What to Sell
Often times when someone is starting a business or looking to expand an existing business, their first question is: What to Sell?
Unfortunately for many, the response to the question is not based on any market research or often times even on common sense; rather, it is often based on what that person or company is good at or what they like to do. This can make sense in some circumstances, particularly when what you like to do happens to be aligned with what the market is seeking, but typically it is not an approach that will get you the results you are seeking.
A better approach to figuring out what to sell is to go on a search for specific problems your target markets are trying to solve, then create and market a solution to those problems, at a price that is profitable for you and reasonable for your market.
Let’s look at a couple of examples of the right way and the wrong way to determine what to sell in your business.
What to Sell – Example #1:
Sally is a good cook and she likes to cook. Her friends and family constantly tell her that she’s a great cook and she should start a restaurant. Sally thinks to herself, “you know what, I am a great cook and I love doing it … they’re right, I should start a restaurant”. So Sally finds a location. It’s a decent location and it already has most all the cooking equipment she needs from the previous series of restaurants that had occupied the space. Since Sally is good at southern “Comfort Cooking,” she decides to go with that theme and calls her restaurant Sally’s Home Kitchen. She’s very excited about her new business and happy that because the location already had equipment, she has had to invest less than $100,000 to open the business. She opens the doors in April. By September, after several grueling months of very few customers and mounting losses, she has to close the doors.
So what happened beyond entering the restaurant business, which has tremendous competition, is perilous for a novice entrepreneur, and has one of the highest startup and failure rates of all businesses? Even without more details, the answer is quite obvious of course: Sally did no research regarding whether potential customers in the environs of the location she chose would have any interest in eating southern “Comfort Food”. As it turns out, Sally’s case was extreme, as she put her restaurant in an area where people were focused on “healthy eating,” with a predominance of vegetarians and other people focused on “heart healthy diets”. The scenario could not have been much worse for Sally, but it all could have been avoided with a little research. When she asked herself what to sell, she would have been a lot better off looking to help customers try to solve particular problems, rather than offer another solution that was contrary to what most people in her area were seeking.
What to Sell – Example #2:
Now let’s look at an example at the other end of the spectrum: Proactiv Solution.
If you watch TV at all, you have undoubtedly seen commercials for a product called Proactiv Solution. It is a product that is used to treat acne, which is a widespread problem, particularly for adolescents. The product was created to solve a very common problem and it is sold to a target market that is extremely motivated to solve the problem as soon as possible. As we say, it is not a product in search of a market; rather, it is a product that solves a pressing problem of a very motivated existing market.
When you are deciding what to sell, you can learn a great deal from many of the “genius” elements of the Proactiv launch, which is widely regarding as one of the most successful products ever marketed on television.
So, why is Proactiv a great example of what to sell? Here are just a few of the attractive elements of creating and marketing a product such as Proactiv:
1.) It is solving a real problem.
2.) The target market is willing to pay to solve their problem.
3.) The problem resides at the emotional level of the target market, so the Pathos element of the Ethos, Pathos, Logos model is already overcome, de facto.
4.) The target market is easily identifiable and reachable.
5.) It is possible to visually represent the effectiveness of the product, thus triggering further emotional connection and credibility with the prospective client.
6.) Although we have no specific information on the profitability of Proactiv, I can virtually guarantee you that the gross margin on the product is extremely high.
7.) It is possible to offer the product at a price that seems reasonable to the client and still have very attractive gross margins.
8.) Given the high margins, it is possible to invest aggressively in marketing, thus further accelerating product sales growth.
9.) The problem is recurring, at least during a reasonable period of the prospect’s life, so ongoing demand from existing customers is likely.
This list could go on quite a bit, but you get the idea. Proactiv is a great product that, without a doubt, is making a great deal of money for those bringing it to market. That said, no product is perfect and undoubtedly there are some downsides to it, such as the risks of selling any product that customers are going to use on their skin. But the focus here is on deciding what to sell, not risk management, and the most important elements of the list above are that the product solves a real problem, at a price that is attractive to consumers and profitable to the provider.
Hopefully these two examples give you the general idea of how you should and should not decide what to sell in your business. You must be solving real problems and you must be able to do so at a price and cost that will allow you to make a reasonable, if not an extraordinary profit. Otherwise, why are you in business?
I look forward to your questions and comments.