Activity 1: Right Steps

Instruction: Read well the story and get encouraged to reach your dreams! As
the story is summarized for you to remember relevant points write the
appropriate words to complete the sentences on the spaces provided.

Josephine Rectin of Legazpi City, Albay is a typical Filipino micro entrepreneur

who started with a small capital. Back in 1995, she sold vegetables on foot. She
had Five Hundred Pesos (PhP500) in capital. Twenty years later—and this is
where her story deviates from most micro entrepreneur’ stories, she heads a
multi-million family business that encompasses a mini grocery store, rice
farming and trading, livestock raising, hardware store with gravel and sand,
hollow blocks and nipa shingles making, trucking and hauling service, and a
computer printing shop.  “We grew the business gradually in response to
customer demands. Together with my husband, Robert, and our children, we
pursued one new business after the other in tune with the market conditions,”
says Josephine.

She turned to what she knew —selling, to help Robert provide for the needs of
the family. “I started as an ambulant vegetable seller. When customers asked
for other goods like dried fish, I would promptly supply them and then add
these to my basket of products. From a portion of my earnings saved up over a
period of time, I raised enough money to establish a sari-sari (variety goods)
store. My store allows me to sell more and earn more. It also keeps me informed
of what customers need and want. As I listen, I get ideas for new businesses.
The hardware business, for example, came about when there was a house
construction boom in the community. It helped a lot that my husband is keen
to run it,” adds Josephine.

Good customer relations is key to a successful business. Josephine makes

times for small talk to make her customers feel welcome.  “I support the saying
that the customer is always right. And if they are wrong, I make them feel
alright by being patient when resolving issues that matter. A good entrepreneur
should avoid being short-tempered and impatient with customers”.
Josephine shares, “the possibilities are endless especially if you are your own
boss. As an entrepreneur, you have the flexibility to manage your time and
resources. If you want to accomplish more, work harder and longer. Success
does not come easy, but if you are willing to work for it, it is yours for the
taking.

Start here:

1.Josephine Rectine’s objective why she became a micro entrepreneur in 1995 was to
______________________________________________________________________________

______________________________________________________________________________

2.She used her skill in ____________________ and started being an _______________________

______________________________________________________________________________

3.Her customers told her what they n_______________ and she promptly s________________
them.

time.

5.She used it for financing her next venture, a ________________________________________.

6.From that sari sari store how did Josephine get business ideas that eventually put her husband
and children into doing business as well?
______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

7.As a young entrepreneur, what valuable lessons have you learned in offering what is right to
your market and grow it big in business like Josephine?

______________________________________________________________________________

______________________________________________________________________________

1. What made Josephine choose to sell in starting her small business?

Why?
 ___________________________________________________________________________
____
_______________________________________________________________________________
___________________________________________________________________________
____
2. How did she come to know of business ideas that she eventually offered to
her customers to meet their needs and made her business grow?
___________________________________________________________________________
__
___________________________________________________________________________
_________
___________________________________________________________________________
_________

3. What objectives motivated Josephine to keep her business diverse and

growing?

___________________________________________________________________________
__
___________________________________________________________________________
_________
___________________________________________________________________________
_________

4. Enumerate at least three (3) of Josephine’s businesses and state the

customer needs that were met by her offerings.

___________________________________________________________________________
__
___________________________________________________________________________
__
___________________________________________________________________________
_________

5. What are Josephine’s learnings as an entrepreneur to attain success? State

at least three (3).

___________________________________________________________________________
___________________________________________________________________________
 ___________________________________________________________________________
_________________________________

https://www.entrepreneur.com/article/78778

STARTING A BUSINESS

Choosing a Product or Service to Sell

Ready to break into a new market? Answering these 29 questions will determine if the product
or service you want to sell deserves your commitment.
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Brian Tracy

Chairman and CEO of Brian Tracy International, Speaker and Author

     

Fully 80 percent of the products and services being consumed today are different from those that
were being consumed five years ago. And five years from today, fully 80 percent of the products
being used will be new and different from those being used today.

There are thousands of products and services available to consumers today. And there are
unlimited opportunities for you to enter the marketplace and compete effectively with a new
product or service that's better in some way than what's already being offered by your
competitors. Remember, your skill at choosing that product or service is critical to your success.

The most important thing you can do before deciding what to sell is to think. And the more you
think about a product or service before you bring it to market, the better your decisions will be.

So how do you start? To make a product successful, you must be personally and emotionally
committed to its success. Once you've got a product or service in mind, you need to begin with a
self-analysis:

 What kinds of products do you like, enjoy, consume and benefit from?
 Do you like the product or service you're planning to sell?
 Can you see yourself getting excited about this product or service?
 Would you buy it and use it yourself?
 Would you sell it to your mother, your best friend, your next-door neighbor?
 Can you see yourself selling this product or service for the next five to 10 years?
 Is this a product or service that you intensely desire to bring to the marketplace?

Then analyze the product or service from the customer's point of view:

 What does the product achieve, avoid or preserve for the customer?
 How does the product improve your customer's life or work?
 What kind of customers will you be selling the product to?
 Do you personally like the customers who'll be buying this product or service?

Imagine that you've hired a management consultant to get advice on introducing this new product
or service. They're going to cut right to the chase and ask you these very objective, bottom-line
questions about the product:

 Is there a real demand for the product at the price you'll have to charge?
 Is the demand large enough for you to make a profit?
  Is the demand concentrated enough so you can advertise, sell and deliver the product at a
reasonable expense?

Dig even deeper into the potential success of your product or service by determining the answer
to the following critical questions:

 What is to be sold, exactly? Describe the product in terms of what it does for the customer.
 To whom is the product going to be sold? Describe your ideal customer.
 What price will you have to charge for the product for it to be profitable?
 Who's going to sell the product?
 How is the product to be sold? What method of sales, or process of promotion, will you use?
 How is the product or service to be manufactured or produced?
 How is the product going to be paid for and by whom?
 How is the product or service going to be delivered to the customer?
 How is it going to be serviced, repaired, guaranteed or replaced?

And you're not done yet. There are a series of additional questions you need to ask before you
make a final decision on a new product or service offering.

 Is there a real need for the product or service in today's market?

 Is your new product or service better than anything else currently available?
 What are the three ways that your product is superior to your competition?
 Is your product lower priced or of better quality than anything else that is available?
 Do you think you could become the number-one supplier in the market for this product or
service?

For a product or service to succeed, it must be the right product, being sold at the right time, to
the right customer, in the right market. It must be produced and sold by the right company, and
the right people. What you have to decide is this: Is this product right for you?

Brian Tracy is the "Success Secrets" coach at Entrepreneur.comand one of America's leading
authoritieson entrepreneurial development. He's produced more than 300 audio and video
learning programs that cover the entire spectrum of human and corporate performance through
his company, Brian Tracy International.
https://www.powerhomebiz.com/starting-a-
business/choosing-a-business/what-to-sell-
how-select-the-right-product-for-your-
business.htm
What to Sell: How to Select the Right
Product for Your Business
June 1, 2013 By George Rodriguez 1 Comment

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A key question often asked by start-up entrepreneurs is what to sell in the business.
What products or services could you sell that will make you money?

The selection of the right product or service is critical. In fact, the choice of a product
or service for your business can make or break your business. Choose a product that
requires significant production capital when you have none and couldn’t find any, and
your business is compromised from the start. Offer a service that a hundred other
entrepreneurs offer in your locality and you may find it hard to get noticed above your
competitors. Or select a product with an extremely specialized market yet you do not
know how to reach the potential customers, and your business can go kaput.

Your products or services define your business. Your products are your business! If
you want to turn your business into an income-generating machine, the first step is to
choose the right product or services to sell.

With the right products, you even stand a better chance at keeping your customers.
The idea is to keep your customers forever by continually offering them a valuable
product or service, thereby diminishing your costs of reaching and appealing to them.
Wise product selection is therefore critical to your business success.

How do you choose the right product to sell? Here are a few questions to help you
narrow your focus and hopefully select the product that will work for you:

1. What are your primary considerations for choosing a particular product?

Make a list of your selection criteria, and what you think are important to you in
identifying what business to engage in. There are a myriad reasons for selecting a
product, and these reasons can include: financial benefit to your business, relatively
low investment requirements, positive return on investment, fit with present strategy,
feasible to develop and produce, easy to source and procure, relatively low risk, and
time to see intended results.

2. Can you meet the needs of the customer and solve a specific problem?

Your product must address a need or an opportunity. You need to know how your
products or services can assist customers. It must have a real value that customers
can recognize, want and need. Include in your product information and sales
materials how your products can benefit the customers, e.g. help reduce time, effort
and expense.

3. How capable are you to produce the product?

Just as an athlete needs to know his physical condition before he enters a race, you
must also know if you have the time, resources and capability to produce your
product. Many entrepreneurs make the mistake of going forward with a business idea
only to find that they cannot afford the manpower required, or do not have the
resources to outsource the product development. As a result, many experience
slippage in release dates making the mistake of launching half-finished web sites. You
must also evaluate at the onset how you can scale up the production if there is a
strong demand for the product.
4. What is the size of your potential reachable market?

You need to at least get an idea of the size of your market. Know who are likely to use
or benefit from your products. If you are selling an information product on how to sell
at eBay, define who will be your potential customers you think will be interested in
your product. Many small and home business entrepreneurs view market research as
an unnecessary and expensive cost, but understanding who and how big your market
can pay off in the long run.

