If You Want To Start A business, First Test Your Product Ideas, Markets and Price
You have great product ideas for starting a business, but how do you know if your target customers want what you are selling? If you want to seriously start a business, then the first step is to identify your target market and test your product ideas.
Identifying Your Target Market
Your target market isn’t everyone in the world, even if you have a general everyday product idea such as natural deodorant and organic skin care items. Yes, men and women might both be able to use this product, but realistically narrow down your market to include the most likely buyers and the best age group for buying your product. In this particular case, your target market might make up the age group of 25-55 and mostly women.
If you’ve just developed an app that uses geo-targeting, what markets could use this type of product? Any organization that is running a large event ie music festivals or any retail company in a downtown location with lots of walking traffic. Good examples here would be a pizza store, sub shop or department store.
What is your channel of distribution?
You can choose multiple channels of distribution or just one type of channel. In the case of organic skincare items, there are a variety of channels that can be chosen.
- Direct to consumer (via own online shopping website or via Amazon and Etsy)
- Wholesale (to shops, distributors and wholesalers)
If you are choosing both direct and wholesale channels, your retail pricing must include the wholesale markup as the retail price is the end user pricing that both you and the wholesaler will use. You obviously make more profit when you sell direct to consumer, but the wholesale channel often has the traffic that will afford you quantity sales but at a lower profit.
Test Your Product Ideas
Before you spend a lot of money on product development, take a small sample of products and test them in your market channels.
What kind of questions should you ask? Don’t forget you are asking questions to get feedback only. So it’s just as important to listen to the negative feedback as the positive feedback. Here are eight suggested questions.
- What do you like about this product and why?
- What don’t you like about this product and why?
- Would the benefits of this products be of interest to you or your customers?
- What do you think of the price of this product?
- Do you purchase/sell products like this on a regular basis?
- What time of year to your stock/buy this kind of product?
- Is the packaging and branding appealing?
- On a score of 1 to 10 (1= low, 10=high), how likely are you to purchase this type of product?
Once you have tabulated the results of your product testing you will know what areas you need to adjust BEFORE you go to market. Plus, you will know from the feedback you receive what benefits to amplify when you are marketing your products.
Tricks For Testing Product Ideas
Amazon is a great marketplace to find similar products and check out the popularity of items. Pinterest boards are another great way to test products. The number of pins is an indication of how many people are interested. Sometimes you can get ideas from watching the pitches on TV shows such as Dragons Den or Shark Tank.
Unique Selling Proposition (USP)
Whatever product you are thinking of taking to market, your version must have a unique selling proposition. All that means is a different twist on your products that will appeal to your target buyers, some unique feature that makes them stand out from the competitive product. This can be something as simple as color array, multi-use, lightweight, or convenient for solving a nagging problem.
Keep your eyes open, something will pop into your head to start a business. But be prepared to test your product ideas before you spend tons of money on product development, only to find out your target market doesn’t want your products!
Check out our post on the Business Model Canvas, it could give you some great ideas!
What kind of product testing have you done before you launched your business?
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