Seeking wisdom concerning potential customers

[owls-hawks-eagles]

I told someone I wanted to design my product for customers who are like me, which this person immediately disagreed with. I am now confused because it makes sense to me to think about my needs because I am so familiar with what I want but am I essentially wrong?

[vangogh]

First welcome to the forum and thanks for joining the community.

You'll probably get different opinions on this. Some will tell you that you can't assume everyone is just like you and they'd be right to say it. Others will tell you that if you want to sell a product to others you should first make something you would like. Those people would be right too.

Why I think both groups are right is because you'll inevitably have different types of people potentially interested in your product. Some will be like you and others won't. You represent one segment of your potential market so by designing something you would buy your product should appeal to others like you. And by designing something you really love you should be able to get some other people passionate about your product.

But you only represent one segment of your potential market. Are there enough people like you to make your product profitable? Maybe, maybe not. Most likely you still want to appeal to people that are different than you and so you'll need to design your product in ways that might not always be best for you so that it will appeal to the larger market.

I hope that makes sense.

By the way I edited your post just a bit. I'm guessing you were writing in Word or something similar and then copied here. It made your font very large so I removed the code resizing it from the default. If you can find a way to post without the larger font it would be appreciated. Thanks.

[owls-hawks-eagles]

thanks for quick reply, i see your point. My product has a rather large customer base already, however, some (like me) are alienated by very inflated prices. I can offer the same product for very little cost to myself. This situation seems ripe for exploiting. Any other thoughts?

[vangogh]

I'm not really sure what you're asking. Price is something that should be set by what the market will bear. No matter what price you set some will think it's too expensive and some will be willing to pay more for it.

In general it's not a good idea to compete based on price. Someone else will always be able to sell for less than you do. To compete on price you need to be a Wal-Mart or similar where you can afford to sell at a loss for a time to undersell your competition.

You're better off selling on value. Give people a reason to pay a little more for your product. Competing on price is never a good idea for a small business.

[huggytree]

what is your product...hard to give advice without having an idea what were talking about..

is your product apples or cell phones or a chair....the advice may change depending on what it is....

i follow the money...if you can make it a good product that someone else would rather have instead of the product which you like why not?...make it good...thats all that counts...

for deciding on what to charge for what i do i first find out what my actual minimum cost is..or where i break even...then i look at the market to decide how much profit i can make. then decide if your going to be on the low/middle/high end of that market...if your product is the highest quality product you can get id go high, if its crap then id go low

[owls-hawks-eagles]

Thanks for bearing with me VanGogh and Im so glad people are responding so quickly. Im trying to be concise, but I realize that makes my stuff confusing.

[owls-hawks-eagles]

"..make it good...thats all that counts..." Thanks huggy, very encouraging!

[Dan Furman]

It depends on the product and market, really. Some great ideas got started because someone said "I wish there was a product that did X" and then did something about it.

But that can be taken to an extreme, too. "Gee, I can never find a red shirt that I like. If only someone would open a store that sold nothing but red shirts... heyyyyyyyy"

I will agree with others that said competing on price is a bad move. Especially if there's an established price point out there - there's a reason for that price point.

Lastly, if you want more relevent advice, it would help if you mentioned some more details. You really need not worry about spilling the beans and someone stealing your idea - I guarantee thousands of others have already thought of your exact same idea (especially if there's already a large customer base.)

[seolman]

Dan - you made a really good point in one of your other posts that really applies here: be an OREO. Some people like Fig Newtons, some people like Oreos.

The same philosophy applies to products. Be different - stand out. Don't be just like everyone else. It's true you must be appealing but that doesn't have to mean just another imitation.

[orion_joel]

I think one main point to make here is that for small and new businesses heavily discounting your product is rarely a way to massive success. While you may find that the price of the product that you want to sell is heavily inflated, you need to look at the market reasons that are causing that.