5. Would you need to comply with government rules and regulations?

New laws or government rules and regulations can impact your product. Some
products can be sold immediately without the need for government approval. Others,
however, require permits, licenses and approval from the government.

6. If a similar product exists, can your product be superior in its functionality,

presentation or marketing?

This entails knowing and understanding your Unique Selling Proposition. Your unique
selling proposition is the one thing that makes that your product different than any
other. It’s the one reason they think consumers will buy the product even though it
may seem no different from many others just like it. It may be that the product has a
lower price or more convenient packaging, or it may taste or smell better, or last
longer.

7. What barriers must be overcome for a potential new product entry?

Barriers to entry include high research and development expenditure, high presence of
start-up or sunk costs, and international trade restrictions such as tariffs and quotas.
Patents are likewise important barriers for many small and home-based businesses,
where your competitor may hold legal protection for an integral component of your
product and hence may prevent you from manufacturing your product. Other barriers
to entry include predatory pricing of competitors that will force you to operate at a
loss, high advertising and marketing costs to compete with established brands in the
industry, and the cost advantages enjoyed by your competitor that allows them to set
lower prices.

8. What are the potential sales, growth, profits, and time for payback?

Before starting your business, run your numbers first. Get a clear idea of your cost
structure, how much sales you need to have to breakeven and post a profit, and what
your return on investment will be.
https://predictabledesigns.com/12-ways-to-select-the-best-product-idea-to-bring-to-market/

here are many steps required to bring a product to market, but

ultimately, it all starts with the product idea itself. If you have the
wrong product idea, then all the other steps, no matter how well you
perform them, won’t really matter.

I always say execution is where the true value is, but it still has to start
with the product idea. It’s really critical that you select the very best
product idea to bring to market.
Today we’re going to review 12 ways that you can determine if you
are focusing on bringing the best idea to the market.

NOTE: This is a long, very detailed article so here's a free PDF

version of it for easy reading and future reference.

#1: Affordable to Develop and Prototype

The number one attribute of a winning product is it needs to be affordable to

develop and prototype. Product development is so much more complicated than most
lay people can imagine.
It’s really critical that you, especially for your first product, try to make the product as
simple as possible. That way your development cost will be minimized and your time
to market will be less.
It’s really critical that you get your product to market as fast as possible so you can
begin gathering market feedback. Then, you can use that feedback to potentially
modify the product to meet what the real market demand is.

I always encourage the concept of a Minimum Viable Product (MVP). Let’s say your
product’s core functionality is Bluetooth audio, but you are also considering potential
secondary functions such as motion detection or GPS tracking.
In such a case it is generally best to focus on only the core, essential functions for
your first product version. Once you have real market data and sales then you can
consider adding any potential secondary functions.

However, you still should research and price out all of the potential functions so you
can choose the best features to include in the long run once you have the market data
to back them up.

For example, if a particular feature increases your manufacturing cost by 10% but
also allows you to increase your sales price by the same amount, then that may be a
wise choice.

Or perhaps, the additional feature will instead serve to increase sales of your product,
thus compensating for the 10% increase in cost.

#2: Affordable to Scale to Mass Manufacturing

You want a product that’s not only affordable to develop but is also affordable to
scale from the prototype stage to mass manufacturing. These two requirements can be
completely different for many products.
It’s possible to have a product that is easy to develop, but complex to scale to
manufacturing. For instance, one major challenge of scaling a product to mass
manufacturing is the cost of injection molds required for any custom plastic parts.

Each custom piece of plastic will require its own injection mold. For really high volume
production, these molds are extremely expensive. A minimum cost for a mold will be
around $1,500 for a simple, low-volume mold. More complex molds for high-volume
production can cost tens of thousands of dollars each.

Although developing a product that requires a bunch of custom shaped plastic pieces
may be affordable using 3D printing, it will become significantly more expensive to
scale when injection molding becomes required.
For example, if your product requires ten custom plastic parts, then you will need ten
separate molds. Each mold will cost anywhere from $1,500 to $50k depending on the
production volume and part complexity.

#3 – Potential for a High Profit Margin

I know developing and marketing a new product can be tremendously exciting and
fun. But ultimately, the goal is to make money, right?

This means you need to focus on a product with a high profit margin. You ideally want
the suggested retail price for your product to be about 4x what it costs to
manufacture.

You can push that down to 3x the manufacturing cost, especially if you’re selling
direct to consumers and not going through distributors or retail chains. But I would
not go any lower. For one thing, it becomes exceptionally difficult to grow a business
with low profit margins.

That being said, you can’t expect to make a high profit when first starting. You’ll be
lucky if you can just break-even on your first small production run. Many times you
will need to sell your first several hundred units at a loss.

As your production volumes increase so will your profit margin. Once you reach
volumes of 10k-100k pieces for most consumer products that is when you should
expect to make a significant profit.
 The higher your profit margins the easier it will be to grow your company.
Profit should never be your immediate goal, and that will come later as you scale to
higher volumes. In the early stages, focus your efforts on minimizing
your development costs, not on maximizing profit.
However, you do need to have accurate estimates on what your manufacturing cost
and profit margins will be once you reach those higher volumes.
For example, you may break even on volumes under 1k, make a small profit on
volumes between 1k and 10k, then make a profit margin of 33% for 10k pieces, and
finally reach 50% at volumes of 100k units. You just need to know upfront that once
you reach high enough production levels, a significant profit is possible.

If you determine in your analysis that 25% profit is all that can be made, even at high
production volumes, then you likely may want to consider a different product, or
consider if you can increase your sales price.

Keep in mind that investors love high profit margins (of course, right!) so having a
higher potential profit margin will make it easier to find them.

#4 – Existing Competition

You want to choose a product idea that actually has some competition. Wait a minute,
isn’t competition a bad thing? Shouldn’t I focus on developing a product that is
completely unlike anything else on the market?

The answer to both of those questions is no!

Bringing a completely unique product to market can be really challenging. Not only do
you have to convince people that this problem even exists and that they need it solved,
but you also have to convince them that your product is the best solution to the
problem.
Also, with entirely new products, you don’t even know for sure that there is a market
for the product. However, having a competing product that already sells well provides
some proof that there really is a market for your product. You can consider a
competing product as upfront proof that a market already exists for your product.
That being said, you don’t want too much competition, which is what I’ll discuss next.

#5: No Dominating Competitors

Although some competition is definitely a good thing, too much is definitely a bad
thing. If you think you’re going to compete with the likes of Amazon or Apple, you’re
just going to get eaten for breakfast. That’s not something you want to ever try to
pursue.

For example, I would not recommend that you try to come up with a product that
directly competes with an Amazon Echo. First of all, you will never be able to compete
with Amazon’s price because they have massive economies of scale.
Secondly, you can never compete with them from a branding or marketing standpoint.
Dominant companies like Amazon, Apple, and Microsoft have reputations for literally
destroying their competition.

As another example, I would never recommend that anyone develop a new

smartphone.

First of all, a smartphone is incredibly complicated and expensive to develop (Apple

spent millions developing the first iPhone).

Secondly, there’s so much competition already that it would be impossible for a new
startup company to ever stand out in such a crowded marketplace.

#6 – Easy to Reach Market

You want to choose a product that has an easily-reachable market.

Perhaps you may be thinking, “Everyone in the world can use my product. It doesn’t
matter their age, location, gender, occupation, or income, they all will want it!”.

Maybe you are thinking “if only 1% of people buy my product that will mean 100
million units and $10 billion in revenue”. By the way, such a statement is a huge red
flag for investors, causing them to run away as fast as possible. So please don’t ever
say something like this.

I know it sounds really great, and you’re likely seeing dollar signs in the billions! But
the truth is, a market that includes everyone will be really, really hard to reach.
It will always be easier to sell your product to 10% of the people in a group of 100,000,
than to 1% of a group of 1,000,000 people.

You are better off focusing on a niche product, or at least somewhat of a niche
product, that has a market that you can reach. This is the reason for the expression
“the riches are in the niches”.

Many of you know that I developed and brought to market my own hardware product.
What you don’t know is before that, one of my first entrepreneurial ideas involved
selling tourist related items in Australia.

I had one day came up with the thought that in empty space there is no up or down,
so there is no defined top or bottom to the Earth. The fact that Europe and North
America are on the top of globes was merely because Europeans created most of the
early maps and globes.
Fundamentally there is no reason why a globe can’t be inverted with places like
Australia, Antarctica, and South America at the top of the globe. My idea was to sell
upside down globes and maps (and t-shirts and such with upside down maps) in
countries located south of the equator.

I’m not Australian nor have I ever visited Australia. I was pursuing this entirely from
the other side of the planet in the U.S.

I had some initial luck with it. I had called a lot of people in Australia, tourist shops
loved my idea, and they were interested in carrying my products in their stores. But
ultimately, that business idea ended up failing.

The main reason it failed was I was trying to reach a market that was literally on the
other side of the world from me. It was a market that I didn’t intimately understand.
#7 – Recurring Revenue

Many may say the Holy Grail of making money is it to create recurring revenue
streams. Recurring revenue simply means that your customers pay you a fee
automatically every month. Most of the online software services you use are paid for
on a monthly recurring basis.

If someone buys your hardware product, can you add a monthly fee to use a web
service or an app that relates to your product?

Finding a way for your business or product to have recurring revenue will be a huge
boost for your company, especially if you ever want to seek outside professional
investments.

