Product Selection Criteria – Factors to be Considered in New Products Selection Process
What are the methods of selecting a new product in business? What are the criteria to be considered in this selection process? The evolution in consumer behaviour has necessitated a continuous development or rebranding of products to meet the continually changing taste of consumers. Special focus is given to the criteria involved in selecting products in entrepreneurship.
The practice of entrepreneurship is aimed at producing goods/services geared towards satisfying the needs of customers. However, the second pronged approach is to extract profit from this exchange of goods and services.
Many products and services offered today have evolved over the years, and will continue to evolve, making the entire process of product/service provision and formulation a continuous one. A key ingredient needed for success here is innovation.
But why do products need to be selected in entrepreneurship? Because consumer behaviour vary with time and may develop preferences for certain products which if not provided may result in outright rejection of available products in the market place. Hence, the needs/preferences of the consumer or client need to be fully satisfied.
Product selection and process criteria
This criteria used in selecting products in entrepreneurship is very important. The level of acceptance a product gains in the market place is tied to how successful such product(s) will fare. Therefore, careful thought should be given to how a product is accepted. However, the only way to know how well a product is accepted in the marketplace is by first conducting a research. This can involve a considerable amount of financial resources.
Product testing in the open market place can go a long way in identifying the underlying challenges that accompany certain products.
Cost of Production
Cost of production forms part of the criteria for selecting a product in entrepreneurship. Entrepreneurs need to produce goods that allow for appreciable profit margins, thereby limiting the cost of production while increasing the possible gains. Therefore, cost of production plays an important role in product selection for entrepreneurs. Only products that give the highest profit margins are selected. The selected products are tailored to fit into, or be accepted by the consumer.
What this means is that before a product is selected in entrepreneurship, ordinarily, a feasibility study is expected to be conducted. But before this is conducted a pre-study is conducted to sample how the product will perform in the open market. The only difference between the pre-feasibility study and the feasibility study is that the pre-feasibility study is not as detailed as the feasibility study.
A feasibility study examines how the product will perform or how viable the product will be in the market place. This is similar to product acceptance. The result enables the entrepreneur to select the product with the widest acceptance in the open market.
The Future of the Product
This forms an important aspect of the process of product selection in entrepreneurship. The future of the product contributes significantly to how well the product fares. Hence, important answers need to be given to questions on the level of demand for the product, the acceptance of the product at the price fixed for it, how feasible the product is and if there are any margins for meaningful profits.
All these form important criteria used in selecting and developing a product/service in entrepreneurship. A product that has wide demand and at the same time offers impressive margins for profits will most certainly be selected over those with lesser prospects.
Does it satisfy a Need or Want?
Product selection in entrepreneurship focuses on important aspects of the product. Here, the searchlight is beamed on the product and critical questions asked on what the product satisfies. Consumers are driven by two forces; needs and wants. Needs are necessities, hence, their demand tends to be more than products that satisfy wants.
Wants range from the cheap to the very expensive ones. Whatever the case, knowing which group the product falls under is of great importance and forms an important criterion in selecting a product in entrepreneurship.
Products that Give an Edge
When selecting products in entrepreneurship, a strong criterion is the possession of skills in selecting products that give an edge over similar products. Generally before products are selected, the market is examined for existing products similar to the available products for sale. The product that performs best is selected over those that might perform averagely in the marketplace. Therefore, being a critique of your product can be useful exercise that ensures that only the best products are selected.
Before a product is being selected in entrepreneurship, the pricing of such a product needs to be fully analysed. Certain products, desirable as they may be, do not allow for profitability, as the cost of production may be high. Therefore, a pricing strategy that focuses on the profit potential of the product will go a long way in improving the product’s performance. In this case, the product will be satisfying the client’s needs, while meeting the profit expectation of the entrepreneur.
The criteria used in selecting a product in entrepreneurship are diverse, and require expertise, and an eye that pays attention to detail. The services of a marketing consultant is needed also to provide useful insights on how to select products in entrepreneurship.