A business is only as good as the products they sell. If you sell substandard products, your profits will be substandard as well. Alternatively, when you put in the effort to create the best product possible and market them effectively your revenue shoots through the roof and the items almost sell themselves. Product analysis plays an integral role in the success of your business both off and online. Keep reading to learn more about product analysis and how it can help your business build upon the success of your online retailers.
What is product analysis?
Product analysis is a fairly basic project management tool used to define the scope of a product. Scope simply means the particular design of a product and all the features and information that come along with that design, including the processing, materials, aesthetic, and economic decisions made prior to the product being manufactured. The analysis takes place after producing the product, so it does not equate to product discovery. It does not focus on improvements that should be made either, just the basic design in financial and aesthetic context, so it is not the same as product optimization either.
How can my business succeed by using product analysis?
The wide-ranging benefits of putting a product analysis strategy into place cannot be underestimated. It reveals tons of important information you can use to market your product and keep your business more sustainable. A quality analysis goes a long way to help you eliminate unsuitable ideas and cut down unnecessary marketing costs.
Figure out the best price for your product through an analysis including competitor research, market review, and feedback from customers. Once you know how much to charge for your product, you can begin estimating the potential profits once it enters the market. An analysis can also identify the market potential of your product through reviewing how existing products in the same genre as your product perform within your industry. These statistics help you set the price point and ensure you do not turn potential customers away by initially putting the price too high or too low.
The same competitor research allows you to forecast sales volumes. The data includes the size of the existing market and customer base, so you can estimate the number of sales in a given time frame. All this information tells you about the profitability of your product and when you will reach your break-even point. The break-even point is when your product generates enough revenue to recover the costs of design, production, and distribution, like wages, rent, raw materials, and electricity costs.
A product analysis helps you determine the lifespan of your products. A single product will never rule the market forever. They all come with a definite lifespan marking the moment when the product starts to become irrelevant to the people using it. Usually, technological advancements are to blame for such a significant shift. Identifying your probability of return on investment by predicting the lifespan of your product is a helpful benefit of a thorough analysis, as well as anticipating the market share percentage the product could gain.
Product analysis also takes a look at the most important part of your product launch, the marketing strategy. It uncovers tons of analytical data reflecting what markets your business should target and how to target them. All this data helps shape your marketing strategy and determines which approaches work best for your particular product in that market. You can alway apply these data to product optimization procedures as well, so you can modify or revamp existing products to shine over the competition.
Tips to Perform Better Product Analysis from Marketing Professionals
Project and product managers looking to improve their product analysis strategy should consider including the tips and tricks listed below in their analysis process.
Tip #1: Analyze the Data At Your Fingertips
Customer relationship management (CRM) and content management (CMS) systems function as key partners in the Pathwwway product analysis process. If you do not have an automated management system, check with your colleagues in charge of these departments to access the vital wealth of information provided by continual observation and financial reporting.
If you do use CRM and CMS, ensure you have a system in place for measuring and taking subsequent action on failure rates, the return of goods, inventory turnover, customer complaints, frequency of purchases and payments, etc. This applies especially to hardware products.
You gain the most from reviewing software products or services when collaborating with your customer support department. They possess statistics with useful insights into product usage, problems with quality, small bugs, and more.
Tip #2: Use ERP Systems
Project managers not using a business support tool or ERP system need to seriously consider investing in one right away. An ERP, or enterprise resource planning, system is a type of organizational software that integrates into popular business applications in order to help manage work and automate vital functions including human resources and other services. It can provide you with more useful data to break down in your Pathwwway product analysis, along with streamlining back office business processes like inventory and supply chain management.
Tip #3: Remember the Nature of Financial Reporting Systems
Most financial reporting systems were not designed for this kind of analysis. The reporting is tailored to analyze a company’s large-scale profitably, not a single product’s performance. If you want to detail your costs and revenue on the individual product level, you need to find better ways to extract the required data from insufficient financial reports. Although time-consuming, your financial reports include an abundance of valuable knowledge that should be used in your product analysis.
Tip #4: Use the Data to Review Operational Efficiency
Do not just use the product data to improve the products alone. This constructive data proves its worth again by helping you discover the less efficient aspects of your business. Do not just chuck away all those analytics after conducting an analysis. Apply them to other investigations and optimize your business from research and development all the way to marketing and acquisitions.