A lot of investment companies like this aspect because it makes revenue more
predictable and allows a company to grow much faster. For instance, Bolt.io is an
angel investment group that focuses on hardware products. They specifically prefer
hardware products with a recurring revenue model.
Recurring revenue is such a coveted way of making money because it’s predictable.
Obviously, people can cancel their membership or subscription, but in general you will
have a group of customers that just keep paying, allowing you to know how much
you’re going to be bringing in each month.

#8 – Upfront Market Research

You always need to conduct considerable upfront market research before you fully
pursue a new product idea. This research is going to help you determine if you’re
focusing on the best product idea.

Let’s say you conduct some early market research using surveys, and your survey
responses come back as, “I hate this product,” or, “I would never buy it,” or, “I would
pay $5 for it, but you’re asking me for $100?”.
Those results are clearly telling you that this product is not something worth
pursuing.

Unfortunately, it’s almost never that easy. It may be easy to quickly prove an idea is
bad, but not so easy to prove that it is a good idea.

This is especially true with physical products where you are limited in how much
upfront research you can do since you don’t have a product yet to actually sell or
show.

For example, your early market research surveys may show that people really like the
product idea, they say they need it, and they even say they will buy it when it becomes
available.

However, if the product does become available these same people may never actually
purchase it.

This is because it’s one thing to say you like a product and would buy it, but it’s quite
another thing to put your hard-earned money down to purchase it. Someone who says
“I love the product, I would buy one,” could walk by it a hundred times in a retail store
and never buy one.

Just realize the limitations of any market data that doesn’t include money changing
hands. What people tell you they will do is a lot different than what they really will do,
especially when it comes to spending money.
But you should still make it priority to gather as much of this early feedback as
possible.

Market research is one of the fundamental advantages of having your own online
audience. If you don’t have an audience already, then start building one right away.
After garnering feedback from your audience, you can move on to the ultimate market
research, which is to start pre-selling your product. This is what happens with crowd
funding campaigns.

For crowdfunding most people focus on the money they will get, but the most valuable
part is the market feedback and proof you will get because people are actually voting
for your product with their money.

#9 – You Already Know the Market

Focus on a product for a market that you already know. This is ideally a market that
you have prior experience in. This can be prior experience selling to this market, or
just yourself being part of this market.

If you’re a carpenter, for instance, focus on products that carpenters use or that are
used in home construction.

You don’t have to always limit yourself to your prior experience, but the markets that
you’ve worked in, ideally over many years, are going to be the ones that you know the
best.

You’re already able to understand what the market really wants, versus trying to go
after an unknown market, like I did with Australia.

#10 – Solves a Known Problem

Your product needs to solve a problem that people already know they have. It’s
challenging enough to educate people on why they need to purchase your solution to a
problem they have.
But it’s even harder to educate them about a problem that they don’t know they
already have. It will make it exponentially more difficult to sell your product if you
have to do both.
Having to make the customer aware that a problem even exists, means it’s something
they’ve never thought of, so it’s not going to be a priority for them.

That’s a really difficult sell. Instead, focus on products that solve problems people
already know they have.

#11 – Differentiated Product

Your product needs to be significantly different from what’s already out there, and you
don’t ever want to be in a situation where you have to compete on price. Competing on
price equates to low profit margins, which as explained already is never a good thing.

Instead, you need to compete on the product itself and the value that it adds, and not
on price. Doing so will give you much higher profit margins and allow your company to
grow much faster.

In order to do this your product needs to be differentiated in some way from any other
solutions already on the market. What makes your product better than any solutions
currently on the market?

#12 – The Price is Right

Be sure to pick a product that’s in a good price range. First of all, you don’t want a
product that has too low of a price. That’s because it will require a lot of volume to
make any significant revenue.

This was one of the major mistakes I made with the physical product I brought to
market. It only sold for between $5 and $10 meaning I had to sell a huge number to
generate significant revenue and profit.

On the other extreme, if your product is too expensive, say $1,000, then that will
present a significant barrier to people purchasing, especially if you’re an unknown
company.
It’s much easier to get $5 or $10 out of a person, or even $100, than it is $1,000.
Especially if they don’t know you or have experience with your products. That’s going
to be a significant barrier to purchase.

Focus on products that aren’t too low in price, but also not too high. I’d say between
$29 and a few hundred dollars would be the best price range.

Conclusion
The real value may be in the execution, but it all starts with the idea.
You need to make sure you are putting your time, money and effort
into a product that has the best chances of success.

If your product idea isn’t the best idea to pursue wouldn’t you rather
know it now instead of later? You need to always be able to pivot as
fast as possible. The more you know, and the earlier you know it,
always the better!

If you would like me to evaluate your product from a development and

manufacturing standpoint then just join the Hardware Academy.

If you read only one article about product development make it this
one: Ultimate Guide – How to Develop a New Electronic Hardware
Product in 2020.  
https://www.entrepreneur.com/article/58070

Of course, every company will tout its products as the latest and greatest. But
we all know how critical timing can be in terms of achieving your "short cut" to
financial independence. Last year's hot item may be this year's "me too" product

in the highly competitive world of copycat marketers. Before investing your

time and money into a new company just because of a new product, make sure
the product is truly unique. Finding out too late that you have numerous
competitors can make the difference between a fun-filled experience and plain
old hard work.

New product ideas and concepts must be based on an accurate assessment of

consumer needs, wants and expectations. A company generating new product
concepts and marketing systems has to properly position the product to create
enthusiasm among its distributors. Finding exciting new products should be a
high priority for every serious distributor looking to "catch the wave" of a new
product trend.

Here are nine key questions to ask when evaluating each product:

 Does the concept, which differentiates this product, fill a need or satisfy

a want of the customer?
 Will the customer perceive a legitimate value in his or her purchase?
 Will the customer recognize quality in the same way he or she does with
national brand names?
 Does the product offer the customer superior performance compared to
similar products already available?
 Does the new product solve a problem for the customer that is not
addressed by similar products?
 Is there a convenience factor that places the new product ahead of all
similar products?
 Is the product consumable or does it offer some type of residual income
stream?
 Are profit margins sufficient to sustain your efforts?
 Does the company provide you with satisfactory support materials and
sales aids to make your job easier?

If you're fortunate enough to find a company with a new product that inspires
you to answer the above questions with a resounding "yes," the next step is to
look at the company's business model and support systems (see my previous
columns). Knowing how to ask the right questions is the most important step in
finding the answers that will help you make educated business decisions.

Michael L. Sheffield is the CEO of Sheffield Resource Network, a full-service

direct sales and network marketing consulting firm. He is also the co-founder
and chairman of the Multi Level Marketing International Association (MLMIA).
He can be contacted through http://www.sheffieldnet.com.

Of course, every company will tout its products as the latest and greatest. But
we all know how critical timing can be in terms of achieving your "short cut" to
financial independence. Last year's hot item may be this year's "me too" product
in the highly competitive world of copycat marketers. Before investing your
time and money into a new company just because of a new product, make sure
the product is truly unique. Finding out too late that you have numerous
competitors can make the difference between a fun-filled experience and plain
old hard work.

New product ideas and concepts must be based on an accurate assessment of

consumer needs, wants and expectations. A company generating new product
concepts and marketing systems has to properly position the product to create
enthusiasm among its distributors. Finding exciting new products should be a
high priority for every serious distributor looking to "catch the wave" of a new
product trend.

Here are nine key questions to ask when evaluating each product:

 Does the concept, which differentiates this product, fill a need or satisfy

a want of the customer?
 Will the customer perceive a legitimate value in his or her purchase?
 Will the customer recognize quality in the same way he or she does with
national brand names?
 Does the product offer the customer superior performance compared to
similar products already available?
 Does the new product solve a problem for the customer that is not
addressed by similar products?
 Is there a convenience factor that places the new product ahead of all
similar products?
 Is the product consumable or does it offer some type of residual income
stream?
 Are profit margins sufficient to sustain your efforts?
  Does the company provide you with satisfactory support materials and
sales aids to make your job easier?

If you're fortunate enough to find a company with a new product that inspires
you to answer the above questions with a resounding "yes," the next step is to
look at the company's business model and support systems (see my previous
columns). Knowing how to ask the right questions is the most important step in
finding the answers that will help you make educated business decisions.

Michael L. Sheffield is the CEO of Sheffield Resource Network, a full-service

direct sales and network marketing consulting firm. He is also the co-founder
and chairman of the Multi Level Marketing International Association (MLMIA).
He can be contacted through http://www.sheffieldnet.com.
https://www.infoentrepreneurs.org/en/guides/develop-new-products-and-services/

Develop new products and services

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New products and services are the lifeblood of all businesses. Investing in their development isn't an
optional extra - it is crucial to business growth and profitability.

But embarking on the development process is risky. It needs considerable planning and organisation.

This guide will outline the key stages in the lifecycle of products and services so you know when the time
is right for your business to start the development process.

