How to Decide on a Product?
Starting a business of your own feels great for sure. But it is also stressful to crunch numbers and worry about your sales, marketing, market conditions or customer’s LTV. And at the bottom of both this joy and stress, lies the product. Finding the right product(s) which would sell can be the key to success and growth for your company. So if I can show you a few criteria, this decision process can accelerate.
- Will you manufacture it or resell?
If you are thinking of creating a new type of product you need to think if it is costly or not. Who will be your suppliers for your materials in production? How much is the unit cost of a product, where will you get it from, what is the cost of shipment to receive those materials, how many employees will you need… These questions also apply at some point if you are thinking of selling an already existing product which you acquire from Alibaba or another manufacturer for example. You should consider the size, weight or the ingredients of your product, too. Since all of these products might affect your shipment and might be regulated by law for cross-country shipping.
- Scalability & Market
Scalability is a very important thing to have a growing business. Your production may be hard and time consuming so it might affect its scalability. If you are producing a basic product, you might want to think if it is applicable for different areas. Because the type of market you will be selling can turn out to be a very niche market and this might be a problem in terms of your profits. The market you attempt to get in is very important in terms of demand and competition. If you have a lot of competition in the market it might be hard for you to acquire your own position in the market with a big percentage. The demand also needs to be high or at least not low. By knowing these you can learn which amount of products will be necessary to start and estimate easier with a cost analysis. Because in terms of profit, you need to continue to sell a product which will always be demanded or needed.
- Who will buy it? And Why?
Your target customers are another important issue. You need to know them to create a better service and product. Know their demographics; know where or how your product will be needed by your potential customers. This sort of knowledge will not only help you decide on a product but also will help you to create a better service and marketing campaign to engage with them. Another aspect you should think about is if the product is available elsewhere like the local markets. Because if people can just buy that product from their next door supermarket; then you need to specialize your product. Also why will these people buy your product? Is it a need or is it a want for them? You can follow a different direction considering this difference.
- Which Price to Sell?
You need to learn about the competitors and their prices before setting a price. Make sure to analyze the costs, shipment, and all the sources that you will put into your production to deliver the product into your customers’ hand. Then you can think of a price for your product. If there are competitors in the market it would be very easy for you to decide on the prices by tracking their prices online. You can use Prisync in order to do that and make profitable price decisions. If you think of a subscription based sales such as magazines or monthly razors for men or tampon for women you can set a different price to gain some position in the market. Also think of you product in terms of its use value. Is it disposable or consumable or durable? Because if the good has a expiration date you can use this in your advantage to decrease the prices for a sell-out. If the goods are durable goods like furniture your price expectations can be higher.
- How to Sell and When to Sell?
If your product is food it has less durability and is under the category of perishable goods. Your delivery service needs to be very fast and the orders should maintain a good level so that you don’t lose any money over it. In certain goods there is a seasonality factor. The product doesn’t need to be food also. If you are selling bikinis, sun creams or winter coats you are also suffering from seasonal sales. This does not have to be a bad thing of course but it needs to be handled well. You will need to change you employee, production or service accordingly. If you have 100 delivery guys for summer delivering sun creams you might need to drop the number of delivery guys to 5-10 in winter. Besides seasonality you might have other externalities that can hurt your business. If you produce smartphone cases your business will be vulnerable to new models which have different sizes and buttons. If you are starting a subsidiary product business your business will be affected from many changes and you might en up with lots of turnovers.
Nil Erden – Marketing Executive – email@example.com – Prisync.com
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