5 Ways to Select A Profitable Product
How to find a profitable food product to sell? Firstly, complicated and time-consuming is product research. Most people will drive themselves crazy trying to master it.
Second, let’s start with a few quick rules and useful tools to identify good food products.
Step 1: What Makes a Food Good Product?
You want a food product that is profitable to sell and low production cost.
First, calculate the cost of the product, second, research what the marketplace will bear.
Calculate the price from the information you found and what is selling in the marketplace.
For instance, if the cost of your 8-ounce jar of strawberry jam is $2.50 and the average cost of strawberry jam (researching 5 competitive jars) is $8.95. You may want to set your price at $8.95 if you feel your product is as good as the competitor.
If you have a truly superior product, you may consider boosting the price to $9.95 or higher. However, if you don’t think your product is as good as the competition, consider what improvements need to be made.
Strive to avoid perfect product paralysis. In other words, don’t get stuck trying to create the perfect product. There’s no such thing.
The truth is product profitability changes over time, and all products have pros and cons. Your job is to create the best product possible, launch it, then grow from there.
Step 2: Brainstorm Food Products to Research
Researching your food product helps you target your ideal customer. You can develop strong product marketing strategies based on what you find out about your products.
It’s important to clearly define your market research goals so that you can give yourself the best chance of meeting the needs of your customers.
How do you research a product?
Your product needs to do three things:
- Catch the consumer’s eye.
- Tell the consumer why the product is important to them.
- Make clear how the product is used.
Primary research methods include:
- Direct observations
- Interviews and focus groups developed and conducted by you or your researcher
Secondary research methods include:
- Information on the internet
- Existing market research results by industry (Baking, Condiment, Snacks, etc.)
- Existing data from your customer database
- Information from agencies such as industry reports, government agencies, and libraries
Step 3: Use Historical Sales Data to Forecast Future Food Product Profitability
In other words, seek out Special Reports. Published by industry professionals offering trends and forecasts. Check out websites like Business Insights for food products you may want to sell.
Historical sales data can be found using Google search or by contacting your local librarian.
Step 4: Is Your Food Product Even Viable?
When something is “viable,” it is capable of growing. In other words, in food product development terms, viability means that a product not only gets purchased but is recommended to others.
Who will buy your products?
Break down who is buying the product by demographics and psycho-graphics.
(Demographic, meaning the statistical study of populations, especially human beings. It is an analysis covering education, nationality, religion, and ethnicity.)
(Psychographic, is the study of personality, values, opinions, attitudes, interests, and lifestyles.)
Step 5: Is the Food Product Profitable?
A food product that is profitable is determined by how you sell that product. In other words, there are five types of food businesses that are most profitable. As a small-batch operator, you will probably sell directly to the consumer or operate an online food business. Do you think you might also sell retail?
- Manufacturing of food items
- Food distribution
- Online food business
Some of the other more lucrative food businesses are bakeries and food trucks. In addition, there are fish farming businesses, certain types of restaurants, food items for pets, and wine shops.
In this list, remember, profitable products are impacted by the following:
- Food cost
- Up-sell ability
- POS system
- Sell Merchandise
- Manage re-ordering and inventory
- Marketing consistently
In conclusion, your most profitable product is one that is on the consumer’s radar several times a month. I don’t think a product that is rarely needed will be as profitable. How often will consumers need your product?