| This is the third part in a series of posts called “Increase Your Income”. By the end of this series, you’ll know the concrete steps you need to take to make more money. Here are the previous installments of the series: Part 1: Make the decision to move forward Part 2: Negotiating a Raise |
If you’ve read the first part of this series, “Make the decision to move forward”, then you probably already have set income goals for making more money. Perhaps one way you decide to reach these goals is by selling products.
Types of Products You Can Sell
The types of products you sell can fall under two categories:
- Tangible. These are physical products, things you can touch. These could be pastries, a house, chairs, computers, books, etc.
- Intangible. These are products that can’t be touched. Examples include e-books, downloadable movies or music, gym memberships, and insurance policies.
Whether you’re making tangible or intangible products, you’d still have to go through a particular process before you can get your product out there and successfully sell it.
Pros and Cons of Selling Products
Just like any venture, selling products has its own advantages and disadvantages.
Pros
- Scalable. Selling products can easily scale, all you have to do is manufacture more products when the demand becomes greater. For digital products such as ebooks, supply is virtually unlimited.
- Rapid testing. You can test prices in batches to see the ideal pricing for your product. After a few tests, you can see the most profitable pricing that your customers can bear.
- Independence. Unless you personally manufacture your products, you’ll usually have the freedom and independence to sell whenever and wherever you want.
Cons
- You need to manage inventory. When dealing with physical products, dealing with inventory is especially important. Overestimate the demand and you’ll end up with too many unbought goods on your hands – and possibly even losing money.
- Promoting your product can be difficult, especially in saturated markets or when you’re competing with larger, more established brands.
- It’s hard to make a good product. Even if you make an “ok” product, this might not be good enough if you have many competitors whose products are better or more established than yours. Also, it takes a bit of research and testing to tell if your product is good enough, and if people will want to buy it. Which leads us to the following question:
How do you know your product will sell?
The answer is, you won’t know – unless you do market research.
“Market research? Kailangan pa ba nun? Di ba pwedeng magbenta na lang ako ng brownies?” - Frugal Pinoy’s Internal Devil’s Advocate
Usually, when coming up with business ideas, we think of a simple random business idea like, say, selling brownies in your workplace. You can just bake brownies and “go with it”.
Still, that’s never going to be enough. What if walang bumili? What if ayaw nila yung presyo? What if wala naman pala sa kanila ang mahilig sa brownies?
One thing you can probably do is test your brownie-selling idea by baking brownies and giving them away at the office. Don’t say you’re planning on selling them, wait for someone to say “Gawa ka pa!” or “Pwedeng ibenta!”, or get more concrete feedback about the taste and how much other people like it.
That may sound like a crude way to do it, but it’s still market research. It’s certainly better than, say, wasting time making an extensive brownie menu, buying cardboard boxes, and giving your officemates a pricelist without even testing whether they actually want to try your product and let alone pay for it.
To delve deeper here are some things you should know about your potential customers when conducting market research:
- Possible desires/goals. What do they want? For the brownie example, this could be an affordable yet nourishing snack that they can get without having to leave the office, or they want to take home a treat that they can eat as a midnight snack, or they want something to go with their morning coffee.
- Possible barriers/obstacles. What could possibly stop them from buying your product? This could be that they have no ready cash, they’re on a diet, or di lang talaga sila mahilig sa brownies.
How do you use this information? Still using the brownie example, if you work at a gym and want to sell brownies at work, you probably won’t have much luck. After all, the trainers at the gym need to maintain a lean physique to convince their clients that their programs and equipment work. It’d be hard to sell your brownies to this crowd.
BUT if you decide to make gluten-free low-fat brownies then you can stand a chance or even be very successful. It might not be long before you can sell your healthier brownies to the gym’s clientele.
Also, consider these subtle differences: will most of your customers eat the brownies during their coffee breaks or will they prefer to eat it at home? It doesn’t seem like an important difference until you think about the packaging.
If they’ll be eating the brownies on the spot, odds are you just need one large box – maybe even a nice reusable plastic container -and just make your rounds or wait for your colleagues to approach you.
On the other hand, if they prefer to take the brownies home as pasalubong to their family, then you need to find a source/supplier for small gift boxes.
Another alternative result of your informal research is that people in the office may not like brownies at all – and that’s okay. You probably only spent an afternoon baking your “test brownies” and a day getting feedback from your potential customers. That’s a small price to pay for learning what works and what doesn’t.
It’s certainly better than spending your money stocking up on ingredients and packaging, and wasting weeks planning a product that nobody apparently wants. Market research, no matter how informal, will save you a lot of headaches – and even money – in the long run.
By understanding what goes on in your customers’ minds, you’ll be much more savvy when it comes to tweaking your products, marketing them, and making your business more profitable.
Action Steps:
Now that you have a better idea how to start selling products, here are the initial steps you can take:
- What products can you sell? Start with a simple brainstorm – you can eliminate the bad ideas later. More concrete ways to ask this question include:
- What strengths/skills do you have that can be turned into products?
- Do you have a ready source of cheap materials/ingredients? What kinds of things do they provide?
- Are there any available products that are sold cheaply in bulk that you can resell for a profit?
- What’s a common problem people have? Is there a product you can provide that can solve that?
- What’s desire/want that people have? Is there a product you can provide that can address that?
- Even better, you can think of a specific subgroup of people (for example, stay-at-home moms in the suburbs, 20-something professionals in Makati, etc.) and go through the last 2 questions thinking only of their possible problems/wants.
- Pick the best 3 to 5 of the listed ideas and ask yourself this question for each idea:
- Who is my potential customer for this product? (Be as specific as possible. Think of gender, location, age, etc.)
- Do they have the means to buy this product? Can they pay for it?
- WILL they pay for it? Is this something they want?
- Once you’ve evaluated your top ideas, you can pick one that you can start with. You can now do more specific market research and testing. (This is the part where you bring the brownies to the office and give them away to your colleagues, in the example given earlier.) If it seems like this product will be profitable, go for it and tweak your system as you go along. If it doesn’t seem to work, pick another of your viable ideas and start testing that instead.
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