Category: Book
The book and its contents: chapters, “cover”, table of contents, etc.
Where to begin?
Creating a successful product is not a technical or organizational issue – it is always a business and sober calculation.
Need to start with the questions:
- Why and who needs it?
- Who and how much can pay for it?
- What is my interest and how much money do I want to earn?
If even in optimistic forecasts your new “product” is not needed (no positioning), will not be able to pay off (too little demand), or you cannot get what you want (you can’t be 33% happy) – the result will be much worse. Your clear answers and preliminary calculations slightly contradict each other? Scrap the project and do not start anything at all!
It’s impossible to make a small cake in your kitchen and feed the whole city with it. One single factory can’t make Christmas decorations for the whole world, but even if it could, then delivering fragile products will break all deadlines and consume all the profits. So resolutely reject “hopeless ideas” and look for a demand for something else.
I repeat once again: Abandon everything that “doesn’t take off.” Right now!
Time is the most valuable resource, do not waste it. Read some books, go on a walk, look around. You will immediately find many other, more promising options.
It is better to calculate everything and quit than to spend years on a “dead end”.
Do I need to create a new product?
If you have calculated everything, decided on the economic feasibility, planned out a strategy for bringing the product to the market and methods of dealing with competitors or simply ignored the advice “to drop everything” in the first chapter…
Be honest with yourself at least in this question:
- Is there something suitable and ready that you can just sell in a different package?
Here are more specific options for questions for those who do not understand what they mean:
- Is there a ready-made solution from ABC, let’s do things based on it?
- Why Excel®, Photoshop®, [your advertisement could be here] are not suitable for these tasks?
- Will the customer definitely switch to our new product , or is it easier for him to supplement someone else’s proven solution?
Maybe we should stop thinking about doing something original and resell finished products? This could also be a business.
Few people think that there is not much difference to sell “their” or “someone else’s” product. All products need to be conveyed to customers in the same way, positioned, delivered, sold… In other words, when selling a “foreign product”, you will have to do the same things, but not waste your efforts on production, maintenance, repair, etc. Do you really need this extra pain in the ass?
If you have not yet closed the book and became even more sure that you can’t do business without your own product / solution – get ready for a hard, but interesting enough, way to build and bring a new product to the market. But if you can get by with a ready-made solution, act immediately.
It’s as difficult to sell your products as selling someone else’s; it only makes sense to produce your own product if you get a tangible advantage in the market from it.
What is the formula “1->10->100” ?
There is an old saying:
- $1 to those who came up with.
- $10 to the one who did.
- $100 to those who sold.
From it follows a simple, but at the same time one of the most important, formulas in business:
- 1*x – 1% – for the idea, methods, drawings.
- 10*x – 9% – on the means of production, manufacturing, salaries.
- 100*x – 90% – for packaging, packaging, logistics and actual sales.
Where *x is any number greater than one, depending on the appetites of business owners.
Note that this is a ratio, not an absolute number. Salespeople like to say that “an idea is worth nothing”. This is not always the case if the idea has a realization, and there is a demand for a product / service, then the “idea” costs at least 1/100 of the profit.
But do not fall into optimism™, overestimating the value of ideas. The “idea” that makes millions, is usually worked out with financial analysis, formulas and precise calculations, contains many pages of detailed documentation on how to produce, distribute, maintain “the results of an idea,” and much more.
Do not forget the main thing: No matter how much you spend on manufacturing of a product, its sales and distribution will require many times more money! Not necessarily 10 times, everything can be much worse…
- We do not run around with ideas like a like a chicken with its head cut off.
- We spend no more than 10% of time and money on manufacturing / production.
- All the remaining time and effort we spend on sales and customer acquisition.
Do we have merchandise, product or service?
We will not go into the economic mumbo-jumbo, but let’s define the terms:
- Goods are material objects for sale that can be owned, held in hands before use, etc.
- Product is a tangible (merchandise, box, package) or intangible (website, program, service) object that meets the needs of the client. It can be both for sale and “free” for the end user.
- Service – mass services to the public or performing some work tasks for someone.
In order not to get confused, it is necessary to determine exactly what kind of “product” we are creating. A tangible product, like goods, requires physical delivery, and a virtual service is very similar to a one-time intangible service. But these are all different types of products. They significantly differ from each other in production, and in consumption, and most importantly in making money!
If the tangible material (composition, components, consumables) is present in your product, it means, in addition to manufacturing in sufficient quantities, you also need logistics (delivery, return, warehouses). Most likely, the weak link of your business will be in a compromise: expensive delivery or produce many times more than needed to fill stores and warehouses.
Intangible product is easy to deliver around the world, but each country has its own language, rules and laws. That means that at the very least there will be a need for localization (translation of the interface, documentation) of the product under the most common languages. The same applies to support services.
A service is different from a one-time service, in that the performance of the service must be guaranteed at least during the working hours of your client. Different laws and cultural characteristics require major changes in business processes depending on the territory. A simple translation into the client’s language may not be enough; some parts of the service will have to be redone completely. And it may even be necessary to make a separate product in order to be competitive on the local market.
What is it all about? So that you can determine exactly what part of the created “product” is really its core and what you need to focus on. You can also determine which parts of the product, business processes, related services can be given “on the side”.
In business, it is possible (and sometimes necessary) to outsource any process other than actual money making.
Be clear about what makes money in your product – spend time and energy only on it. Everything else can be done by someone else, just earn enough money for that.
Create first or sell first?
On one hand, selling “air” is not an easy task. On the other hand, a “first-class pure snow pile” is very difficult to sell, especially to the inhabitants of the Arctic.
