The first point any business or budding inventor needs to check is that their idea for a new product or service is designed to be a marketable product - as you can make anything, but only marketable products will sell! Here are seven steps which, in our experience, you need to consider to ensure you have a commercially viable offering and the greatest chance of financial returns.
1) Know your unique selling point (your USP)
It may seem obvious but many people get this wrong or simply do not give it sufficient thought. Often what they see is different to what their customer sees. It is important to know the advantages of your product from your customer's perspective. As well as knowing your unique selling point, you need to be able pitch it to a potential customer, quickly and clearly. Often referred to as the 'elevator pitch', you need to refine whatever you say to describe your idea in an accurate, concise and compelling way. It needs to engage a potential customer - or potential investor - and compel them to want to know more. When Sony started getting into electronics in the early 50's the head of engineering said that he would 'develop a radio that can fit in your pocket'. At the time, when radios were the size of cabinets, this was a compelling story and a great USP.
It may seem obvious but many people get this wrong or simply do not give it sufficient thought. Often what they see is different to what their customer sees. It is important to know the advantages of your product from your customer's perspective. As well as knowing your unique selling point, you need to be able pitch it to a potential customer, quickly and clearly. Often referred to as the 'elevator pitch', you need to refine whatever you say to describe your idea in an accurate, concise and compelling way. It needs to engage a potential customer - or potential investor - and compel them to want to know more. When Sony started getting into electronics in the early 50's the head of engineering said that he would 'develop a radio that can fit in your pocket'. At the time, when radios were the size of cabinets, this was a compelling story and a great USP.
2) Know your market
People often think of an idea and a design that is something that suits them, or solves a personal issue. They believe that the fact they, or their family and friends, like it and need it means there is a market for it. But to assess whether a market genuinely exists, you first need to ensure you have clearly identified exactly who your customer and end-user is and how they will use your product. Market profiling and competitor analysis are essential here. As an example, we work with many different companies who plan to sell to the children's toys, games and lifestyle sector. What they need to be aware of is what children are looking for. They also need to have a scale reference to a young end-user, in order to get the size right.
People often think of an idea and a design that is something that suits them, or solves a personal issue. They believe that the fact they, or their family and friends, like it and need it means there is a market for it. But to assess whether a market genuinely exists, you first need to ensure you have clearly identified exactly who your customer and end-user is and how they will use your product. Market profiling and competitor analysis are essential here. As an example, we work with many different companies who plan to sell to the children's toys, games and lifestyle sector. What they need to be aware of is what children are looking for. They also need to have a scale reference to a young end-user, in order to get the size right.
3) Know how big your market is
If only we received a pound for every time we heard the phrase "everyone will want one... " This, I am afraid, cannot be true. Not everyone will, or can, buy your product or service. Knowing clearly who your target customer/end-user is will enable you to estimate the actual size of your potential market. Competitor analysis will then help you to understand how competitive the market is and how well other company's products are selling. From this you can calculate a market penetration figure - ie the % of the market you can reasonably expect to achieve, provided your product/service is competitive. This can be translated into how many actual units you might be able to sell.
If only we received a pound for every time we heard the phrase "everyone will want one... " This, I am afraid, cannot be true. Not everyone will, or can, buy your product or service. Knowing clearly who your target customer/end-user is will enable you to estimate the actual size of your potential market. Competitor analysis will then help you to understand how competitive the market is and how well other company's products are selling. From this you can calculate a market penetration figure - ie the % of the market you can reasonably expect to achieve, provided your product/service is competitive. This can be translated into how many actual units you might be able to sell.
Bear in mind that this process is more of an art than a science and delivers scale rather than precise numbers. However, a number of educated and defendable guesses that deliver a number is better than no number at all! It will require some digging and cross-checking from different sources and a fair degree of estimation and guesswork. Much of the information you need can be found on the web or through reliable sources, such as the British Library. We suggest you identify a best, worst and most likely figure that you can substantiate. You can then refine your numbers progressively over time.
4) Know how your customer will buy your product
Make sure you know how your customer will find and purchase your product or service. For example, is it a direct sale? Or do you need an intermediate, such as a retailer or distributor? Do these distributors use agents and do these retailers buy from businesses like yours? The longer the chain between you and your end-user is, the lower your costs and larger the profit margins need to be. Researching your competitors will help you greatly here and you can watch and learn from them. You may even be able to see an innovative step they are missing and such a step could well end up being your key USP.
Make sure you know how your customer will find and purchase your product or service. For example, is it a direct sale? Or do you need an intermediate, such as a retailer or distributor? Do these distributors use agents and do these retailers buy from businesses like yours? The longer the chain between you and your end-user is, the lower your costs and larger the profit margins need to be. Researching your competitors will help you greatly here and you can watch and learn from them. You may even be able to see an innovative step they are missing and such a step could well end up being your key USP.
5) Know how everyone in the chain will learn about your product
Promotion and branding for your new product/service needs to be considered early on. As product designers, and having developed intellectual property concepts for the entertainment industry, we know that the essence of a design concept typically forms the foundation of any promotional and branding activities. It is common for a branding company to make a brand fit an existing product, but this is tough and can be hit-and-miss. It is far easier and more effective to consider branding and promotion at the beginning of a project, rather than at the end, and to let the two aspects develop together.
Promotion and branding for your new product/service needs to be considered early on. As product designers, and having developed intellectual property concepts for the entertainment industry, we know that the essence of a design concept typically forms the foundation of any promotional and branding activities. It is common for a branding company to make a brand fit an existing product, but this is tough and can be hit-and-miss. It is far easier and more effective to consider branding and promotion at the beginning of a project, rather than at the end, and to let the two aspects develop together.
6) Know how much your customer will pay
How much will you customer pay for your product/service and so how much should it cost you to supply it? Addressing the earlier points should enable you to answer this question quite easily. We work on the principle you can make anything but only marketable products sell. So not only do you have to know what your product or service will sell for, but then what it will cost to make and deliver, whilst still enabling everyone in the chain to make the money they need to. As an example, a TV advertised product sold on the High Street should cost around a seventh of its retail price to manufacture.
How much will you customer pay for your product/service and so how much should it cost you to supply it? Addressing the earlier points should enable you to answer this question quite easily. We work on the principle you can make anything but only marketable products sell. So not only do you have to know what your product or service will sell for, but then what it will cost to make and deliver, whilst still enabling everyone in the chain to make the money they need to. As an example, a TV advertised product sold on the High Street should cost around a seventh of its retail price to manufacture.
7) Know that all these points are interdependent
All of the answers to the above points are interdependent and so changing one means you have to re-evaluate the rest. As an illustration, you cannot just raise the price of something without re-considering the amount and type of promotion you undertake and the quantity of product you can reasonably expect to sell.
All of the answers to the above points are interdependent and so changing one means you have to re-evaluate the rest. As an illustration, you cannot just raise the price of something without re-considering the amount and type of promotion you undertake and the quantity of product you can reasonably expect to sell.
If you would like further information, or to receive some practical advice on this subject, then Bang Creations runs a monthly workshop at the British Library, Business & IP Centre. For details and to book visit Eventbrite or the events section of our website http://www.bangcreations.co.uk
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