It will explain how a planned and phased development process will help you make the wisest investment
and budgeting decisions. It will also advise you on how best to create a development team and manage a
project

 The lifecycle of products and services

 Developing your ideas
 Match products and services to market needs
 Pricing your proposed service or product
 The project development process
 Creating a project team
 Investment and cost control
 Manage a development project
The lifecycle of products and services
There are five key stages in the lifecycle of any product or service.
 Development - at this point your product or service is only an idea. You're investing heavily in research
and development.
Introduction - you launch your product or service. You're spending heavily on marketing.
Growth - your product or service is establishing itself. You have few competitors, sales are growing and
profit margins are good. Now's the time to work out how you can reduce the costs of delivering the new
product.
Maturity - sales growth is slowing or has even stopped. You've been able to reduce production and
marketing costs, but increased competition has driven down prices. Now is likely to be the best time to
invest in a new product.
Decline - new and improved products or services are on the market and competition is high. Sales fall and
profit margins decline. Increased marketing will have little impact on sales and won't be cost-effective
unless new markets are identified.
Manage the lifecycle

Identifying where products or services are in their lifecycle is central to your profitability. Effective
research into your markets and competitors will help you do this. See our guide on how to understand
your competitors.
You can extend the lifecycle of a product or service by investing in an "extension strategy". You could:

 increase your promotional spending

 introduce minor innovations - perhaps by adding extra features or updating the design
 seek new markets
But ultimately this only delays a product or service's decline.

Ideally, you should always have new products or services to introduce as others decline so that at least
one part of your range is showing a sales peak.

Developing your ideas

There's a lot at stake when developing a new product or service. To minimise risks and allocate
investment and resources wisely, you should consider a number of factors:

 Will your new product or service meet customers' specifications? For example, consider its
design, ease of use and performance benefits.
 How technologically feasible is the product or service? Can you meet the design, resource and
manufacturing requirements?
 Are you clear about what you hope to achieve with the new product or service? Does it meet the
strategy outlined in your business plan and play to your business' strengths?
The clearer you are about your plans, the better you can analyse the risks involved.

The following tips may also be helpful:

 consult members of your team about your development plans - they may contribute insights that
you've overlooked
 seek the views of suppliers and other business associates - their specialist expertise could be
invaluable
 test lots of ideas at the start of a project - it costs relatively little to assess which are most
promising, but make sure you stop work on ideas that don't meet your criteria before committing a lot of
time and resources
 ask your best customers what they think of your plans
 consider the regulatory framework within which your new product or service will operate
 don't overlook the environmental impact of your plans
 look beyond a new product or service's immediate potential and consider the longer term
 Match products and services to market needs
New products and services have to offer benefits that meet your customers' needs. You need to discover
what these are.

Market research, using techniques such as surveys and focus groups, will help you do this.

Remember that although the end user of your product or service might be your most important customer,
you may have to take the needs of other parties into account.

For example, if you were planning a new DIY product, you would need to consider how retailers would
stock it as well as how it would benefit professional decorators. If you're creating a toy, you should
consider what parents as well as children will think of it.

Your competition

Not only must you meet your customers' needs, you have to do so in a way that is better than the
alternatives offered by the competition.

Your new product or service needs a unique selling proposition - a feature or property that makes it stand
out in the marketplace. Before entering the market you need to determine:

 how customers needs are currently met

 why customers would choose your product or service rather than the competition's, both now and
in the future
 what risks you are prepared to take to launch your product or service into this market
To find out more, see our guide on how to understand your competitors.
Pricing your proposed service or product
Establishing a pricing strategy for a new product or service is an important part of the development
process. You should consider pricing the moment you decide to take an idea forward as it will determine
how much you can afford to invest in the project.

You will need to take the following factors into account:

 The benefits - or value - to the customer of your product or service compared with what the
competition has to offer. Will the price be one that customers are prepared to pay?
 Whether or not you're first to market. Is your product or service revolutionary or are you following
a market trend?
 The selling channels you want to use, which will affect your promotional spending and distribution
costs.
 The speed with which you want to establish your product or service.
 The expected lifecycle of your product or service.
 Whether you are covering your costs.
Strategic pricing can be used to drive sales and regulate demand. See our guide on how to price your
product or service.
The project development process
An effective development process for products or services should be divided into a number of key stages:

 Idea generation - to capture new ideas.

 Idea distillation - to screen out those ideas not worth taking forward.
 Concept definition - to consider specifications such as technical feasibility and market potential. If
you're planning a new product, you should consider the design process now.
 Strategic analysis - to ensure your ideas fit into your business' strategic plans.
 Concept development - to create a prototype product or pilot service.
 Test marketing and finalising the concept - to ensure your product or service can be modified
according to customer, manufacturer and support organisations' feedback. This means deciding the best
timing and process for piloting your new product or service.
 Product launch - the trickiest stage. Before setting a date you must determine how to sell,
promote and support your product or service. Getting it right first time is essential. But any decisions to
delay your launch should be balanced against the danger that your competitors will beat you to market.
In practice some of these stages may overlap, but the presence of a staged process will help keep timing
and costs under control.

Creating a project team

Every potential new product or service requires a dedicated development team.

In creating your team you need to include people with a variety of skills. For example, as well as a
creative ideas person you may also need a technical expert, a marketing specialist, someone who can
source components and someone who understands the supply-chain difficulties you could encounter.
All team members should understand your business' objectives and be committed to them.
There are many forms of effective team working and the right one for you will depend on your business'
needs. For example, team members might:
 work as a unit dedicated to one project, reporting to a project manager
 work exclusively on one project but remain in separate departments reporting to department
heads who are under the project manager
 work on several projects at once with both a department head and project manager to monitor
progress
Teams need someone in a project management role to lead, co-ordinate and motivate the team. See the
page in this guide on how to manage a development project.
Investment and cost control
Developing new products and services is an inherently risky process. You must plan any investment
carefully and strictly control your costs.

You need to:

 factor any future investment in products and services into your strategic business plan
 plan exactly where this investment will be directed
 justify the expenditure on every project
 manage your costs
Before making investment decisions, consider how much your business stands to gain from a completed
product or service. Weigh this against the risks you face.

Phasing new product development

One way to minimise your risks is to phase investments in projects. By reviewing a project at the end of
each phase or stage of development, you can identify products or services that are unlikely to be
successful before resources are wasted. If the product or service fails to meet established criteria, the
project is ditched. If it meets them, resources sufficient to enable it to reach a next, predetermined, stage
are allocated.

Finding support

A range of government grants and tax breaks is available for research and new product development.

Cost control

It's essential to keep a close eye on costs when you develop new products and services to avoid them
spiralling out of control. You should:
 estimate development costs in advance, as described below
 monitor expenditure throughout the development process
 introduce phased investment, as described above
There are two main ways to estimate costs:

 a top-down approach where you consider previous comparable projects and use them as a
benchmark
 a bottom-up approach where all team members agree on the costs they expect to incur with one
project manager, who will then estimate the total cost
Remember that your costs could include staffing, materials, technology, product design, market research,
prototyping and incremental overhead costs.

Manage a development project

Project managers are essential to ensure the successful development of new products or services. They'll
be responsible for:

 controlling costs and allocating resources - for further information, see the page in this guide on
investment and cost control
 drawing up the key parameters for the product or service's specification
 co-ordinating the product development team - for further information, see the page in this guide
on creating a project team
 timetabling the development process
 troubleshooting
Timetabling the development process

Your project manager should draw up a critical path for the completion of key tasks. SMART (specific,
measurable, agreed, realistic and time-limited) objectives can help to control and co-ordinate the
development team's advance along this path and stages can be used to monitor progress.

However, flexibility must be built into your plans. Any number of unknowns can come into play and result
in, for example, a change in the project's specifications or expected completion date.
Original document, Develop new products and services, © Crown copyright 2009
Source: Business Link UK (now GOV.UK/Business)
Adapted for Québec by Info entrepreneurs
Our information is provided free of charge and is intended to be helpful to a large range of UK-based
(gov.uk/business) and Québec-based (infoentrepreneurs.org) businesses. Because of its general nature
the information cannot be taken as comprehensive and should never be used as a substitute for legal or
professional advice. We cannot guarantee that the information applies to the individual circumstances of
your business. Despite our best efforts it is possible that some information may be out of date.

As a result:

 The websites operators cannot take any responsibility for the consequences of errors or
omissions.
 You should always follow the links to more detailed information from the relevant government
department or agency.
 Any reliance you place on our information or linked to on other websites will be at your own risk.
You should consider seeking the advice of independent advisors, and should always check your
decisions against your normal business methods and best practice in your field of business.
 The websites operators, their agents and employees, are not liable for any losses or damages
arising from your use of our websites, other than in respect of death or personal injury caused by their
negligence or in respect of fraud.
https://www.vocabulary.com/dictionary/viability

https://www.entrepreneur.com/article/72824

Issues to Consider

Whether you have a specific product line in mind or are still trying to come up
with some ideas for what you can sell on eBay, consider these issues:

 Cost. how much will the item cost you? There's more to cost that simply
the price on the item-do you have the cash required to make the
purchase or are you going to have to borrow money (and therefore pay
interest) to acquire the inventory? Will there be any additional expenses,
such as shipping to you or repairs if the item is not in saleable condition?
 Storage. Do you have room to adequately and safely store the item while
you are waiting for it to sell?
 Shipping. What are the labor and cost issues associated with shipping
the item to your customer once it sells? Is it very fragile, an unusual
shape or extremely heavy? These are issues that can make shipping a
challenge.
 Product life cycle. How long can you expect the demand for the item to
continue? You may have something that is wildly successful today, but
next year you won't be able to pay people to take it away from you.
Beanie Babies and other fad collectibles are a great example of this.
Some high-tech items are also at risk of having a short life cycle due to
technology advances. If you pay attention to product life cycles, you can
maximize your profits while the item is hot and avoid getting stuck with
excess inventory when the demand declines.
 Season. When you put an item up for sale on eBay, consider the time of
year. Heavy coats and sweaters don't sell well in the spring and summer.
Lawn and garden equipment is not going to move as well in the winter as
it will in the summer. If you have room to store items, you can make a
nice profit buying off-season items and holding them until they sell.
Where Will You Find What You'll Sell?

