Have you got a new product idea or several in mind, but aren’t sure if your ideas are any good? Perhaps you need to create a screening process to help decide which ideas to progress. Below, I’m going to give you some questions that you should ask yourself in order to screen your ideas.
Does the idea fit with your business objectives and core values?
I’ve started with this question, as there is no point in doing any further investigation if the idea doesn’t fit with your business objectives or core values. Perhaps you haven’t yet formalised your business objectives and core values, but I’m sure that deep down you probably know whether the idea fits. It might be a profitable idea, but if it’s something you will struggle with everyday, then don’t do it! For example, you may have the idea to build an eco-friendly baby brand. Your core values are about providing the best, safest products for your baby whilst thinking about the environment. However, the opportunity presents itself to sell a colourful plastic baby toy. It’ll be profitable, but you know it’s something you’d never let your baby play with and it doesn’t fit your business idea. In this case it’s probably not for you.
Who are your potential competitors?
Make a list of all of the potential competitors and their products. Is the market saturated with similar products? Will you be able to differentiate yourself from the competition? Can you determine a Unique Selling Proposition?
Just because there are competitors out there, doesn’t mean you shouldn’t move forward with your idea. Competitors are not to be feared, you just need to understand where you sit amongst them. Maybe your product will be more premium, maybe it’ll be cheaper, perhaps your product will look or function a little differently.
Who is your consumer/target market?
Is there a market out there for your product? Even before doing research you should have some vague idea of who your target market would be. Often ideas arise from the lack of products available to yourself. Maybe explore what target market you would fit with. For example, you love running but find that most exercise tights don’t have pockets for your phone and keys. This was so inconvenient that you decided to go and create some. It’s immediately obvious that the market might be women or men, roughly your age, who enjoy running but need to keep their phone and/or keys on them.
If your product idea is quite obscure you might find it difficult to define a target consumer. This might mean the target consumer doesn’t exist or the market is so niche that it would be really difficult to get sales. Niche can be good, particular if they can be marketed to quite easily. However, if the group is so small, really think about whether the sales volume would even be worthwhile.
What consumer need will your product fulfil?
Is there a need for your product? You need to identify the gap that you fill in relation to consumer needs. It may be difficult to identify a consumer need for a luxury item, however don’t dismiss it right away. It might just be more of a consumer ‘want’.
Ask friends and family, read Facebook groups, read online forums. Listen closely to what the consumers are saying about your category. You may just find some pearls of wisdom.
Will the idea be profitable?
Just because there is a desire for a product, and perhaps even a market for it, doesn’t mean it will be profitable. Create a basic P&L. Costs might be hard to calculate without having started the product development process, however you might be able to figure what cost you need to achieve for the project to be profitable. Start with your sell price and volume and work backwards. You can adjust your profit number and see what sort of costs are required to get the level of profitability you want. You might find you pricing expectations are unrealistic.
I’ve seen this happen when people enter the market hoping to undercut the competition. When their point of difference will be “lowest prices”. I’m not saying this strategy doesn’t ever work. However, personally I believe, particularly for small businesses, you should have points of difference which are not simply based on price. You might find that a larger competitor will almost always be able to lower their prices below yours.
How easily can the product be sourced or manufactured?
The answer to this should be fairly brief. Almost anything can be sourced or manufactured, for the right price. Volume also plays a part. If you can comply with suppliers minimum order quantities (MOQs), than you should be able to get custom products manufactured. It becomes difficult when you want to produce a bespoke product at very low volumes. You would need to determine if you can meet the suppliers MOQ or if it simply too high and therefore not feasible to continue.
How marketable is the product?
How easy a product is to market will probably be clearer once you have a prototype, and can start some solid market research. However, for now write down ideas on how you could market the product. Think about target consumer and their media and shopping habits, environmental impact of the product, aesthetics, features and benefits, safety features, legal or regulatory compliance and potential for future range development.
Hopefully the above 7 questions has provided you with a screening and sorting process for your new product ideas. This should give you a pretty good indicator of whether a product idea is feasible, however it should be noted that many entrepreneurs will still simply rely on gut feel. I personally like structure and process to sort through my ideas, however there have been plenty of entrepreneurs who’s products didn’t seem feasible on paper but still worked! Look at Lisa Messenger and The Collective Hub, who created a successful, physical magazine when magazines were hugely in decline! Everyone thought she was crazy and that the idea didn’t make sense, however she is a big believer in intuition, and pursued her idea relentlessly. Be prepared though, if you are relying on intuition that you will need to fight naysayers continuously. Investment could also be more difficult to obtain without numbers, figures and a solid business story.