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HOW TO SELECT A PRODUCT FOR YOUR NEW BUSINESS?
We, entrepreneurs, are always passionate and looking up for new opportunities where we can showcase our talent and our vision. Although, the major obstacle which stands in our way from achieving our objectives is the question; Which Product should I select for my new start-up? Deciding the right product is very crucial as it shapes or designs the foundations of your entire business. Here are some logical points which will help you in selecting the right product for your new growing business.
Picking the right Industry
As an entrepreneur which field matches your expertise? The First step is selecting the right industry in which you would compete with so many different businesses. Which field is the most trending? Does it offer good profit margins? Would that industry still survive after ten years in the future? Analysing such questions will help you realize the current scenario and narrow your vision towards selecting the right product.
Production Cost and Profit ratio
The primary goal of any business is profit. Profits are crucial for the survival and expansion of a business. A product should be selected based on cost-effectiveness. The raw materials, the machinery, the processing cost should be minimal whereas the profit margin or the rewards should be high or more than average to keep your business running.
Room for Innovation and Expansion
A product selected, should always have a new opportunity, where it can be innovated or evolved into something new for meeting the ever-changing demand of the consumers.
Let’s take an example here, We all know how Amazon started, it primarily dealt as a marketplace for books. Now imagine the consequences if it had stopped there? Would it still be regarded as the largest e-commerce website today? Or would Jeff Bezos be known as the richest man in the world? Of course not!
The above example is less relatable, but it teaches us an important lesson, that your product should be something which can be evolved into as per the market demand.
Now should your product be less competitive or more? For most of you, the obvious answer would be the former. However, a product having more competition is easier to sell in the market, as it would be already known among the consumer and you won’t have to spend money marketing and making consumers aware of your new product. For consumers, a quality product from a competitive market is preferable than a new or lesser-known product in a monopoly market.
Another effective method is to indulge in extensive market research. One of the significant factors is knowing the consumer’s demand and taste. What’s your reaction when someone gifts you the exact thing which you hoped or desired for? That’s the same response which your product should aim for when it launches in the market and therefore proper market research counts as an important step. A simple method to know consumer’s choices regarding a particular or different category of products is market surveys! It collects the opinion of the masses, highlighting the clear idea of which product to be selected for your new business.
Let’s understand what is Repetitive demand, how many times would an average person buy a car in a year? Would it be once or at an increasing count? Of course, the answer is ‘Just once’ for a car is a product which generates sales only once per year through every desirable consumer, yet there are FMCG products which are a constant market demand for all the consumers, as they are required on a regular basis. A product having a repetitive demand is much favourable for your new business and not the opposite. However, an entrepreneur with a well-executed plan and vision can perform great with a product having non-recurring demand as well. Choose wisely according to your expertise.
Remember, whatever product you chose, it would act as the pillar for your business, right from scratch. Selecting the right product would include dedicating time, investing a lot of money, and risking the existence of your entrepreneurship goals on a single factor. Adopting methods such as the trial and error methods at minimal cost would be effective or speculation and analyzation of different product categories in the market could also help you decide and design your own product.