The reading level for this article is Novice
On August 1, 2001 I met with a man I’ll refer to here as Mr. R. Mr. R had found a great product and had worked the past year laying the groundwork to create the company that would sell that product. I wasn’t sure at the time just how good his product was. A year later however, as we passed the $800,000 sales mark, I knew.
It was a great product. Now, that wasn’t the only reason we had made so many sales. The other half of the story was that in the mean time I had put into place some very effective marketing systems. I examine these in detail in my upcoming book, Zero to One Million. But, admittedly, this product was great.
The market size was huge. The demand for the product was large and increasing. The product was of very high quality. The product was unique and could be distinguished easily from competing products. The product was effective. The product gave significant benefits to the consumer. The product had to be reordered every thirty days. The product could be obtained at a relatively low cost, which supported a large markup. Finally, there were few serious competitors selling similar products.
In short it was great. But how do you know if your product is great? And if you are in search of a product to sell, what questions must you ask to determine if it is great and will sell well?
Fifteen Essential Questions
Well, there are two factors that must be assessed when selecting a product. These are the inherent qualities of the product and the state of the marketplace. Here is a list of questions to ask in examining each of your products or potential products.
Inherent Qualities of the Product
1. Is the product of high quality?
2. Is the product effective?
3. How valuable are the benefits the product gives to the consumer?
4. Does the product increase pleasure, increase utility, or reduce pain?
5. Must the product be reordered?
6. Can a back-end for the product easily be developed?
State of the Marketplace
1. Can it be obtained or produced for a low cost so as to support a high margin?
2. What is the current demand for the product?
3. Is this demand expanding?
4. How many other competitors are selling the same or similar product?
5. How many serious competitors are there?
6. What are the sales figures of these competitors?
7. What are the products substitutes?
8. Are there any factors which may increase or decrease sales of substitutes?
9. How hard will it be to differentiate the product from competing products?
Answer these questions for every product you have and every product you are considering adding to your line.
Seven Prerequisites for a Great Product
As given in my article, “Attributes of the Perfect Product” here are the seven prerequisites for a great product.
1. Fulfills a need or want.
2. Has either niche market appeal or mass-market appeal.
3. Has at least a 2:1 margin; 5:1 or higher is optimal.
4. Has a high perceived value.
5. Must be replenished or repurchased by the customer often.
6. Is easily upsold and cross-sold.
7. Has a related back-end product.
Look at every product you have and every product you are considering selling with these criterion in mind. If you have a product that passes the litmus test above, you may just be on your way to success.
Note: For more information on exactly how Mr. R’s company went from $0 in sales to $1,000,000 in fourteen months with a 51% profit margin, no debt, no venture capital, and just three employees, do be sure read my upcoming book Zero to One Million [learn more].