Many business people will take a year or more before deciding which business to enter or which products or services to bring to the market. Every hour you spend in research and test marketing will save you 10 hours of hard work later. Be sure that a market exists. I remember the story of an entrepreneur who thought he would make a killing on the toy, creepy crawly spiders that he bought from a Taiwanese manufacturer. He invested more than he could probably afford, buying 10,000 units for $3 each. And he kept what he was doing secret with the idea he was certain to make a killing at Christmas. He called a major department store and told the buyer he had a great toy that would sell like crazy during the Christmas season. He got his appointment, and when he demonstrated his toy, the Myer loved it. In fact, he had already bought 100,000 units from the same manufacturer for 1.59 each.
The market was there, but he lost his shirt because he didn\’t check out whether he could sell these toys at a profit. Not to mention his money test. The market test marketing is quite simple. First, you make a prototype or create a sample of the product or service that you can show to a potential customer. You then get accurate prices and delivery dates from your suppliers. So you know exactly how much you\’ll have to charge with these in hand; you go straight to a buyer and ask for his or her opinion about your product or service. Ask prospective customers whether they would buy the product or service and what price they would pay for it. If you are selling to companies, call on the individual who makes the final buying decision and get his or her candid reaction to your offering. Be sure to compare your product with other products on the market. You must always ask the question. Why would someone buy from you instead of from someone else? Another way to test market a new product or service is to take it to a trade show where sophisticated buyers and potential customers will tell you whether or not you have a winner. Finally, ask your friends, relatives, and business associates if they would buy or use the product or service at the price you would have to charge. I once bought $2000 worth of a home cleaning product that I thought everyone would want.
It turned out that nobody wanted it at all, and I ended up stuck with the product for years. Don\’t let this happen to you. Approach your business strategically. Stand back and look at your business from the point of view of an objective third party. Imagine hiring a professional to inspect your business and ask you some hard questions before starting. Be tough on yourself and your ideas. This alone can give you a key advantage over your competitors.
The more time you spend thinking through the answers to these hard questions, the less time it will take you to pay for your mistakes and turn your business into a profitable enterprise. Ask the key questions first, what exactly do you sell in terms of what it does for your customer? What needs of your customers? Does it satisfy? It is currently not being satisfied by someone else\’s product or service. The three major needs of customers are better, faster, and cheaper. Customers also want products and services that are easy to use and superior to what they\’re currently using. Business customers want increased sales, lower costs, and higher net profits. Individual customers want success, social status, popularity, knowledge, influence, and personal power. People, in general, want prestige and admiration, acceptance, self-esteem, pleasure, and comfort. Which of these needs does your product satisfy? Customers are always asked to improve their situations, either personal or business, somehow. In what specific ways does your product or service improve the life or work of your customers? You must be very clear and specific about this.