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How can you know what your customers will buy?
You can choose the things that you like yourself ... But your customers will not always want the same things as you do (even though maybe they should)
You can choose what you think they will like ... But maybe they won't like your choices enough to pay money for them.
You can do what some bigger companies do. You can go through a methodical process to buy new items with the biggest chance of success. It doesn't need to be as hard or involved as a big company would do. You can go through most of the steps pretty fast and easy.
Big retail chains have extensive written processes for choosing new products. A lot of time, thought and effort is put into choosing the most popular products possible. This article will show you some of the basic things that these companies go through; and show you a way to do this yourself fast.
There is a chart here that can help you go through the same basic process fast.
First, look at what your customers buy from you the most already. You want to buy the same categories of products that your customers want. If half of your sales are for clothing; then you probably want about half of your new products to be clothing.
Second, look at the price range of products that people buy from you the most. If most of your total sales are for items that cost between $10. and $20., look most for new products that will sell in this price range. You probably want to also look for ways to increase the average price of products that you offer.
One thing that most people also want to do is to move their selling prices up whenever they can. If this is what you are wanting to do, you will want to give preference to products with slightly higher prices. Make sure that your lower priced products are superior to higher priced products in other ways; and take more chances with higher priced products.
Third, you can make a list of the things that are important to look at for each new product. A sample list is shown below. Whenever you look at a new product, you can think through your list of criteria to make sure you are looking at all of the most important things for each product.
Criteria
Profitability
Cross sell potential
Uniqueness
Quality (value/image)
Cost of inventory
Fits with other products
Availability
Reorder potential
Minimal space needed to show product
If you want to take this a step further, you can make an analysis sheet for each product that you look at. To do this, start with your list of criteria from above, and add three more things about each factor to come up with a grade for each new product.
Even if you never use a form like the one shown below; if you understand the concept behind the form, you will be able to choose new products better and easier.
First, you add a weight percent that shows the relative importance of each feature, as shown below. The weight percents should add up to 100%.
Weight/
Percent Criteria
| 25% 15% 12.5% 12.5% 10% 10% 5% 5% 5% | Profitability Cross sell potential Uniqueness Quality (value/image) Cost of inventory Fits with other products Availability Reorder potential Minimal space needed to show product |
Next, you grade each product on a scale of 1 to 5 (1 being least acceptable, and 5 being best)
Weight/
Grade percent Criteria
| 3 4 4 3 3 4 1 4 1 | 25% 15% 12.5% 12.5% 10% 10% 5% 5% 5% | Profitability Cross sell potential Uniqueness Quality (value/image) Cost of inventory Fits with other products Availability Reorder potential Minimal space needed to show product |
Finally, you multiply the grade by the weight/percent for each product as shown below
Weight/
Value Grade percent Criteria
| .75 .6 .5 .375 .3 .4 .05 .2 .05 | 3 4 4 3 3 4 1 4 1 | 25% 15% 12.5% 12.5% 10% 10% 5% 5% 5% | Profitability Cross sell potential Uniqueness Quality (value/image) Cost of inventory Fits with other products Availability Reorder potential Minimal space needed to show product |
3.235 - total
The score for this product comes out to be 3.285 which means that it is a slightly better than average choice.
An average product (not especially good or bad) would have a score of 3.
The higher the score, the better the product would be.
You can change the importance (weight/percent) for each criteria to fit your own goals better.
If you have a choice between a lot of different product ideas, you can put this into an Excel spreadsheet to grade all of your choices more thoroughly.
Most people will not go through all of these calculations for each product that they look at. If you do, you will probably pick out better products.
You will still do a better job of picking out new products if you just remember to consider each of the different criteria for each new product.
Keep it as a checklist when you are looking at something new, and you will have products that sell faster.
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