One of the most exciting things about selling on eBay is that merchandise that
will sell for a profit is virtually everywhere!

 Your home. Start by looking around your own home at the stuff that's
collecting dust on shelves or stashed in the back of closets, or in the attic
or garage.
 Flea markets. Flea markets can be a tremendous source of bargain-
priced merchandise that will sell on eBay.
 Garage and yard sales. Savvy eBay sellers can make a comfortable living
spending one or two days a week shopping garage sales for items that
will fetch many times what they cost when auctioned on eBay.
 Estate sales. If a professional is already handling the estate sale, you're
not as likely to get really great bargains. But if you have access to a truck
and storage, you can advertise that you can buy entire estates. When
you make such a purchase, select what will sell best on eBay, put those
items up for auction, and then sell the rest through other channels.
 Established retailers. Stores need a way to move items that aren't
selling. Once Gotham City Online, a eBay company that focuses on
clothing and accessories with sales exceeding $1 million annually, was
established, co-founder Jonathan Garriss was able to approach retailers
and offer to help them solve their overstock problems by selling those
items on a consignment basis on eBay. Eventually, he began purchasing
that inventory outright.
 Discount stores. Look for clearance items at discount department and
drug stores. Cindy Mayer of Cindy's Collectibles routinely buys infant's
and children's items at the end of the season and stores them until the
following year. "I buy out of season, and I have found great sales in
drugstores," she says.
 Friends and family. Tell people you know not to throw anything away.
Laurie Ayers says that members of her church will give thing they are
going to throw away or donate to charity, and if she can sell them on
eBay, she does.
Buying From Wholesalers

As your business grows, you may choose to start buying from wholesale sources
and selling on eBay at retail. This can be very profitable, but only if you choose
the wholesaler wisely.

The Internet is full of opportunities to buy lists of wholesalers, often for just a
few dollars. Save your money. You can get the same quality of information (or
maybe even slightly better) for free by using any of the popular search engines
and plugging in keywords such as "wholesale," "manufacturer" or "drop ship."
But even that is not the best route to take.

Instead, be more specific in your approach. Think about the type of products
you want to sell, and then look for manufacturers, wholesalers and distributors
you can work with. Find companies whose products meet your quality
expectations, that have prices and terms you can work with, and that deliver the
service level you want to provide your customers. Get sample products so you
can see the quality yourself. Some companies send free samples, while others
charge a nominal fee-either way, don't try to sell something you've never seen.
Be sure it is truly worth what you expect to sell it for.

Be sure you're dealing with a true manufacturer, wholesaler or distributor, and

not another middleman who is marking up their prices and increasing your
costs. Ask for and check references. You want to talk with others who are
buying from these sources. In addition, check with the Better Business Bureau,
any industry associations, the consumer protection agency of the state in which
the supplier is located, and any other source that may be able to verify their
claims.

Legitimate manufacturers, wholesalers and distributors will also want

information about you, including proof that you are a legitimate business and
that you have any necessary licenses and tax identification numbers. A supplier
who doesn't ask for this information is probably a middleman whose ethics
couldn't stand up to moderate, much less close, scrutiny.
Figuring Out What's Hot

How do you figure out what will be a hot seller on eBay? It's a challenge for
new sellers. "They're hopped up to sell, but don't know what to sell," says Jim
"Griff" Griffith, dean of eBay Education.

In fact, "What should I sell on eBay?" is the most common question new sellers
have, says Todd Lutwak, eBay's director of seller development, adding that
"eBay attempts to provide as much information as possible to help people spot
trends."

Seller Central is the place where new sellers can find hot lists that reveal the top
search terms or keywords by category. Sellers can learn, for example, if
computer buyers recently using the site preferred to use laptop or notebook as
their main search term.

"It's great data for sellers," Lutwak says. "By looking at the keywords, you
know what's selling. And it's a leading indicator of how you should be selling
it." eBay also e-mails sellers information regarding the top-selling categories for
the last month.

In the "What's Hot" section at Seller Central, sellers will find a Merchandising
Calendar that reveals what items tend to sell at certain times of the year based
on holidays and events. Outside sources such as Andale.com, meanwhile,
provide information about hot sellers on eBay for a monthly fee of $3.95.

Lutwak sees strong growth in all of eBay's major categories. The products that
sell best, he says, sell because of inventive sellers who are able to differentiate a
commodity product through eye-catching listing information and innovative
sales tactics such as 24-hour shipping or bundling an entire solution. "They try
different ways of selling or accentuate different things about their selling
strategy," Lutwak says.

To become a better trend spotter, keep track of eBay's hot categories, items and
search words, Lutwak advises. Then be a pioneer in your sales strategy. "Try
new things and become a trendsetter," he says. "That in itself is a best practice."
 viability
The noun viability means the quality of being
able to happen or having a reasonable chance of
success. The viability of holding your party at a
restaurant might depend on how many guests
they can seat.

Is Your Business Model Viable? An 8-Point Test

 FACEBOOK
 TWITTER
 LINKEDIN

By CLAIRE BRADLEY
 Updated Jun 25, 2019
You have a great business idea, and even got started on a business plan. But now you wonder: is
my upstart business model really viable? Here is an eight-point test to tell you if you should
forge ahead with your business idea.
IN PICTURES: 9 Tips for Growing a Successful Business

1. Uniqueness
Before you worry about upstart financing, marketing or business location, you should
begin with an idea - not just any idea, but one that's unique. What makes your business
stand out from the rest? (Although they probably have better hair, the business world
doesn't go easy on celebrities. Check out Celebrity Business Busts.)
Uniqueness doesn't necessarily mean you have to invent something (though that's never
bad - just look at Snuggie's success), it just means that you have to set yourself apart from
the competition. If you're starting a catering company, say, what will make your catering
service different from the rest? These are tough questions, but important ones. The most
successful businesses have a strong, unique concept, and a clear identity. Take the time to
define yours.
2. Upstart Funds
What will your start-up cost be? Every business has some expenses at the start, whether
you're paying for equipment, rent or just basic marketing materials. Make a realistic
estimation; you'll need these figures to obtain a loan or simply to budget if you're paying
these expenses out of pocket.
3. Customer
Who's your customer? Knowing who will be buying your product or service is vital to
your business success - how else will you find your customers if you don't know who
they are? Are you catering to busy professionals, stay-at-home moms, college students,
retirees? Define your customer, even if you have to be broad at first. If you'll be renting a
space, make sure the local demographic fits this profile; the real estate agent will be able
to provide you with that data. (Don't let these myths stop you from reaching your
entrepreneurial dreams. Check out 10 Breakout Ideas for Small Business.)
4. Competition
Unless you're lucky enough to find a hole in the market, your business will have
competitors. Check them out, because your future customers surely will. Competitors can
be a great resource to you as an upstart; you can see how much they charge, what
marketing strategy they use and the location they chose.
Ask yourself: how can I do better than the competition? Use your uniqueness identified in
step one to find ways to outdo your competitors.
5. Economic Mood
Your business' success can greatly depend on economic mood: imagine starting a
luxury real estate business at the start of the housing crisis. Gauge the state of
the economy, and think of how it relates to your upstart: where are consumers' mind right
now? Are they cutting back, spending more time at home, concerned about the
 environment?
Even an economic downturn can be an opportunity if you can meet the mood of the
consumer. If your business idea doesn't fit the current trends in spending, think of ways
you can tweak it to tap into today's needs.
6. Timing
Timing is crucial, especially for an upstart. Opening an ice-cream shop in January is a
bad idea; opening Memorial Day can make it the place to be that summer. Do you expect
your business to be seasonal? If so, time your opening to the strongest consumer demand.
You'll come out of the gates with a flood of new customers, customers who will come
back for more.
7. Marketing
Remember step three, where you identified your customer? Now you have to develop a
marketing strategy to make sure these potential buyers know about your great new
business. With today's internet capacity, marketing can be relatively low-cost, using
online coupons and mailing lists. Brainstorm ideas with friends and family, and look at
what your competitors do to get new business.
Your local SCORE chapter, which consists of business counselors for startups, is a great
free resource with counseling, classes and networking opportunities. (If you're going into
business, you must have a plan. Find out how to put this important document together
in Creating A Business Plan.)
8. Continuing Cash Flow
Imagine this: business is booming, you're on a roll and getting in more orders than you
ever imagined. But you have to front the money for supplies and other costs, and you're
out of cash - just like that, your business stumbles because you can't meet demand. This
is a classic cash flow problem many new businesses face, and one that can be prevented
with proper financial planning.
Before you open up shop, prepare a detailed financial plan; there are many guides
available in places like the Small Business Administration. Now is the time to plan for
your business' first year, to make sure you can face any obstacle thrown your way -
especially financial ones. (Don't overlook the details when starting up a business. It's the
small expenses that have the potential to make or break a great idea. Don't miss Business
Startup Costs: It's In The Details.)

The Bottom Line

Did your upstart idea pass the test? If not, find ways to adjust. There are many more things to
consider, like zoning, insurance, and legal entity, so take the time to plan and do your research.
Use every resources you have available - SCORE, the Small Business Administration, even your
local bank have information to plan your business venture, so you can be a
successful entrepreneur for years to come.
Catch up on the latest financial news; read Water Cooler Finance: More Spilled Oil, Fewer
Jobs.