The other thing that you will find is that if you discount your product to much you have the potential to cause your own business much more damage, then the good you think that you are going to do for others. For example the biggest problem can affecting the market to an extent that you will not be able to make a reasonable profit.

I knew a company that started out by copying a local discounter in the same industry there product list and prices almost straight out. The problem they found was that while they could compete on price their smaller business model could not accommodate the low margin that they had to work with. While the company they copied was doing ok on the same price list because they had a lot more market visibility sold a lot more volume, and had the model to accommodate it. However this company only survived 2 months.

[vangogh]

Glad to help Owl and no worries if I didn't understand the question right away. Easy enough to rephrase if need be and sometimes thinking about the best way to ask the question reveals the answer.

If you do want to share the product we can probably offer more specific advice. If you prefer to keep it secret we'll try with the general.

[phanio]

I say have two products - one that you and others like you want and one that others in your target market (that are not like you) want. (I say this as long as it is not very costly to make these changes).

In regards to price, if you price it cheaply, people will think it is cheap. Start high - you can always come down - not so easy the other way.

[owls-hawks-eagles]

this quick advice is awesome. i am wondering about some basic business principles but i dont have a product.

[owls-hawks-eagles]

anyway, a lower price than competitors seems like it doesnt have too many awful effects, especially because the low cost of overhead does not pose a credit hazard, because i wouldnt need to borrow a s(-)itload of capital.

[cbscreative]

The problem with marketing on price is someone can always go lower. It is an endless downward spiral that has many casualties. As someone just starting out in business, it is natural for you to think that price is a bigger issue than it is. The lower price only devalues your business. Think in terms of adding value, not reducing price. When value exceeds price, people buy. Price shoppers are the least loyal market there is, so trying to win them is a lesson in futility.

Even the king of the low price dung heap is finding it challenging to keep up the pace. They have to invent ways to go even lower, which raises some serious ethical questions and gets them some unwanted PR nightmares. I'm not trying to bring this discussion down the path of talking about a certain retailer, just pointing out that you're best off not trying to market on price.

[vangogh]

To give you an example about competing on price. A long time ago when Exxon was still Standard Oil they'd have a gas station on a corner. Someone would open a station across the street offering gas a penny or two lower. So Standard would drop another penny or two. Both stations would continue to compete dropping prices in order to get more customers into their stations.

There's a limit to how low they could drop the price of course. The Standard Oil station could drop their price the furthest. They could afford to take a temporary loss for a time at that station, because of all their other profitable stations. The local gas station across the street couldn't sell gas at a loss and went out of business. They might even have ended up selling their station to the Standard Oil station, who then proceeded to raise prices back where they were and perhaps a little higher.

You as a small business can't compete on price. Like Steve said someone else will always be able to undersell you. Unless you have an unlimited supply of funds you'll quickly go bankrupt.

That's why you have to sell based on value or the perception of value.

[owls-hawks-eagles]

standard oil wins! i would rather be standard oil rather than the competitor. someone will win, i will make sure i am the winner before i lay down a dime.

[vangogh]

But the point is if you compete on price you probably won't win. Look for ways you can add value to your product or service to differentiate you from the competition. For example my primary service is web design and development. There's a lot of competition in design and development. Over the years I've also learned quite a lot about search engine optimization, particularly as it applies to site development. So I'm able to differentiate myself by designing and development search engine friendly websites.

Not everyone will care about having a website developed to be search friendly, but for those that do I'll stand out from much of the competition. Another person might differentiate themselves by offering higher end graphics or Flash based design. But each of us adds some additional value to the basic web design and development.

Look for ways you can add additional value to your product and then price accordingly. If your main selling point is that your price is lower you won't be in business long.

[BillR]

standard oil wins! i would rather be standard oil rather than the competitor. someone will win, i will make sure i am the winner before i lay down a dime.

This is what we all want.

It is unfortunately impossible. Business is inherently a risky proposition. The risks may not be great - but they are real.

You need to acknowledge and accept that if you are going to be willing to go into business for yourself.