NFIB

Introducing a New Product or Service
02/ 10/ 2003

by Vicki Gerson

If you own a business, you are probably always thinking about adding a new product or service to your mix. But before you take this step, there are a few important questions to ask:

Is it seasonal?

Make sure you introduce the new offering during the time of year it will be most profitable. For example, if you own a home heating and air conditioning company, you wouldn't start selling a new AC system in the winter. You would introduce it in the late spring, then advertise and market it throughout the summer.

Will the product or service be affected by a bad economy?

As a beauty shop owner, you have a chance to enlarge your facility and open a spa. Are you located in a neighborhood where people will be able to afford to spend $75 for an hour massage? Consider your clientele. If you are located in an upscale area and a slow economy isn't affecting your hairstyling business, economic uncertainties may not be a major factor in the decision.

How profitable will the product or service be?

Before investing dollars in expanding services or developing a new product, consider the profit margin. Are you going to make 15 percent or more on the product or service? Is there volume involved so you can earn a smaller percentage and still be profitable? All of these factors have to be considered. Also try to determine the level of customer interest in this product or service.

What is the competition?

If you are the beauty shop owner planning to expand your business and open a spa, are other spas located near you? How will your spa be different than others that are just as easy for the customer to reach?

If you are selling a new product, ask if your customers are local, statewide or national? How many of your competitors already offer this product? Be sure that offering the product will fill a need that isn't being met by your customers elsewhere.

Will the product or service be easy to sell?

Do you believe this is a product or service that will appeal to your current customers? If the answer is no, that means you will have to find new customers and devise a marketing campaign to convince people they need the product or service. If you are not willing to invest the time and money, then you may need to rethink your plans.

Does the product or service appeal to you?

You won't have much success selling something you aren't enthusiastic about. If you don't want to sell custom invitations at your paper goods store because of the work involved dealing with customers and the various manufacturers, don't do it. Only sell the products and services that appeal to you.

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