Failure of a product or service can produce an extremely negative impact on a small

business. To prevent this effect, small-business owners conduct market research
before the release of a new product or service to determine if their offering is likely to
appeal to a target market of customers as intended.

Check out businesses in the geographic area you plan to target to determine the level
of competition you might experience, types of marketing efforts that may succeed or
fail and demographics of customers who purchased a similar product or service. For
example, visit competitor stores and websites, evaluate promotion and sales efforts
and observe foot traffic.

Make a list of customer demographics, such as age, family status and income, that
you believe target customers for your type of new offering share based on your
competitor evaluation and expert analyses from industry publications. If your budget
allows, hire a market research firm to provide you with customer demographics data
for local, national or international sales of similar products or services.

Narrow your target market by requesting feedback from a small group of people that
have the customer demographics you're considering. For example, buy a list of
targeted contact leads from a direct marketing or survey firm and then send a
questionnaire to the group that asks about their demographics, interests and shopping
habits, such as their reasons for shopping at certain stores and types of products or
services they value most.

Invite 15 or 20 people from your narrowed list to try a prototype or limited release of a
product to get their general responses and feedback about ways you can make the
offering better. For example, allow those in your test group to try your offering for 10
days and then ask them to complete a survey or participate in a face-to-face focus
group discussion about what they liked or disliked.

Change your plan based on your research as needed and then conduct additional
survey and focus group research. Repeat this process until you feel you have a
product or service that can succeed with your target customers.

Make a list of other factors besides customer opinion that can affect the success of
your offering. Such factors include natural or man-made disasters, economic changes,
 new businesses or emerging technologies. Make a list of alternative methods to attract
customers, boost sales or expand your offering to other markets if necessary.

Estimate the initial and long-term costs for developing, releasing and promoting a
product based on your research and cost estimates from those directly involved with
the project, such as designers, manufacturers, advertisers, project managers and
team members.

Analyze all of your data to determine if you should move forward with your new
product or service.

Tips

 During testing, ask the test group questions about the proposed price, product packaging and
marketing you plan to use to better understand consumer reaction.

References

Photo Credits

 Stockbyte/Stockbyte/Getty Images

About the Author

Based in Southern Pennsylvania, Irene A. Blake has been writing on a wide range of
topics for over a decade. Her work has appeared in projects by The National Network
for Artist Placement, the-phone-book Limited and GateHouse Media. She holds a
Bachelor of Arts in English from Shippensburg University.

by Taboola

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https://www.bigcommerce.com/blog/evaluate-product-market-viability/#undefined

Things to Consider During a Product Viability Analysis

To start, you’ll need to ask yourself some serious strategic questions

about your product’s viability.

 Is the product idea practical?

 What obstacles or challenges lie ahead?
 Will it need support services of some kind to ensure customer
satisfaction?

After answering these questions, you’ll need to shift your focus to the
more tactical aspects of your product and how it will impact your
business model.
1. Consider product size and weight.

The size and weight of your product will have an impact on how much
you sell.

If the product you’re considering is large, awkwardly shaped or heavy,

you may have high shipping costs. To add to the complexity, UPS &
FedEx prices fluctuate, which could negatively impact your budget.

Think you can pass the cost of shipping on to your customers? Think
again.
Shipping cost is a top reason for cart abandonment.

If you can provide your customers with free, fast shipping, you
significantly increase your chances of winning their loyalty.

That being said, free shipping is tightening profit margins across all
industries, making it harder to stay competitive and offer a leading
customer experience. By having a smaller product, you can minimize
shipping costs and satisfy your customers’ desire for quick and easy
delivery.
2. Consider product fragility.

Fragile products need extra attention when shipping to ensure they

arrive in perfect condition.

Typically, durable products cost less to ship and lighten your customer
service and reparation burden for products that break en route to the
consumer.

Bonus? They also usually cost less to store.

Fragility shouldn’t completely dissuade you from offering a certain

product, but keep in mind that opting to sell fragile goods will increase
costs for shipping, inventory and customer service.
3. Consider SKUs.

Many entrepreneurs forget that a single item can often be associated

with multiple SKUs.

A SKU, or stock keeping unit, typically refers to color, size and other
variations of a single product.

The more SKUs you have, the more attention, time and money you
will need to spend in tracking and maintaining inventory.

Let’s look at how a t-shirt breaks down in SKUs to get a good idea of
the process.

You’ll not only need to stock a variety of sizes (small, medium, large)
…

But also colors in each size (small and red, medium and red, etc.)…

And perhaps even male, female and children’s sizes (small, red and
women’s; medium, gray and children’s; large, blue and men’s).
SKUs can quickly add up, adding a level of complexity to how you will
fulfill, manage and distribute the product.

Don’t let a large amount of SKUs discourage you, but keep an eye out
for additional costs and reparations associated with product mix-ups
during fulfillment.
4. Consider product lifespan.

Having a consumable or disposable product is often perceived as a

great choice from a business perspective because you can improve
the way you earn customers’ loyalty and,  ultimately, build your
business off of repeat sales.

Think of the grocery store model. Inventory churn is high, competition

is fierce, but the location and price point generate loyalty, pulling in
consumers on a weekly basis.

Better yet, consider the subscription box business model, in which

your customer signs up for monthly deliveries and payments.

Think recurring, if possible, when considering your product offering.

Overall this can help lower your marketing costs and increase your
average customer lifetime value.

Now — let’s talk about perishables.

There are many successful businesses out there that sell perishable
products, like Jeni’s Ice Cream, who serves up quality, handmade ice
cream and frozen yogurt with unique flavors.

However, their road to success didn’t come without challenge—like

storage, shipping and production.

When offering a perishable product to the market, you’ll need to set

proper expectations for your customers regarding timelines and cost.
By being transparent, you’ll retain customer loyalty and be able to
deliver a better customer experience.
With Jeni’s Ice Cream delivery box, they’ve done just that—plus, they
used a content-first approach to integrate the logistics into the overall
brand messaging.
5. Consider seasonality.

Seasonality means that there are different levels of demand for a

product throughout the year.

Do you buy sunscreen in winter?

How about holiday decorations in the summer?

Of course, there are different aspects to consider, including where

your target customers are located (if you’re selling internationally—
keep in mind your winter could be their summer).

Seasonality is not an exact science. But, there are multiple ways to

navigate the challenge, including running timely promotions and
shipping internationally.

Whether or not you view your product as a seasonal one, seasonality

does still affect revenue for all online stores. For example, some of the
most highly anticipated shopping holidays—like Black Friday, Small
Business Saturday, and Cyber Monday—result in some of the highest
sales of the year.

To make sure you can manage a seasonal product or capitalize on

holiday buzz, you’ll need to determine your own business downtime,
and work to off-set expectations and costs during those periods.
6. Consider price point.

Selling a product with a higher price tag doesn’t prevent you from
finding ecommerce success. 

Let’s take a look at Revelry and Natori. Both fashion brands offer

luxury items that are also functional.
BY 
JEAN MURRAY

Updated June 25, 2019

Entrepreneur Heather Saffer has finally found it—a viable business. At 32 years old,
after years spent in multiple jobs and several previous failed business attempts, Ms.
Saffer hit it big with her company Dollop Gourmet Frosting and even got a Shark
Tank investor to boot. It looks like she has finally found a viable business model. But
what exactly does that mean?

https://smallbusinessbc.ca/article/how-to-use-viability-to-test-if-you-should-invest-in-
your-business/

HOW TO TEST YOUR BUSINESS

VIABILITY BEFORE INVESTMENT
BUSINESS PLANNING | MARKET RESEARCH

You have a great idea for a business and the support of all your friends and family. But
before you invest your time, capital and resources, you need to figure out whether it’s a
viable business venture. Consider the steps below a business viability test for your idea.

Viability measures your business’ ability to start, grow and survive. It factors in target
markets, competition, sourcing and overall financial potential. The creation of a
business plan will help you determine if your business is viable.

We’ve asked one of our Business Advisors, Josh Ludgate, some common business
viability questions we hear at Small Business BC, so that you can start your process of
asking the right questions.
How will you know whether people will buy your product or service?
Your business needs people to buy your product or service so that you can operate
profitably. You can see whether you’ve chosen the right audience by using test
marketing, trial samples and trial sales. This will help you validate that your product will
be paid for by a larger community.

For example, produce a limited batch of your product, and then take it to your target
market and see if there’s interest. Proof of sales is better than any theoretical plan
when you’re testing viability.

What is a competitor, and how do I compete with them?

When you’re evaluating how viable your business is, you will be asked who your
competitors are, and why people will choose you over another business. To answer
these questions, it’s important to be able to tell the difference between indirect and
direct competitors, and how to find out more about your competition.

In business, there are two types of competitors: direct and indirect. For example, if you
are a café in a food court, your direct competitor would be another café. However,
you’re also indirectly competing with all the other stalls, as there are a limited number
of lunchtime consumers.

Use basic research to find out who your competition is, and then go into your
consumers’ communities and talk to them. This information will tell you how to make
your business stand out.

How do you determine the financial viability of your business concept?

The most effective way to make sure your business is financially viable is to go through
the development of a business plan. Developing a business plan gives you insight into
the decisions you will make in your business that will incur costs and/or create revenue.
When you know these decisions and their financial impact, you can evaluate whether
your business can support itself financially.

