In the previous blog we talked about What is Procurement and why it important for you business. In this episode of our procurement series, you will be learning about how to understand and identify your needs in the business.
Understanding and Identifying needs.
What category will you be choosing for your business?
Wanting to start a business goes through a lot of thinking and analyzing but the first thing you should ask yourself, What Category are you going to choose for your business.
There is a huge variety of things you can sell in the business. You can sell Food, Medicine, Clothes, Toys, make up and many more. But in order to choose the right one you have to know which one connects to you more, which one makes you motivated in selling those products and most especially what category will make you happy in doing your work, because doing something that makes you happy makes you do better in your business.
Second is doing a good market research for your business. Market research will give you a lot of information that could help you in your business.
Doing a market research can help you with
- Identifying your needs in your shop.
- Know your product retail prices
- Know what kind of services your customers might need
- Identify your Competitors.
What does your competitors sell?
For example, The category that you chose for your business is to sell gifts.
First thing you do is check and look for gift stores in your area. Go to local gift shops, shopping malls and online shops that sells the products in your business category.
Then try to see what do they sell, what do they all have in common and what are the new trends. You can even ask one of the staff what are their bestsellers in their shop.
Going to different stores can also help you how will you design your shop that will look inviting to your customers and that would make them want to come back and buy again in your store.
Who is your Target Persona?
What is Target Persona?
Target persona is your target market. To who do you want to sell your products? Do you want to sell it to Women or Men? What age range do you want your audience to be? Are you selling products for adults, kids or family? Target persona is your target Customers in your business.
By knowing your Target Persona, this will help you identify what categories to put in your shop.
For example you decided to have a gift shop. You must have categories in your shop such as Gifts for Women, Gifts for Men, Gifts for infants/Kids or even some seasonal gift categories like Christmas seasonal Gifts, birthday gifts and many more. To be able to cater for your Target Persona to purchase from your store.
What is your Target Retail Prices
Visit a shop, and take pictures of the retail prices of the item. So that you can use it as a reference.
For example, The store you visited sells bags for men, and they sell it for $20 to $25. This will be your target price, which means that if you were to open a shop that sells bags for men your bag prices should be within that range.
Yes you can sell something higher, if it’s unique and different and it’s something that you cannot buy from the other stores. But if it’s something similar to your competitors, it’s suggested not to go higher than them because customers will most likely go to the store that sells it cheaper.
If your Target Persona are middle class the prices of your products will most likely be between $10 - $30 but if your Target Persona is in the higher class the prices of your products can most likely range from $80 to thousands of dollars.
What are your target purchase prices?
Every Business, Retail stores or wholesalers has a calculation to know what will be their purchase price. To know your purchase price, you have to know the retail prices in the shops.
For example if there is a product that is sold for $10 at the shop you probably have to buy it for $3 to $4 so that you can have enough margin but if you’re a wholesaler or a retail shop that can buy bigger quantity of products, you can have a higher markup if you’re going to buy your product directly from a gift manufacturer in China.
Markup is from the difference of the selling price of goods, services and costs. In order to make a profit, the manufacturer of goods and services adds markup into the total cost.
Example., You buy something for a $2 you sell it for $10, Meaning the markup of your company is 500%.
If you can have a higher markup, this will benefit your business because this will make your business more profitable.
How will your business stand out?
The chance that you have on running the business for long term is working hard for having a higher markup because this will keep your business running and profitable.
One of the way of keeping your business running and profitable is by selling something unique. Sell something that your competitors does not have but something that the customers would like to buy.
By being unique, this will lessen the competition with the other competitors on already existing products or items in your business.
Doing a good market research for your business will really help you a lot in identifying the things that you will be needing in your business. Such as what products do you want to sell to your customers, Who are your target Persona and what is your target purchase and retail price for your products. Doing good market research will really help you a lot In your business because it gives you all the information that you need to have a good start with your business.