Paid User System

Similar to the classification of population and society, system research can be conducted on the overall paying users. Different system models have different product strategies:

 

A healthy user system is very important for business development.

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