It’s okay if your decisions aren’t always perfect. Just go back and adjust some of your
decisions, and then adjust your finances to reflect this. Reevaluate and repeat as
necessary. It will never be perfect – but it must be reasonable.

How do you turn viability into a business plan?

Finding out if you have a viable business is a learning process. There’s a lot of trial and
error, so experiment to find out what the best course of action is for you. You can
always go back to find a more effective solution for any problems that come up.

When you decide your business is viable, bring everything together in the form of a
business plan. But don’t stress – a business plan is just a way to argue that the
business is a viable model, that the market can support it and that you are the right
person to operate that business.

Relax, and remember that determining viability is just the start. After this, the real
learning and validation begins!

https://smallbusiness.chron.com/determine-market-viability-product-service-40757.html
 How to Determine Market Viability for a
Product or Service
 Small Business

 Advertising & Marketing

 Marketing Products

ByIrene A. Blake


 RELATED
 A List of Marketing Strategies
 Market Research Report for Formulating Marketing Strategies
 How do I Change Consumer Attitudes?
 How to Launch a New Product With Social Media
 Basic Strategies in Advertising

Failure of a product or service can produce an extremely negative impact on a small

business. To prevent this effect, small-business owners conduct market research
before the release of a new product or service to determine if their offering is likely to
appeal to a target market of customers as intended.

Check out businesses in the geographic area you plan to target to determine the level
of competition you might experience, types of marketing efforts that may succeed or
fail and demographics of customers who purchased a similar product or service. For
example, visit competitor stores and websites, evaluate promotion and sales efforts
and observe foot traffic.

Make a list of customer demographics, such as age, family status and income, that
you believe target customers for your type of new offering share based on your
competitor evaluation and expert analyses from industry publications. If your budget
allows, hire a market research firm to provide you with customer demographics data
for local, national or international sales of similar products or services.

Narrow your target market by requesting feedback from a small group of people that
have the customer demographics you're considering. For example, buy a list of
targeted contact leads from a direct marketing or survey firm and then send a
 questionnaire to the group that asks about their demographics, interests and shopping
habits, such as their reasons for shopping at certain stores and types of products or
services they value most.

Invite 15 or 20 people from your narrowed list to try a prototype or limited release of a
product to get their general responses and feedback about ways you can make the
offering better. For example, allow those in your test group to try your offering for 10
days and then ask them to complete a survey or participate in a face-to-face focus
group discussion about what they liked or disliked.

Change your plan based on your research as needed and then conduct additional
survey and focus group research. Repeat this process until you feel you have a
product or service that can succeed with your target customers.

Make a list of other factors besides customer opinion that can affect the success of
your offering. Such factors include natural or man-made disasters, economic changes,
new businesses or emerging technologies. Make a list of alternative methods to attract
customers, boost sales or expand your offering to other markets if necessary.

Estimate the initial and long-term costs for developing, releasing and promoting a
product based on your research and cost estimates from those directly involved with
the project, such as designers, manufacturers, advertisers, project managers and
team members.

Analyze all of your data to determine if you should move forward with your new
product or service.

Tips

 During testing, ask the test group questions about the proposed price, product
packaging and marketing you plan to use to better understand consumer reaction.
 References

Photo Credits

 Stockbyte/Stockbyte/Getty Images

About the Author

Based in Southern Pennsylvania, Irene A. Blake has been writing on a wide range of
topics for over a decade. Her work has appeared in projects by The National Network
for Artist Placement, the-phone-book Limited and GateHouse Media. She holds a
Bachelor of Arts in English from Shippensburg University.

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https://www.shopify.com/blog/13640265-the-16-step-guide-to-evaluating-the-viability-of-any-product-
idea

The 16-Step Guide to

Evaluating the Viability of Any
Product Idea
 by Richard Lazazzera

 Products to Sell

 Apr 16, 2014

  

 14 minute read

 Leave a comment

Email Pinterest Facebook Twitter LinkedIn

When it comes to building a highly profitable ecommerce business, choosing

the right product is without a doubt the most important piece of the puzzle.

A critical first step in making sure you’ve picked a winner is evaluating

the market demand, existing competition and viability of the product itself.

Get this step wrong and you run the risk of wasting your time and energy, or
worse, sinking a bunch of money into inventory you can’t move.

Get it right and you set yourself up for sales and success.

To help you determine if you’ve got a viable and profitable product idea on
your hands, we’ve put together this comprehensive guide that shows you
exactly how to take a look “under the hood” of your market and your product
to make sure you’re building your business on a strong foundation.

Let’s dive in.

Free Guide: How to Find a Profitable Product to Sell

Online
Excited about starting a business, but not sure where to start? This free,
comprehensive guide will teach you how to find great, newly trending products
with high sales potential.
 Get the free guide

Note: In this post we’re going to show you how to analyze a variety of factors
to better understand the viability of your product idea is. We will do this by
using our own product choice, a coconut oil hair care product, as a case
study.

It's important to remember that no single factor can give you 100% confidence
in your product choice. Rather, it’s a combination of many factors that will help
you paint a more complete picture and will allow you to make the best
possible decision.

Make, manufacture, wholesale or

dropship
Before we get into our evaluation, we first need to recognize that there are
several ways we can build a business around a coconut oil for hair care
product. The first step is to decide how we want to build this business: make,
manufacture, wholesale, or dropship. 

 Make - We can make a coconut oil based hair care product relatively
easy. We were quickly able to find recipes and ingredients available online to
make our own unique hair care product. We’re lucky in that a product like this
doesn’t require sophisticated processes or hard-to-find ingredients. Making a
product like this would be relatively easy and inexpensive. Purchasing in small
quantities to make our initial product means our margins will be smaller but as
a new product and brand, we would also have full control over the pricing and
a lower inventory risk.
 Manufacture - This would consist of working with a manufacturing
partner to develop a coconut oil based hair care product. Because of the
relatively simple nature of the product we're creating, this option doesn’t make
much sense until we get to a point that we cannot keep up with demand on
our own. This costs associated with manufacturing a product like this would
be much higher than if we were to make it ourselves due to minimum order
quantities set by manufacturers, likely in the thousands of tens of thousands
of units range.
 Wholesale - Purchasing wholesale means purchasing commercial and
independent label coconut oil hair care products and reselling them on our
own site. Typically your margins for reselling products are around 50%, so a
product that costs us $10 to buy wholesale would retail for around $20. When
buying wholesale, you’ll have little control over pricing as the prices are
usually established by the manufacturers and expected by the market. 
 Dropship - If we didn’t wan’t to carry any inventory ourselves, we could
go the dropshipping route. If we were to work with dropshipping partners, we
would be looking at a much smaller margin, usually around 20%. This means
that we wouldn’t have any startup costs for our inventory. Instead we would
list the product on our site and when we make a sale, our dropshipping
partner would charge us and ship the product on our behalf. If you're
interested in dropshipping, we recommend Oberlo.
For this evaluation we have decided to evaluate the viability of building a
business around making our own coconut oil hair care conditioner product.
Remember, when choosing a business type of your own, you can always go
back an reevaluate other business models if your first choice doesn't meet
enough of the criteria below.

How to evaluate your product idea

For each evaluation criteria below, we’re going to briefly explain it and then
use it to evaluate our product idea. Many of the decisions are arbitrary and
you may have a slightly different opinion for each criteria. For many of the
points there won't be perfect answers, rather educated guesses. Each of
these criteria are meant to help you better understand your own product
choice and all the factors of building a business around it.

You can use these 16 questions as a framework, substituting our product

choice for your own in order to get a better idea of your products potential and
to avoid dangerous potential pitfalls.

Market based criteria

The first thing we want to look at is market based criteria. These are criteria
that are usually external facing like market size, target customer, whether
you're dealing with a trending product, and so on. 
1. What is the potential market size or demand?

Gauging market size and demand can be difficult but you’re going to want to
have some sense of the potential market size and demand before investing
any significant amount of time, money and energy in your venture. It can be
as simple as using a service like Buzzsumo to better understand how many
people per each day are talking about your potential product. Perhaps the
most popular tool is the Google Keyword Planner Tool which will help you
determine how many people each month are searching for keywords related
to your product idea.

Evaluation: We determined in our last post that search volume for coconut oil
hair products is extremely high. Using Google’s Keyword Planner Tool we
were able to determine that there are over 73,000 searches per month in the
USA and Canada for coconut oil for hair and similar keywords.
 Using Buzzsumo, we were also able to determine that there were
approximately 150-250 Tweets per day mentioning our main keywords.

This information doesn’t give us 100% certainty that our potential products will
have a market of buyers but it's a vote of confidence that if we do launch a
coconut oil for hair product, there are likely people with with interest in
learning more. 

2. Who are your competitors?

It’s always good to know who you’ll be competing against if you choose to
start your business. The more you understand about the competitive
landscape before you start your business, the less potential surprises you’ll
face later.

Learn More: How to Conduct a SWOT Analysis for Your Business

Evaluation: From our analysis and as we mentioned in our previous post,

there are three areas of competition in the coconut oil hair product market:

 Pure Coconut Oil - Pure coconut oil is the main ingredient and from our
research does a great job on its own of moisturizing and repairing hair. Pure
coconut oil is readily available online and locally.
 DIY Coconut Oil Recipes - Do-it-yourself recipes are available online.
All recipes obviously include coconut oil as the base ingredient, but also
combine various other ingredients to improve the effects of the final product or
to help change its core function/texture. For example, hair conditioner vs. hair
mask.
 Commercial Coconut Oil Hair Products - These are products
produced by businesses large and small and contain a proprietary blend of
ingredients to create a unique and perceived better final product.
We didn’t find any true market leaders for our coconut oil for hair products
rather a very fragmented market of manufacturers and retailers. 
3. Is it a trend, fad, flat or growing market?

