How to choose Products/Services for your Business?

Product/Service Selection for Business/Start-up

(Step 8 of our how to set-up new business guide)

Product selection is one of the most crucial steps that can create difference in failure and success of any business. Here when we refer Product here then it is for both products and services. At one end, good product selection can establish a business and at other end, poor product selection can ruin all investment, time and efforts done to establish a business. 

Before selection of any product, you need to analysis few important aspects like:

• Is there demand for the product at the price you are going to sell it?
• Is it possible for you to make profit from that product/service for running your business?
• Is the market size of products/services enough so you can advertise, sell and deliver the product at a reasonable price?

In this article, we will try to figure out, how we can select products or services for our Business.

No one can suggest or predict which product is best for you to start with. Sometime most favorable products can underperform and less weighted products can do better when come to sale of products. One product that is doing good for others, may not work for you or vice versa.

So it is suggested that you should not invest all your investment at initial level products and save it for any new product launch possibility that you may need in near future.

Like business, product selection is also a learning process, you learn with time which products or segment is working for you and which is not.

General Selection Criteria:

Most of start-ups and entrepreneur launch their products based upon their prior experience and knowledge. Their starting products are those at which they already have worked during their professional life. One of the main benefits of starting with already selling product is that you know about market, customer type, price structure, competitors etc.

You are aware about many product of similar type and you can choose any of your initial products based upon affordability, competition, easiness or difficulty to reach in market, profit margin, price tag etc. Your experience and market knowledge is best way to choose products for your start-up.

This selection is applicable only if you are in sales or have experience in industry you are going to start your business. But if you are new into market and don’t know anything then it becomes difficult to choose products for your business. Entrepreneurs who don’t have experience in industry should go for product selection based upon consulting with industry experts, your mentors and select products based upon market research we have conducted in starting in our step 1 of how to set-up new business.

Here we are going to discuss few factors at which product selection depends. These are discussed below.

Product selection Criteria’s:

• Market Research
• Market Demand
• Already selling products
• Affordable to launch and maintain stock at good quantity
• Profit margin
• Price Segment
• Problem solved by product
• Season Based
• Existing competition
• Differentiation from competitors
• Easy to reach market

Market Research: Market research we have conducted at our step 1 of how to set-up new business. In market research part you have researched about what actually your proposed customer’s want. Depend at your prospect’s requirement, you can choose which product to launch. What better you can give to your proposed customer so they buy your product in place of your competitor.

Market Demand: At that part we know about products that are in trend, doing well in market, short term profitable products, long term beneficial products etc. You can select your products as per your market research conducted at initial level. But you should consider time gap between market research conducted and present time to check whether this time period is not too long for market trend shifting.

Already selling Products: If you already selling any products then you have knowledge about market. Having practical knowledge of product and market helps to choose products because you know who your customer is what is the rates, profit margins, direct competitors etc. That is one of the most useful scenarios because you already know the products.

Affordable to launch and maintain stock at good quantity: You can launch product with initial investment but if you aren’t in position to maintain its stock due to price, vendors etc . Once you have launched product, you need to maintain product at regular basis. So you should start with products that you can afford to launch and maintain stock as per demand even you get huge demand.

Profit Margins: Profit margin affects product selection criteria. Profit margin of product should be as much to allow running your business as well as giving revenue for further expansion. You have to invest at many parts of business so you need money for that and your product selection should fulfill those criteria.

Price Segment: A product may be affordable to launch but price segment of that product is low. You may need it in bulk to earn adequate income for your business. On that other hand, you may choose higher price tag product but investment required to launch and sustain stock is higher. SO you should be careful while selecting product based upon price segment.

Problem Solving Product: If you identify any problem faced by your proposed customer, you can launch your products based upon solving that problem. It will help you to easily penetrate market and beat the competition.

Seasoned Based Products: Some products are seasonal. Customers purchase those products at a particular time. Seasonal products are generally used to boost sale at particular timer but during off season they become non-moving inventory. So you should be careful while launching products for your business.

Existing Competition: A healthy competition is good and everywhere is competition but if a product has too many competitors than its market size then it becomes difficult to establish or sustain a product for long time.

Differentiation from competitor: If you are launching a product in market that already have many competitors then you should consider that what uniqueness or differentiation you can provide to customers that will differentiate your products i.e. low rates, better packaging, better quality or any other things.

Easy to reach market: Some products may be less profitable or even low price segment but if that helps you to penetrate into market then you can choose them to stable your business.

Other Steps:

Check out : Sixteen Easy Steps to Set-up New Business
Step 1: Market Research
Step 2: Business Plan
Step 3: Arrange Finance for Business
Step 4: Finding a premises for Business
Step 5: Name your business
Step 6: Trademark Registration
Step 7: Registrations and Licenses

Step 9: Name a Product and Service
Step 10: Recruit Staff/Employee
Step 11: Execute your business strategy Effectively
Step 12: Promotion and Marketing of Business
Step 13: Supply Chain: Set-up a Distribution Channel
Step 14: Recruit Sales Staff 
Step 15: Start taking Orders
Step 16 : Closing the sale (Supply Goods/services and collect payment)

Based upon above criteria, you can choose products for your start-up.

Hope above information is helpful to you…