Small Business Startup
Refining the Product
(Date posted: March 30, 2009)
This step in the small business startup shows you how to refine the design of your proposed product. This enhanced product design will help you attract and satisfy customers. The enhanced product should also have a low cost compared to the expected sales price.
Before starting this step, you should have:
- Found a potential business idea (product)
- Reviewed the market for your product
The two previous steps show you how to do this.
The desired result of this step is a written summary of the enhanced design of your main product, and any optional features.
You will use the following topics to complete this step:
Go or no-go decision
This detailed product design will be used in the next three steps to help you design the sales program, set the cost structure, and project your expected cash flow.
Before using this information to start a business be sure to read the following notice: Disclaimer
These guidelines should help you enhance your product to attract and satisfy customers. The enhanced product should also have a low cost compared to the expected sales price. This is a giant step toward achieving a successful small business startup.
Design the product to please your customers
It is human nature to assume that other people like the same things that you do. However, people who design and produce products usually value the products for their technical merit. Whereas people who buy and use products only care about how the products can improve their lives.
In the Reviewing the Market step, you found out what attracts customers to products comparable to your own. Use this knowledge to enhance your product so it will improve your customers' lives. They will reward you by buying your product and providing you with a profitable business venture.
Don't try to design the perfect product
It’s easy to fall into the trap of trying to design the perfect product. What usually happens is that the development work never gets finished. The product never seems to be good enough to sell.
The rule is -- design a product that is good, but not perfect. Then get the product into the marketplace, learn from what your customers say about it, and keep improving it.
Design the product as a package of benefits
One of the goals of refining the product design is to give your likely customers as many benefits as possible. The more value that customers get from a product, the more they will want to buy it.
So don't think of the product as simply this "thing" that you want to sell to someone. Think of it as a package of benefits. Your product is a vehicle to provide as many benefits as possible to your customers.
List of possible features and options
These product features and options are arranged in four groups, corresponding to the three possible types of products, and their intangibles.
Goods -- Adaptable, Battery operated, Convenient, Customizable, Dependable, Easy to use, Flexible, Expandable, Hazard free, Idiot proof, Knocked down, Long lasting, Multi-purpose, Powerful, Pure, Quiet, Reliable, Reusable, Sturdy, and Worry free.
Services -- Convenient, Flexible, Professional, Reliable, and Worry free.
Information -- Accurate, Convenient, Easy to understand, Easy to use, Powerful, and Timely.
Intangibles -- Adorable, Admirable, Beautiful, Clever, Cozy, Cute, Enchanting, Exclusive, Exquisite, Hand made, High quality, High status, Homey, Low cost, Novel, Prestigious, Quaint, Serene, and Unique.
Keep the cost of your product low
If your beginning business venture will be selling goods (merchandise), the costs of these products should be a small portion of the expected sales price. By this, I mean costs of no more than 25 to 35 percent of the expected sales price. The only way to make a suitable profit with high costing goods is have a large volume of sales. This high sales volume would be difficult for a beginning business venture to achieve.
If your beginning business venture will be selling services or information, the "costs" of these products should result mostly from your own time and effort.
During this step in your small business startup, you will enhance the design your main product, and any optional features.
When asked to get paper and pencil or pen, you may prefer to use a spreadsheet or word processor program instead.
This step has three phases. First, you add features to please your likely customers. Next, you insure that your product has a low cost compared to the expected sales price. Then you decide on the final design.
Adding features to please your likely customers
In this phase, you look for ideas to make the main product, and any options, please your likely customers. However, these ideas should not increase the total cost of producing the product above a reasonable level.
Get several sheets of notebook paper and a pencil or pen. Study the following items you are asked to review. This should help you develop ideas to improve the product. Write down each idea you have no matter how silly or trivial. Allow a third of a sheet of notebook paper for each idea.
Review the preceding Guidelines topic for suggestions on how to design your product.
Review the following materials you prepared during the Procedures topic of the Finding a Potential Idea step:
- Brief description of the product (goods, services, or information)
- Brief description of the likely customers for this product
- Brief description of any competitive advantages this business idea gives you
- How the product will be produced and delivered to the customers
- How this business idea appears to satisfy your requirements for a business
- How this business idea appears to satisfy a current need of the expected customers
Review the following materials you prepared during the Procedures topic of the Reviewing the Market step:
- Media used for advertisements
- Hot buttons used in advertisements
- Sales propositions used in advertisements
- Prices charged for products
- Standard and optional features of products
Keeping the cost of your product low
If you sell goods, you need a low-cost supplier. One way to achieve this is to produce your own goods. Thus, you might hand craft your own products, such as custom designed storage units.