From the perspective of benefits, it is better to “sell” first, especially if you can immediately get some working capital, and only then look for or manufacture a product. But you still have to close the deal, and if there is a shortage of goods or the complete absence of components instead of profit, you can get penalties.
If your product is something new and unique, but at the same time consumers do not believe that such a thing is possible “without touching it with their hands”, you will most likely have to create a test batch before the start of sales.
But if your product is a service or an online service, then “pre-sales” help determine which parts of the solution are most in demand by customers and which of them are willing to pay. Based on this information, you can immediately focus on creating the required product elements, and not guess the user’s needs by “poking a finger into the sky”.
There are proven business methods: Customer Development, Minimum Viable Product (MVP), Lean Startup, and more. All of them are focused on identifying customer needs, followed by a series of short experiments, to confirm or refute hypothesis. This approach allows in a short time (3-12 months) to create a solution that meets the needs of the market, which is actually used, and for which people actually pay.
- If you can sell without a product, you should sell.
- If you are not believable without a product, you need to create its demo examples.
- If the product is not fully defined, pre-sales can help navigate the needs of the market.
What is the “minimum set in a box”?
So what to pack “in a box” and how to deliver the product to the buyer?
Your task is to meet the needs of the client within the acceptable time for him (and not for you). No more, but no less! The product must be workable without shenanigans™, and the delivery time to which the customer has agreed may differ slightly from the claimed.
The “package” should contain the necessary minimum of what will allow the client to fully use the product. Everything else, including the “fascinating” unboxing process™, is already a “free prize inside”, “shooting at the sky” for getting the Wow-effect, and other marketing magic.
Delivery. The faster – the better. The pleasure of acquiring is inversely proportional to the waiting time. But we must understand that the cost of transportation cannot exceed the amount of profit. So be sure to warn the buyer about the actual delivery time, so as not to cause a negative attitude even if everything is done “quickly.”
For online products, delivery can (and should) be made instant, but do not spoil the “instant result” with all sorts of strange steps like:
- Choose a stronger password.
- Confirm your email by clicking on the link from the letter.
- The phone must be entered without a plus, dashes or spaces.
You can insert additional information or correct incorrectly entered data later, but you cannot make a good “first impression” again…
Give the customer everything you need as quickly as possible. Bells and whistles™ can be added later, maybe your product can
be sold without them.
Why is packaging and shipping more important than content?
If you put solid feces in the wrappers from Snickers®, Twix®, KitKat®, etc. or pour tinted urine into cans / bottles of Coke®, Pepsi®, Red Bull®, packages with this product will still appear on supermarket shelves and in consumers’ refrigerators! Yes, perhaps those will be the last sales of such a product, moreover, a serious scandal may break out… But then again, sour milk in supermarkets is quite common.
The moral of the story is simple: People buy goods “package” of suitable size in the nearest “accessible place”, and only then expect the “fabulous content” inside.
You can try to argue with this, saying that the popularity of a product or brand was built precisely on “content quality”… Yes, most likely it was. But we are talking about the importance of packaging and delivery!
Stories about what kind of good, and most importantly cheap, grapes can be bought in the villages of the Mediterranean have nothing to do with business (well, except for the tourism business). Moreover, without proper packaging and fast delivery, the same grapes will not sell across the world.
The presence of prepackaged goods (packaging) in the consumption location (delivery) is more important than the content itself (product).
How to do it from the other end?
If you want to sell something on the market, then those are the necessary steps (in the reverse order):
- Satisfy the customer or give the opportunity to return the money.
- Deliver the product or give the goods to the customer in hand.
- Accept payment from the client in a convenient and understandable way.
- To convey information about the product / service to a potential client.
- To produce goods (or collect its components) in the required quantity.
- Create a product or service.
- Come up with a product / solution.
As you can see, only the last point touches upon the “idea” stage, the two penultimate “do” stages, and all the remaining items are the “sell” stage, which are the business itself.
Even if you remove the concern for the “level of happiness” of the client… The necessary conditions for any business model are: take money from the buyer and deliver the product in the expected time.
It is very hard to sell a product without reporting information about it. It is unlikely that someone will pay for the “smoke and mirrors” or decide to spend money on something that he has never heard of. There are exceptions, of course…
“Solving problems from the end”™ is a useful practice not only in business. This approach is often used in different areas.
- Engineering: we need to connect our solution to standard input / output devices even at the prototype stage.
- Logistics: we need to fit everything into a standard container, pass through a tunnel in the mountain, do not overload the plane, etc.
- Medicine: we need to keep the injured patient alive.
Solve business problems in reverse order. First, do everything to receive money and satisfy the customer, and then you can do the distribution and production.
What’s next?
If you were not mistaken in the calculations at the “idea” stage and did not lie to yourself when choosing “your product” vs. “selling someone else’s” – you have a demanded product on your hands. This is a very valuable asset!
It’s simple: Deliver the product to everyone, improve and develop it. Bring customers joy and take money for it.
Later on you will be engaged in usual business, tasks of growth and optimization like:
- How to sell more and more expensive.
- How to deliver faster and safer.
- How to produce cheaper, easier to maintain, etc.
- Rinse and repeat…
And after a while, but it will always happen sooner or later, the demand for your product or service will disappear. At this point, you will either create other products, or become a footnote in history…
It is because of the obsolescence of the product and / or the disappearance of the demand for the service that businesses do not live long. And those companies that exist on the market for more than 10 years often sell completely different products from which they started.
But whatever difficulties may be waiting for you on this business path, it is better to “meet the demand” somewhere and go down in history as a success than just look at the world from the safety of the passenger seat.