Selecting the Right Product: What Sells?

Deciding what products to sell is a crucial decision for any business. It does not make sense to stock or carry the same goods as your competitor does, especially if they are selling them at a lower price. Furthermore, no matter how good a price you get on an item, if it sits on your shelves for months it is tying up capital that could be used for other purposes and lowering your profit margins.

So how do you determine what to carry and what products are in demand in the marketplace? There are a number of ways you can do this including market research, competitor analysis, customer surveys and emerging trends analysis.

Market research is examining the existing marketplace and available suppliers and seeing what is available and what the demand is. For example, an area may have a high number of bicycle sales through retail channels, but no available repair facility or outlet to purchase accessories. In these cases sales data from the manufacturer itself can be useful in deciding what to carry. Often it is possible to piggy-back off of other retailers who have already done this research. For example, if a gas station has recently opened in a particular location they probably have already researched traffic patterns, household demographics and income levels. This data may be available either directly through them, or through filings with local zoning commissions or the Chamber of Commerce.

Competitor analysis is where you study your competitors and find out what items they are selling that are performing well. Sam Walton, founder of Wal-Mart, was famous for going into competitors stores and examining what they did well and the prices they were charging for similar products. You may find out that a competitor is selling a large quantity of toddler clothing and that you can get similar clothing at a cheaper price or of a higher quality. This is also an excellent way of finding out what markets are yet untapped, such as a retailer selling numerous lawnmowers but not offering any type of riding lawnmower.

Customer surveys are asking customers what they are looking for. There are many firms that do this, but you do not need to spend a lot of money doing this if you already have a retail outlet. Listening to customers is one of the best ways to find out about emerging trends in the marketplace. For example, if customers are asking if you carry iPods this may be a sign that there is demand in the marketplace for iPods, but no local supplier.

Emerging trends analysis is looking ahead to what is coming through the use of news sources, businesses outside your operating scope and other methods. Often trends can be seen on the horizon before the market breaks open because of an increase in a particular news story, national or worldwide event, and in some cases political factors. For example, sales of mosquito repellant rose by over 300% after news reports started circulating in 2003 about the West Nile virus. Manufacturers of such items quickly responded by re-labeling their products to show that they repelled mosquitoes that carried the virus. This is by far the riskiest and most time consuming method of research, but has the highest potential for capitalizing on the market.
Finally, no matter what method you use to select a product remember that the best method of achieving high sales is to be unique in your product offering, and staying away from commodity items. No matter how much demand there is, selling toothbrushes is not going to generate much profit as these are a commodity item available at almost every retail outlet. Standing apart from your competitors and being the first to market when the upward wave of sales start is the best way to ensure long-lasting financial success.

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