We all know that undertaking a business venture is a big investment requiring adequate planning. Just as investment opportunities are many and diverse, products or services options for an entrepreneur are uncountable. However, the selection of required product or service is the first step towards success.
Indeed, products provide the business with the most important and visible contact with buyers i.e. consumers. Products to the consumers represent psychological symbols of personal attributes, goal and social patterns.
A product is anything that can be offered to a marker for acquisition, use or consumption.
Factors to Consider in Product Selection
In selecting product for your business venture, the following factors must be taken into consideration:
Supply-gap: The size of the unsatisfied market demand which constitute a source of business opportunity will dictate, to a great extent the need to select a particular product. The product with the highest chances of success as reflected in its demand will be selected. In essence, there must be existing obvious demand for the selected product.
Fund: The size of the funds that can be mobilized is another important factor. Adequate fund is needed to develop, produce, promote, sell and distribute the product selected.
Availability of and Access to Raw Materials: Different products require different raw materials. The source quality and quantity of the raw materials needed are factors to be seriously considered, Are the raw materials available in sufficient quantities? Where are the sources of raw materials located? Are they accessible? Could they be sources locally or imported? Satisfactory answers should be provided to these and many other relevant questions.
Technical Implications: The production process for the product needs to be considered. There is need to know the technical implications of the selected product on the existing production line, available technology and even the labour force. The choice of a particular product may require either acquisition of the machineries or refurbishing of the old ones. The product itself must be technically satisfactory and acceptable to the user.
Profitability/Marketability: Most often, the product that has the highest profit potential is often selected. However, a product may be selected on the basis of its ability to utilize idle capacity or complement the sale of the existing products. The product must be marketable.
Availability of Qualified Personnel: Qualified personnel to handle the production and marketing of the product must he available. The cost of producing the product must be kept to the minimum by reducing wastages. This is achievable through competent hands.
Government Policies: This is quite often an uncontrollable factor. The focuses of government policies can significantly influence the selection of product. For instance, a package of incentives from government for a product with 100% local input contents can change the direction of the business’s R & D and hence the product selected.
Government objectives: The contributions of the product to the realization of the company’s short and long range objectives must be considered before selection. For instance, the company goal maybe the achievement of sale growth, sales stability or enhancement of the company’s social value.