Guidance on testing product ideas and competitive analysis for small businesses

Let’s use two people, Sherwood and Johanna, and their two product ideas—French sailor shirts and a how-to yoga DVD for rock climbers—as case studies of what the testing steps look like and how you can do the same. Sherwood bought a striped sailing shirt in France while traveling last summer, and upon returning to NYC has been continually approached by 20—30-year-old males on the street who want to know where to get their own. Sensing an opportunity, he requests back issues of NYC-based weekly magazines aimed at this demographic and calls the manufacturer in France for pricing. He learns that he can purchase shirts at a wholesale price of $20 that sell for $100 retail. He adds $5 per shirt to account for shipping to the U.S. and arrives at a per-shirt cost of $25. It’s not quite our ideal markup (4x vs. 8-10x), but he wants to test the product regardless. Johanna is a yoga instructor who has noticed her growing client base of rock climbers. She is also a rock climber and is considering creating a yoga instructional DVD tailored to that sport, which would include a 20-page spiral-bound manual and be priced at $80. She predicts that production of a low- budget first edition of the DVD would cost nothing more than a borrowed digital camera and a friend’s iMac for simple editing. She can burn small quantities of this first-edition DVD—no menus, just straight footage and titles—on the laptop and create labels with freeware from www.download.com. She has contacted a duplication house and learned that more-professional DVDs will cost $3-5 apiece to duplicate in small quantities (minimum of 250), including cases. Now that they have ideas and estimates of start-up costs, what next? Besting the Competition First and foremost, each product must pass a competitive litmus test. How can Sherwood and Johanna beat the competition and offer a superior product or guarantee? 1. Sherwood and Johanna Google the top terms each would use to try and find their respective products. To come up with related terms and derivative terms, both use search term suggestion tools. Google Adwords Keyword Tool (http://adwords.google.com/select/KeywordToolExternal) Enter the potential search terms to find search volume and alternative terms with more search traffic. Click on the “Approx Avg Search Volume” column to sort results from most to least searched. SEOBook Keyword Tool, SEO for Firefox Extension (http://tools.seobook.com/) This is an outstanding resource page with searches powered by Wordtracker (www.wordtracker.com). Both then visit the three websites that consistently appear in top search and PPC positions. How can Sherwood and Johanna differentiate themselves’? e »Use more credibility indicators? (media, academia, associations, and testimonials) « »Create a better guarantee? e« » Offer better selection? e »Free or faster shipping? HOUSE_OVERSIGHT_013909