Just as important as knowing your potential market size and demand, is also
knowing which direction the market is going. The last thing you want to do is
spend a lot of time, money and effort to create a product and establish a
business just to find that you missed the boat and the market is rapidly
declining.

Evaluation: We know from Google Trends that the search interest has grown

significantly over the last several years.

“Coconut Oil”

"Coconut Oil for Hair”

 

Even though coconut oil is trending high right now, the beauty industry is
always going through massive marketing shifts that highlight and push new
key ingredients as “breakthroughs” to stimulate sales. It’s important to
recognize that in time, one of these marketing shifts may overshadow that of
coconut oil and cause a decrease in demand.

4. Can your potential customers buy the product locally?

If your product is readily available locally, there's one less reason for people to
seek your product out online.

Evaluation: We know that coconut oil on its own works well for hair repair,
moisturizing and as an anti-frizz. Coconut oil as a raw ingredient is pretty
widely available online and offline, we were easily able to find it at our local
GNC as well as our local supermarket. However, coconut oil based
commercial hair care products are much more scarce offline and would likely
require a specific trip to find it.
5. Who are your target customers?

Before you fully decide on a product, it’s important to get a sense of who your
potential customer are. You don’t want to find out too late that all the people
that would be potentially interested in your product live somewhere you can’t
ship to or can’t purchase (i.e. kids without credit cards).

Traditionally if there were some major players in the market, we could use
channels like Quantcast and Alexa to find out more about the demographic
information of our potential target market. It’s difficult in our case because
there aren’t really any major competitors with websites to analyze. As we
mentioned before, the market for coconut oil hair care products is currently
pretty fragmented. 

To get a better idea of our potential target customers, we took to Twitter. From
our last post we know that everyday there are approximately 150-250 Tweets
that mention the keywords “coconut oil for hair” so we took a closer look at
who exactly these people are that are talking about coconut oil for hair. From
this analysis, and as we expected, the people on Twitter talking about our
product idea were overwhelmingly female. Based on credible profile images,
we can assume the average age is 18-35.

We also know from Google Trends where our target customer predominantly

live:

In the USA

In Canada

From this information we know we can easily reach our potential customers
and in general, we know this particular demographic isn’t adverse or shy
about spending money online.

Product based criteria

Now that we have reviewed our market based criteria and feel confident in the
market, the direction it’s going and our target customers, it’s time to consider
factors surrounding the actual product itself.
Product based criteria deal directly with the product’s viability. These criteria
can help you get a better understanding of what your product’s strengths are
and potential pitfalls to be aware of.

6. What is your potential selling price?

The lower the price, the lower the the potential profit per unit. This translates
into more marketing dollars to find more customers. It has been generally
accepted by many top ecommerce entrepreneurs that products that sell
between $50-$150 hit a certain sweet spot where you can make a respectable
amount per unit but isn’t too high that customers are hesitant to purchase
online or expect premium services like phone support.

Evaluation: We looked at approximately two dozen coconut oil and coconut

oil hair care products from a variety of brands. After looking at average cost
per millilitre we determined that we would be able to charge approximately $9-
$20 per 120ml unit depending on the positioning of the brand. This low price
point means our margins will be small and can make it difficult to use paid
advertising channels, especially when we first start out.

7. What is your potential markup?

Markup is the amount over the cost of the product. This amount is what will
cover your overhead and be your profit. Remember, when looking at potential
markup, you may also want to consider how it may change as your business
grows. For example, if we start out making our own coconut oil hair care
products, we would likely be starting with a relatively small quantity of raw
ingredients. However, as we grow and our purchase volume goes up, our
costs for ingredients goes down. This is also the same for manufactured
goods, as your order quantity goes up, your pricing goes down.

Evaluation: From our analysis of potential selling price, we know we can

comfortably sell a premium coconut oil based hair care product for $9-$20 per
120ml.

We were able to find Raw Coconut Oil for $80.00 for one gallon (3,785ml). We
were also able to find various other essential oils and extracts that have a
proven track record of helping damaged hair for a relatively low price
averaging $10 per 60ml.

If we assume our product will contain mostly coconut oil, with several other
additional oils and extracts, we can assume our total price would be $110 for
3,965ml (3,785ml + 60ml + 60ml + 60ml). We divide this by 120ml, which
would be the size of our final product and we get 33 total units. If we take our
total cost ($110) and divide it by our total units (33) we get a cost per unit of
$3.33.

Taking into account a 120ml jar would cost approximately $2.00 and $0.50 for
a label, our total cost per unit becomes $5.83. At the lower end of our potential
selling price this would be a bit of a concern but if we sell our product for $13-
$20 with can enjoy a pretty healthy markup. 

8. How many SKU’s will you have to stock?

In general, more SKU’s (types or styles of product) mean more potential

headaches. Typically, this can become an issue when you get into things like
sizes and colors. As an example, if you plan to sell jeans online you’re going
to have to stock many sizes for each style. This increases your costs for
inventory, storage as well as increases potential for shipping mixups.

Evaluation: Our product choice would likely begin with just one or several
SKU's. You could likely do well with just several of your own products or a
dozen or so curated coconut oil products.

9. Can you offer a subscription?

Far from necessary to build a successful online business, however the ability
to offer a subscription for your product is very desirable as it helps increase
your lifetime customer value, provides you the ability to spend more to acquire
customers, and decreases the number of customers you need to build a
successful business.

Evaluation: It’s doubtful that customers would purchase a hair care product

on a subscription basis as a product like this wouldn’t likely be used on a
regular basis, rather it would be used as needed.
10. What is your product's size and weight?

The size and weight of your product can have a big impact on your sales and
bottom line. If your product is oversized or heavy, costly shipping can deter
potential buyers and squeeze your margins. Size and weight can also be a
costly factor in warehousing and storage.

Evaluation: Shipping coconut oil isn’t light but at the unit sizes we would likely
be selling our product at, we don’t expect the packages to be that heavy. For
the average order, most shipping companies would consider it a small
package and it should fall well below the weight limits for small packages.

11. How durable is your product?

A durable product is always more ideal. Product durability will decrease your
overall shipping costs and prevent costly breakage during transit.

Evaluation: Most coconut oil hair care products come in either a glass or

plastic containers. This makes them relatively durable but if we plan to use
glass containers, it’s important to consider additional shipping costs to
properly and safely ship the the glass containers as to avoid breakage.

12. Will you face seasonality swings?

Seasonality refers to swings in purchasing behaviour over the course of a

year. For example, Christmas Trees have extremely high seasonality with
almost all of them being purchased in the months of November and
December.

Seasonality swings are important to keep in mind because of the effect they
can have on cash flow and the overall viability of the business.

Evaluation: We used Google Trends to look at some of the main keywords

surrounding our product idea to better understand if we would potentially
suffer from seasonality swings.
We can see that there are subtle spikes in searches around January that we
assume can be caused from people searching for an aid to help with dry, or
frizzy from the winter. Other than that, there doesn’t appear to be much in the
way of seasonality affecting out product choice.

13. Does your product serve a passion or solve a pain?

Products that solve a pain point or serve a passion are much easier to find
and acquire customer for compared to a product that is just a “nice-to-have”.

Evaluation: It’s fair to say that our product choice can definitely solve a pain
point for customers, including dry, brittle and frizzy hair. Arguably it also
serves a passion as well as women typically tend to go to extraordinary
lengths to keep their hair healthy and beautiful.

14. Is your product consumable or disposable?

A consumable or disposable product is good from an business perspective

because it provides you a better opportunity to earn the trust and repeat
business from your previous customers. Overall this can help you lower your
marketing costs and increase your average customer lifetime value.

Evaluation: As a hair care product, our product choice definitely falls under
the consumable category.

15. Is your product perishable?

Choosing a perishable product can be a recipe for disaster if you find yourself
struggling to find your market and make sales.

Evaluation: Coconut oil, along with several other ingredients we've

researched for our product (other oils and extracts) have an approximate shelf
life of three years or longer. This should give us more than enough time to sell
our product and give the customers ample amount of time to use the product.
16. Are there any restrictions or regulations on your product?

Restrictions and regulations are a part of life for many businesses and
products. However, it's best to learn about these before investing time and
money into your business. Understanding these things ahead of time will help
you plan accordingly, and likely save you a lot of time, energy and money. 

Evaluation: As far as we have been able to determine, there are aren’t that
many regulations or restrictions for our product other than labelling
requirements.

Conclusion
After looking at and taking into account all market and product criteria, we feel
pretty strongly about our product idea and the potential market for it. Some
highlights that really stand out to us are the low cost to start this business,
strong search demand, trend trajectory, and low competition keywords that we
feel we could rank well for in Google over time.

However, we do have a few concerns that prevent this from being a slam
dunk. Some of the biggest concerns include a low product price point and the
competitive landscape.

A large part of the potential success of our product idea would come from
being able to develop a product that is notably better than just coconut oil on
its own, building a brand around it and ranking high for the keyword
opportunities we identified.

What are your thoughts? Based on the criteria above, how confident or
unconfident are you in our product choice?