Hey there,So we are working on this product which will be a consumer electronic product but with a more design and fashion functionality rather than tech,the finishing price of the product at this point is around 300-400 dollars which makes it not a necessity but a luxury and not everybody will want to pay for it, i think one of the challenges we gonna have is to find a niche market and targeting people who will really convert on low ad budget,so my question is how do you think we can work this out? has this ever happened to you? will appreciate it,cheers
A couple of quick notes to add on top of some good answers:
1. Have you done any blogging / writing around the concept? If so make sure you have google analytics on your site and you have demographics functionality turned on. You will get some good high level demographic info on who is interested in your product.
2. Work up 1 - 3 personas of people you think will like the product look at gender, geo location, income, interests, careers, etc. of these personas. Find individuals or groups of people that fit into each persona and give them a survey. You may want to go to meet up groups or other gatherings that fit personas and speak to them. Offer to buy them coffee or sponsor your own coffee gather and use it as a consumer research group.
Hi, first of all if you have a consumer electronic product, never admit or mention that your product is not competitive at minimum with other electronics. Consumers are not stupid, even those who are willing to spend a significant amount of money will most likely not do it if is only aesthetics.
Always assume your consumer is smarter than you and try to over deliver.
Second, the price alone does not make it a luxury item. I will give you an example to illustrate how a luxury item comes to be:
Ferrari as well as Bentley are hand crafted cars with limited availability, their engines and raw materials might be better than the mass produced BMW and have a long history of market satisfaction - meaning they've been in business for many many years.
Consider Apple, their company started with the mission of delivering consumer grade, easy to use, modification free computers. They introduced heavy R&D into their machines and thus introduced fonts, paint, click and point mouse and much more. Over time their quality became reknown and through their continued innovation, their computers were priced at a higher range than others. But due to quality of both the hard ware and the technology consumers don't really mind paying their higher price margins. This market acceptance at a higher price helps make it a luxury because not everyone can afford it and there are entry level, problem solving laptops and computers you can buy if what you need is to simply have a computer.
Also, part of what makes their devices look and feel somewhat luxurious is the fact that they are heavy, they are made of typically single or coupled pieces of steel or some other alloy.
So with apple, you have dependable technology, heavy-steardy feel, high price acceptance, limited quanities for long periods of time after announcements, ongoing releases.
Apple's target market? Anyone who is willing to spend money to stand out, have a product that is limited, industrial art oriented consumers, graphic artists, music artists, any artist you can think of. Generation Y and Generation X who grew up with the brand. Music lovers and techies who enjoy the simplicity of technology and integrated functionality. App lovers (socially engaged mobile users)
Now consider Beats, purchased by Apple. Beats is touted as top of the line listening devices, however every professional grade testing proves that Beats is competitive with your average $29.99 headsets. Much more their headsets cost on average, including the packaging, only $16.99 - something Apple must have loved because the Beats sell for average $200 a piece. Apple has similar margins. However typical their sound might be, Beats was able to leverage the founder's industry & network to get free unpaid sponsorship from athletes and musicians, on top of that they promoted the customization of their sets which people saw and replicated. On top of this customization, as general consumer when you see your favorite athlete or singer or celebrity using Beats, you're going to wonder where and how much? This worked for Beats, because there are other "father-like" headphones like Bose's who are priced about the same. Beats found a hole in the headphone market and exploited it.
Another thing that Beats did (proven to work and not alone) is that they added random pieces of metal to the headphones bands to add weight to them. Because when we feel something heavy and steardy we often assume is high quality packed with high quality stuff... in Beats case, It was just metal to add weight.
Beats target market? Those who are looking for hip, colorful, attention grabbing, status touting headphones.
Finding a target market is key, since you didn't really provide any detail of your product Is hard to give you direct help, but I hope this helps you get sorted out and re approach your marketing strategy. Also consider that pricing is a key marketing effort. Not everyone knows how to properly price items, but what is most commonly done is take most direct competitor and add 15% on top. Assuming that less than the competitor's price already covers your costs and provides some profit.
Guys...use paragraphs. Spacing. Please.
Make it easier for everyone to read. No Gray Potato Smear.
OP: you're building a product you're not sure people want?
Lesson for next time: determine the market FIRST. Then build the product.
Apple didn't make the iphone because Jobs thought "This is cool to me, and maybe someone will want it." We could see that phones, TVs, cameras and other functions were all merging into a single device. They *knew* people wanted it before they made it.
Without seeing a picture of the thing, it's tough to say why people would buy. But your Price concern is not something to be worried about. What you want right now is the 10-15% early adopter market, not mass market penetration. If you need to know more about this, look for Simon Sinek's "Why" video.
These people will pay what you consider to be the "extra" money, so they can be the first to have a cool new product.
They can give you your raving testimonials.
But the product had better be cool.
People pay more for high end fashion all the time. Sunglasses. Designer jeans. Keurig coffee.
YOU ARE NOT YOUR CUSTOMER.
You mentioned that "the finishing price" is $300-$400 - is that your cost, or what you are going to charge the customer?
What is your profit margin?
You mention a low ad budget - why is that? You can build the cost of advertising/marketing into the COGS.
What is your exact manufacturing cost for the product, including the shipping cost (to you) and if you want to include free shipping to the customer, the the shipping cost to them, and the cost to package it and advertise it? Once you have that, create a reasonable profit margin to give you the actual sale price (allowing for future discounting).
If you truly are in the luxury market, you will not be discounting often (or at all.)
Now that price issues are out of the way - is this something that can be manufactured on demand quickly? Because what if no one wants it - you won't want a whole warehouse full of inventory if the product never sells. That's a nightmare scenario, better to have a minimum amount on hand and have a supply chain that can spin up to replenish stock. Get a good idea of your initial needs via a preorder site like prefundia.
Content Marketing - you need to figure out WHO you want to target and create personas that go beyond typical demographics....what are their pain points? how do they spend their days? where do they consume content to learn about products like yours, etc. Then figure out WHAT you want to tell them - each persona should have its own story. Then figure out HOW you want to tell each story - video, article, white paper, infographic, etc. Then and only then do you focus on WHERE to tell it - which channels - social? web? print?and so on. Too many companies start with WHERE because it is fun and sexy- but they fail because they don't know who and what they want to say....