Richard Crouse and Pamela Phillips had an idea for a product that had never before been offered to the public. Their first prototype got positive feedback from both of their families and all of their friends but Richard and Pamela knew that kind words and praise from the people closest to them wasn’t enough to determine if their product was viable.
Richard and Pamela thought they were onto something but wanted to be sure before they invested all their time and money.
So what did they do? They test marketed their product.
Test marketing is one of the most important steps to launching a business. Test marketing is a smaller group of people who you use to gauge the viability of your product or service before launching a full scale advertising or business campaign for it. Before you go out and spend your life savings to make 5,000 copies of what your sure is the next big thing, test to see if consumers want your product as much as you do. You can never be sure of the public’s response to a product or service without first testing it.
This step is so crucial to your business and your finances. Many people have lost their life’s savings by starting a new business to sell a new product before testing to see if someone even wants it.
In 2002 Richard and Pamela took their prototype of BagLight, a small light that attaches to the inside of a woman’s handbag to help women find items in their purses easier, to Ebay to determine the viability. In just two short years sales for Richard and Pamela’s BagLight went from zero to $250,000.
Richard and Pamela understood the fundamentals of marketing and advertising. By bringing their product to the market in a smaller setting they not only learned their product idea was a good one but also what consumers were willing to pay for it.
Auction websites like Ebay can help determine the answer to a whole range of product related questions. One of the most important being what will consumers pay for my product. You can have the greatest product idea in the world but if you price it wrong nobody is going to buy it. For example if fishing lures cost several thousand dollars instead of just a few bucks there would be a lot less fishermen in this world.
Ebay can help you determine the best price point for your products. First look at what similar items are already selling for on Ebay. You should also run several tests to determine what the best price is. First, auction your product at a low starting price point with a minimum reserve. When that auction runs out relist your item at a higher price point with no reserve. Whichever listing results in the higher final bid amount is the winner. Use that price going forward.
Richard tested several different prices before finding BagLight sold best at an $8 price point. He also learned that his customers like to buy several of the item at a time to give as gifts to their friends. That information in turn helped him with packaging and group discounting.
In addition to determining viability and price you can also learn how to improve your product. Ask for customer feedback when you test your product. You get your buyer’s email address when an auction is complete. Email them a survey in the days following receipt of your product.
Your customers can be one of your greatest assets. You can learn a host of information from them about how to improve your product. Maybe you learn that providing the product in a broader range of colors would be welcomed or that if your product were a bit bigger/smaller in size it would be more functional. Your customers can provide you with the kind of honest feedback you hoped would come from your friends and family. Your customers don’t care about sparing your feelings or delivering the news gently. They are an unbiased source of information.
Four out of every five new products will fail in the marketplace, that’s why testing the viability of your product is so important. Ebay is a great tool to test your ideas for very little upfront cost. You pay a listing fee, and a seller’s fee. These fees are determined by the starting and final sale price plus the category of your item. Neither of which should be too cost prohibitive. Don’t worry about losing money on test market sales. If the product doesn’t sell well or at a viable price, you’ve likely saved yourself far more time, energy and money that you would have otherwise spent.
To ensure your product has the best chance for viability on Ebay and other auction sites I’ve put together a micro report detailing the most advanced selling and listing techniques. The report details six specific skills any auction house test marketer should know before advertising their new product or service. Don’t waste the information you can learn from test marketing because you don’t know how to sell items at auction websites like Ebay or Amazon.
Until Next Time…
Ethan Warrick
Editor & CEO