For a one-person service or information company, much or most of the value of the product should result from your own knowledge and skills.
There probably will be other costs involved in producing and delivering the product. Try not to let these other costs exceed the value of your own time and effort. This will leave you with most of the sales price.
So enhancing your products try to benefit from your own time and effort. One example is offering to do jobs that most other firms avoid. Another example is offering to perform a job outside of normal working hours, or on holidays and weekends.
Selecting the final product design
Write down each possible idea that might enhance your product or keep its cost low. Allow a third of a sheet of notebook paper for each idea.
You should have gathered several ideas for improving the product. From now on, we will refer to these ideas as features.
In this phase, you decide how to classify these potential features. You can add some features to the main product. You can offer other features to customers as an option. You should discard the remaining features.
The following are indications that a feature should be added to the main product:
- Most customers are expected to want this feature.
- The feature is needed to make the product complete and fully useful.
- The feature could be used to increase the sales price, or its cost is insignificant.
The following are indications that a feature should be used as an option:
- Some customers, but not most, are expected to want this feature.
- The feature would make the product especially attractive to a certain group of customers.
The following are indications that a feature should not be provided now:
- Very few customers are expected to want this feature.
- The feature would significantly increase the cost of producing the main product, with no increase in sales price possible.
- You are not presently qualified to provide this feature.
Mark each feature in your list of ideas as: "include," "option," or "discard."
You may wish to organize the "include" and "option" features into two separate lists. Now you have an enhanced design for your product, and any optional features.
I am using my own small business startup for this example. I hope the results of my exercise will help you.
My proposed product is an information report (e-book) on having more money and starting a small business. The contents of this e-book will be similar to that of this website. However, the e-book will be more detailed and more extensive in certain areas.
Following is my program to enhance this product.
Adding features to please my likely customers
These features result from reviewing the Guidelines for this step:
- My product should allow almost anyone to have more money. I will perform extensive research to make the ideas in this e-book unique and useful.
- I will find ideas for small businesses with low startup costs and little if any fixed operating expenses.
- I will show readers of the e-book how to get a job in hard times.
- I will develop various methods to make extra money.
- I will show readers how to find other ways to enjoy life rather than having an expensive life style.
- I will do the best I can to make the e-book useful.
- I will work on the e-book along with updating my free website. Thus, this e-book should be highly useful, but perhaps not "perfect."
- I will create various bonus reports to provide readers with a package of benefits. I will overwhelm them with useful information.
These features result from reviewing the Example topic on the Finding a Potential Idea page:
- In rethinking my product, I believe it will be better to have two separate products.
- The most likely customers for the "money" e-book are ordinary people who are unemployed, worried about being unemployed, or just want some extra money.
- The expected customers for the "business" e-book are ambitious people who want to start doing their own thing in the business world.
- Therefore, I will develop separate articles for these two different e-books. Each e-book will satisfy a particular group of likely customers.
- I think most people feel trapped in their present circumstances and don't even consider the possibility of increasing their personal power. Therefore, I will use a more detailed explanation of gaining personal power (Magic Success Secrets) as unexpected bonuses.
- Both the free website and the e-books will help me become a recognized authority on the topics of having more money, starting a small business, and gaining personal power.
These features result from reviewing the Example topic on the Reviewing the Market page:
- I will develop a range of bonus articles. Then buyers can choose which ones they prefer. This will also help me know what areas to use for future e-books or bonus articles.
- My strategy will be to concentrate on getting both the first e-book and the free website completed as soon as possible. The free website will establish my expertise. Then I will offer some of my e-books on having more money and on starting a small business.
Keeping the cost of my product low
- As I develop information products, the only significant "cost" is my own time and effort. Being retired, I have these in abundance.
- Therefore, the cost of my products will be low compared to the moderate sales price.
Selecting the final product design
Apparently, I censored myself when doing this exercise. So I only came up with good product features.
Should I throw in some inappropriate ideas, so I can weed them out? No, I will stick with what I have.
One of the unexpected results from this product enhancement exercise was to divide my proposed e-book into separate products. However, it is always a good idea to modify your products to meet the needs of your likely customers.
This decision concerns the refined product design you developed in this step.
Go on to the
Developing the Sales Program step in your small business startup if you can answer "yes" to the following questions:
- Are you satisfied that the enhanced design of your main product, and any optional features, will attract and satisfy your likely customers?
- Are you satisfied that you will be able to produce and deliver the enhanced main product, and any optional features?
- Are you satisfied that the cost of your enhanced product is low enough compared to its expected sale price?
If you have answered "no" to any of the above questions, go to this topic on another page for what to do next.
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