How To Determine If There Is
A Need For Your Product
by Tom Egelhoff
My lovely wife of seventeen years always seems to come up with ideas that require some kind of construction on my part because no one makes such a product. She is always amazed that no one has thought of this "thing" of hers before. If I had the funds for research and development for all the projects she has thought up I'd probably be giving Bill Gates a run for his money today.
The point of this article is to give you some things to think about and research to make sure there is in fact a need or demand for your product or service. The usual scenario for new business is for you to come up with an idea, go to the library and look at some outdated information, determine if you only get 2% of the population to buy your product you'll be on easy street for the rest of your life.
Well, let me tell you that product evaluation is much more involved than that. An evaluation begins with an evaluation of your company and it's capabilities. You'll find more on evaluating product demand in Chapter Two: The Business Resume of my book, "How To Market, Advertise And Promote Your Business Or Service In A Small Town."
Where To Start
There are three basic categories of needs that companies can develop. 1.) Improve or find a niche for an existing product line or service. For example: Espresso or flavored coffees; 2.) Create a spinoff of an existing product that creates a new product for a new market. For example: Laptop computers; 3.) A totally new product or service. For example: Priceline.com. Most new products or services fall somewhere in these three categories.
The three categories also present some challenges. For instance. In category number 1, people already know what coffee is so the process of educating the customer is less costly. This is probably the best category for new businesses with small start up dollars available.
In category number 2, you have almost the same scenario as category 1, except that with the laptop computer you have a whole new market of people on the go who never used or knew they needed a portable computer.
Category 3 is the most costly. A totally new concept or idea usually requires education of the public. Education of the public can be expensive. Radio, TV newspapers, and other media just to let the public know such a product or service exists and explaining why they would want it. Priceline.com spent a major fortune on various media to educate the public that they could call and make an offer for what they would be willing to pay for airline tickets, hotel rooms, and now gasoline.
What Are The Keys To Look For?
In order to know if your product is a winner or loser there are some things you should ask yourself. Here are some of the things I talk with companies about when they have a new product idea. Note: Keep the three categories in mind and the possible expenses connected with each as I go through the following:
What makes your product or service different? How does what you are doing to differ from the competition? Can you produce it or sell it for a competitive price? What are the benefits to the customer? What needs are being filled that weren't filled before? See: How To Develop Product
Benefits That Sell.
Who will be your customers and why are they your customers? What needs do they have that your product will fill? Are there enough of your customers in your market to make the business feasible? See: Target Marketing: Who They Are, How To Find Them
How will you sell your product? Directly to the customer in a storefront, mail order, internet? Will you need salespeople? Samples? Demonstrations? What are the projected costs of these things?
Can your product or service be narrowed down to one principle target market and two to three secondary markets? Can the product be adapted to other markets?
What are you really up against with your competitors? What do they do you can't do? What can you do they can't? How can you set yourself apart from them? See: How To Research Your Competition
How do you compare in price with other similar products and services? If you must sell your product or service for a higher price can you justify the value to the customer? See: Pricing Methods And How To Use Them
What is the cost of advertising your product? Remember category 3? Educating the public can be expensive. How much advertising will you need to do and where? Newspapers? TV? Radio? Flyers? Brochures? Which form of advertising will work for you? See: Checklist Of What Works In Print, Radio, TV, Direct Mail and Outdoor Ads.
How To Be Profitable
Guess what? Your business probably won't be profitable for a while. Are you prepared for that? Don't quit your day job until your business is consistently making a profit and that is rarely within the first five years. A more realistic thing to look for is consistency in sales. If you are making a level of sales month in and month out then the business will probably grow and will reach profitability. How fast depends on you and your efforts minus the mistakes that set you back. See: How To Grow Your Small Or Home-Based Business To The Break-Even Level.
The Last Word On A Need For Your Product Or Service
The best final advice I can give you is this; this is your idea. It's no one else's. Don't seek advice about it from unqualified people. If your parents are not in the business you want to go into they are not qualified to advise you on the idea. They may be able to advise you in other areas but not in the business itself.
Neither can your friends. Find people who are in your industry to advise you. Where do you find them? At the library in phone books in other towns and states. Find your industry in the yellow pages and call people up and ask them about what you want to do. I realize you want to protect your idea but if you are successful you are going to have all the competition you can handle soon enough.
There are thousands of great ideas out there. The difference between the guy holding the "will work for food" sign and Bill Gates is that Bill went out and did it. Against the wishes of his parents and most people he knew. I hope you are the next Bill Gates and this inspires you to make your idea happen. The longest most difficult journey begins with a single step. Start yours today.
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Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your Business Or Service In A Small Town, and The Small Town Advertising Handbook: How To Say More And Spend Less. He is also a seminar and workshop presenter and trainer. He may be reached at 888-550-6100 or PO Box 271, Bozeman, MT 59771-0271
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