With a new product in hand, you have to evaluate its viability to make sure it is a worthy investment to offer to retailers. A viability analysis is carried out to ascertain whether the product will sell, the size of the market, and even its future. It is a crucial process that can help a business avoid major pitfalls that startups experience. A product ought not to be based on feelings; it should be guided by tangible research, a clear picture of how the product would perform, and using evidence-based information to make the crucial decision. Here are factors that can be applied in the evaluation of the viability of a new idea product.
Whom are you targeting with the new product?
You need to establish the target audience. What are its characteristics? Is there a need for your product? Will retailers want to buy it? Answering these questions will give you information on whether there is a need for the product. It would be a big mistake if you continue investing in a product that has no adequate market. Once you have established there is a market, you need to study the characteristics of the market, such as their likes, preferences, tastes, and demographics among others. Armed with this information, you will have a clearer picture of whether it’s worth investing in the idea or what you need to ensure that the idea becomes viable.
Are there others who are selling similar products?
You need to establish who the competition is. These are businesses producing similar products or those offering that can be easily substituted to what you are planning to produce. Who is the largest competitor? What is their market share? What strategies have they used to remain at the top? Are you able to match that with your current resources? How can you capture their market share? What marketing strategies do you need to use to ensure that the new product gets a sized market share? To answer these questions, you need to study the current market and also visualize how the future might look like.
How do you make your product profitable?
At this stage, you need to have established all the costs that will be incurred to produce your product. To produce gains, you need to make some profit; therefore the revenue-generating capability of your product will have to be beyond the cost. The profit margin should be enough to allow you to grow your product and at the same time enable the product to remain competitive. High or low-profit margins will end up hurting your business, putting its future in jeopardy; therefore, set it at a reasonable level.
Think about these factors, they are crucial in ascertaining the viability of your new product. The research will be important in helping to answer these questions. However, remember that any business venture will always be risky but gathering enough evidence will allow you to make tangible decisions and ultimately leading to the success of your venture. As a Chicago-based retail consulting company, Retailbound helps innovative product start-ups and small companies to get their product “retail-ready” and firmly placed with major US retailers. Have a product you want to offer to retailers? Contact at info@retailbound.com for more information!
