If you’re an inventor (or just a deep thinker) and you’ve come up with what you believe is a brilliant new product or service, the first thing that you need to do is find out if there is a market for your product or service before you decide to try and bring it to the market and to consumers. Frankly, even if it seems brilliant in your mind, if your invention or service is not something that a large amount of people will also find brilliant, want to use or need in their life, you’re probably not going to be able to sell very many of whatever it is you’ve created.
If you find that there is indeed a market for what you have created, and a lot of people show interest in purchasing it, you’ll then of course want to start determining exactly what you need to do to make it a reality for consumers. On the other hand, if you find that you are the only person who actually thinks what you’ve made is ‘the bomb’ you may want to hold off on spending hundreds or even thousands of dollars to have a prototype produced. Below are a number of things that you can do to determine just that. Enjoy.
The first thing that you need to do, no matter what your product or service is, is accept the fact that the market is completely nonjudgmental. It has no bias and has nothing against you or your creation whatsoever. The market will ultimately dictate your success however and what this means is that before you get started you need to make sure that the numbers will support whatever it is you are keen on creating. Information about these specific areas will help you, including;
- Dollar amounts, revenue-wise, about the category of product that you are bringing to market. These should be locally, regionally and nationally.
- Know who your competitors are, where they are and what they are doing to market a similar product.
- Find out if the market that you wish to enter into a strong and growing, static, mature or dropping.
Let’s say, for the sake of example, that you want to start a company that makes a new type of sandal. Let’s also say that the market in your area has enough customers that $1 million worth of sandals a year are being sold. Finally let’s say that you’re up against 10 competitors in your area. Keeping in mind that the top 3 companies in almost all categories usually take in about 80% of the total revenues you’ll thus be competing with 7 other companies for what ultimately is $200,000.00 worth of revenue. In this scenario it might not make sense to bring your new sandal idea to market.
One of the smartest things that you can do is pick a proven category and then, within that category, find your niche. There is much greater opportunity in broad, proven categories then there is in hot new markets. Most experts will tell you that, when given the option of going into a sizzling new tech category or going into the shoe market they’d rather go with shoes. The reason is simple; all over the world the need for shoes is strong, has been around for thousands of years and is not bound to drop off anytime soon. Shoes are a proven commodity with opportunities for repeat business that are built-in and many opportunities for value added options and accessories. (For example, if you’re selling shoes you can also sell socks, shoe polishes and other accessories.) There are also plenty of opportunities to be innovative if you have a market that is proven supporting you.
One of the best things to do would be to start with a broad, general and proven market and then start thinking about a specific niche that you want to fill. Well you’re in this planning stage you simply can’t go too deep or too narrow. In fact you’d be best to go as narrow as possible and see what type of opportunities are available in the smallest niche that you can find. Once you’ve done that you can expand out from there. The reason for this is that with a narrow niche you can usually grow quite rapidly and also be the sole provider of that product or service. You will also be in the enviable position of being the manufacturer that makes the prices (and thus the profit margins) rather than having to lower your prices and less your profit margin. Remember that the less competition that you have the better.
Another vital aspect of finding a niche and exploiting it is that, rather than going after a big market share, you can instead focus on repeat business and customer loyalty. This will allow you to us change your objective from getting new customers to selling as much as you possibly can to existing customers and keeping them for as long as possible. Focusing relentlessly on repeat business is kind of like setting up an insurance policy to take care of your marketing program. Simply put, it is much less expensive to find new customers and convince them to make a purchase than it is to convince an existing customer to make another purchase. Once you’ve built a large, loyal customer base your costs for outside marketing are going to drop drastically while good old-fashioned word of mouth, which costs practically nothing, will keep your business afloat.
One last thing that you’ll need to do is put your idea to the test and see if there is truly a desire among consumers to purchase it. Create a simple webpage or produce a number of products and put them into a few retail stores on consignment. It might take a little bit of time and effort to do this but, once done, you’ll know a lot more about what the market will bear and who your customers are. The response that your webpage or products get will tell you what the market will bear and what the needs and desires of your customers truly are. Once you have this information you can decide whether to expand or pullback.
In the end, if you can grow a loyal and satisfied customer base with your new commercial enterprise and accumulate a good bit of personal wealth in the process you’ll be much better off than trying to bring a product to market whose time might never come or whose need may never exist. Marketing experts will tell you that you should never fall in love with an idea and hope that the world will catch up or catch on but rather find an idea that will satisfy a consumer need and exploited as best as you can.
The entrepreneurial spirit can be very strong and if you are keen on bringing a new product to market and building yourself a business we wish you the best of luck. We hope that the advice that we’ve given today has been a valuable and invite you to come back and visit us again soon for a wide range of advice and tips on many different financial subjects. See you then.