Nobody ever lost money taking a profit.
Marketing 101 demands that before you introduce a new product or start a business selling a new product, you need to make sure that there is a solid demand for the product. While this sounds so elementary, we continually work with entrepreneurs and inventors that have just forgotten about this basic tenet of good marketing.
We were called in recently to assist an inventor that had developed a new type of dog toy. The toy was fun for dogs but very expensive to produce. They gave me one to try, and I can personally attest that my dogs (3) loved the toy.
This toy was the brainchild of an inventor who really needed a product like this for his dogs. This idea came to fruition after the inventor invested over $100,000 in initial production and development expenses. His teams called JMI because they wanted help with some partner issues. However, as it frequently turns out when people call us for help, the issue they cited was not the critical issue at all.
After much discussion, we were able to ferret out the real problem. Their partner issues paled in comparison to the fact that they were uncertain if the product even had a viable market. They spent all of this money without knowing if there was any real demand for the product. Of course, they asked their friends and relatives what they thought about the product, and of course, they got rave reviews. What they did not do was ask potential customers if they would be willing to buy the product and for what price.
In order to cover the cost of getting these dog toys produced, they would have to charge a very high price, and because they assumed there would be a landslide of demand, they thought they could do that. We very kindly told them that they first needed to find out if there was a real demand for the product. Furthermore, even if the demand was there, we thought that it was way overpriced.
We suggested that they try to sell their current inventory on the Web as well as at various dog events. They could set up a small table and try to sell the blankets at these events before they invested too much more money.
While ensuring that there is a demand for your product seems like such a simple concept, this inventor just got caught up. He fell in love with his first idea, not his best idea. Additionally, he saw this as a way to achieve financial success, and he failed to think carefully through all of the ramifications of ensuring that there was a demand for his product.
Now go out and make sure that there is a viable demand for your new product or business. You can do this through the use of surveys, selling your product to a small market, or asking your existing customers what they think about a new product or service.
You can do this!