First things first, what do you do and how do you want the world to perceive you and your organization? Building a brand is the foundation of an organization’s relationship with an end user. It is the understanding that all aspects of your organization influence consumers and their likelihood to recognize your organization as a reputable industry leader.
Before you can provide a product or service to a client or customer, you must have the knowledge to sell it. You should know every little detail about your product or service and how it stands out from the rest. This is where building credibility of product knowledge begins.
Create a Complete Description of your Product(s) or Service(s). No detail is too small here. Your goal is to know more about your product or service than anyone else. If you cannot articulate what you do, how you do it, what you produce, how you produce it, what it costs to produce it, what your profit margins are etc., then how do you expect future or current employees to do so?
1. Consumables- Consumable goods are items an organization uses on a regular basis that wear out quickly or run out with a limited shelf life. Examples of consumables are ink cartridges, paper, cleaning products, packaging material, etc. As you are developing your product or service, you should always consider the cost of consumables and their lifecycle. This is not to say you should try to limit consumables to keep costs down; most of the time these consumables are necessary for producing your product or providing your service, so it’s important to account for them upfront. However, you might be able to help your costs by going digital whenever possible.
2. Durables- Durable goods are items intended to last a long time (usually at least three years), are purchased infrequently, and are more expensive in costs when they need to be replaced. It is important to budget for eventual replacement as your item(s) depreciates in value and before it is expected to reach the end of its lifecycle. While Durables do depreciate over time, they are often pivotal in the success of your business, such as a computer and appropriate software, specialty tools, and even motor vehicles. When purchasing Durables, makes sure you’re choosing the right items necessary for providing your goods and service as they are costly to purchase and costly to replace.
3. Cost of Goods Sold- Cost of Goods Sold (COGS) refers to the total price of direct and indirect costs needed to produce your product or service. COGS can include raw materials, consumables (where applicable), cost of labor, and the costs to sell and market your product or service. This number is so important to understand as it sets the baseline for your profit margin determination. Generally, the higher the COGS, the lower the Profit Margin. It also helps you understand how competitive you will be within your industry.
4. Profit Margin- Now that you have established what it will cost to produce one unit of product, you can calculate your profit margin. Profit margins are different across industries, so it’s not our intent to suggest a reasonable percentage of profit for all. Your company’s profit margin will depend on many factors, and you should consider as many of them as possible before you establish your profit margin. Keep in mind, the more it costs to produce something, the lower the Profit Margin.
Important Industry Terms To Know During Product or Service Development
i. Wholesale- Wholesale is the contracted price of raw materials a business owner pays to a supplier. This is typically at 50% reduced cost from retail pricing of the completed item.
ii. MOQ- Minimum Order Quantity refers to the minimum number of units a supplier will sell at the wholesale cost. This is important when you are developing your product production plan as you may need to maintain inventory which carries its own set of risks we will get into later.
iii. MAP- Minimum Advertised Price refers to a completed items minimum amount you will publicly advertise while running Sales Campaigns.
iiii. MSRP- Manufacturer Suggested Retail Price is the cap on a completed items maximum amount you publicly advertise at full price. Simply, it’s the price you sell a product to a consumer for.
Take a look at our Product/Service Branding Sheet below. This should help with the big picture on what it takes, financially, to produce a single product.
Now that you completely understand the product you are producing or the service you are offering, we can jump into the fun stuff, production. As you put your production plan together, keep the following in mind:
Is it Expedient?
Is it easily Reproducible?
Is your method Relevant?
Does your process provide Value to your product?
Is it Cost Effective?
And, is it Measurable?
Building your Production Plan should be a very personal thing to any business owner. This is where your Image and Product/Service efforts begin to come to life.
Okay, so you have separated the details of your product by specifications and cost per unit, and you’ve built your production plan, it is now time to include your branding. Packaging and labeling will elevate your product as customer perception will see you operating on a higher level of customization.
Take a look at Page Two of our Product/Service Branding Sheet for a good method of branding your product or service.
Our Product/Service Branding Sheet is meant to be a starting point with the capability of evolving as you and your business so often will.
If you provide a service, rather than a product, your approach will be similar with some notable exceptions. Developing your service-based brand is focused on your image primarily. Your focus needs to be on branding your company image while on and offsite. Your Branding effort will typically fall into three categories:
Signage (Vehicle wraps, storefront signs, yard signs, banners, etc.)
Promotional Items (Company apparel, lanyards, coffee mugs, etc.)
Card Stock (menus, business cards, letterhead, flyers, etc.)
Use our example Product/Service Branding Sheet in the same way you would if you were developing a product. We are not reinventing the wheel here, just simplifying the Branding Process.
You should have a pretty good handle on developing your product or service now. So, let's take a look at constructing your Exposure Plan. Click Here to get started.