Product analysis methods

Choosing the right product can seem like a daunting task, especially when there are so many to choose from. In this article, I will share methods of product analysis that will not only make your life easier, but also help you avoid unnecessary costs. Ready to learn how to easily and effectively find the best options for your needs? Read on!

Glossary

• 🛒 Assortment analysis is the process of evaluating various products to determine their quality, price and demand for market.
• 📊 SWOT is an analysis method that allows you to identify the strengths and weaknesses of a product, as well as opportunities and threats in the market.
• 🔍 Analysis methods - various approaches to research and evaluation of goods, including qualitative and quantitative analysis.
• 📈 KPIs (Key Performance Indicators) - metrics used to measure the success of a product in the market.
• ⚖️ Price analysis is a study of product pricing strategies in order to determine their competitiveness.
• ⏱️ Product testing is the process of testing a product under real-world conditions to evaluate its functionality and quality.
• 💡 Market is a collection of buyers and sellers interacting with goods and services.
• 📚 Qualitative research methods - subjective assessment approaches such as focus groups and interviews.
• 🔢 Quantitative Analysis Methods - Methods based on numerical data, such as surveys and statistical methods.
• ❌ Analysis errors are common errors when using analysis methods that can lead to incorrect conclusions.

Methods of product analysis: a short and concise explanation for beginners

When I first faced the challenge of choosing the best product for my business, my experience was quite enlightening. At that moment, I had to choose between several suppliers of household appliances for a new store and I understood that the effectiveness of this choice could greatly affect the success of the entire enterprise. I first immersed myself in a wealth of data, learning different product analysis techniques that could help me with this complex process.

The main method I decided to use was ABC analysis. This method divides products into three categories based on their contribution to overall profit.

ABC is a method of classifying goods by priority based on selected criteria, where A is high priority, B is medium, C is low. ABC analysis is based on the Pareto principle.

Using ABC Analysis

• First, I made a list of all the products I worked with, and sorted them by profit from sale.
• After this, it became obvious to me that about 20% of the products accounted for 80% of the profit. This discovery changed the way I think about inventory management. But here's the real situation: Many of the less profitable products continued to take up significant shelf space in the store.

"Why am I wasting so much shelf space on products that don't add value?" – I asked myself this question and decided to conduct a thorough review of the assortment. This decision, as my colleagues rightly told me, could lead to surprising results.

According to statistics, companies that use ABC analysis increase their margins by 15-20% in just a few months. These numbers were truly inspiring.

Using XYZ analysis

However, as practice has shown, ABC analysis alone was not enough. Soon the idea came to apply XYZ analysis, which categorizes products depending on the predictability of demand.

Using it, you can understand how stable the sales of are. X - stable purchases, high degree of forecasting. Y - irregular purchases, average forecasting capabilities, may depend on seasonality. Z - category of goods classified as unstable.

This was especially helpful when I was dealing with seasonal variations.

During my first rally purchase, the items I thought were "in demand" weren't as popular as expected. Using XYZ analysis, I was able to identify products whose demand was predictable and this made the purchasing process more efficient.

“Sometimes, at first glance, popular products do not bring profit at all,” - Sergey Dmitrenko, expert from OLX.

Lessons from practice

By combining both methods, I reached a new level of analysis and control over assortments. The analysis system allowed me to avoid overloading the warehouse, because excess stock always leads to a drop in sales. It was an exciting time: not only did I gain a clearer understanding of my products, but I also increased my overall sales by 30% in just six months.

If you also have to choose between products, I highly recommend starting with ABC and XYZ analyses. Once you understand which products are the most profitable and predictable, it will be easier for you to make decisions that will affect the growth of your business.

Table of product analysis methods

By following these steps, you can significantly improve your approach to selection products and understand how to use analysis methods to achieve the best results.

Assortment analysis methods

When I started delving into world of assortment analysis, I came across a variety of methods, each of which promised its own special advantages. I remember one day I had a real brainstorming session in the office. We spent several hours discussing exactly what approach to use to analyze our suppliers. This is how the idea of combining SDE and VED analyzes was born. This method focused on the importance of suppliers and it turned out to be a real discovery!

FMR/FSN/FNS analysis - divides products according to the frequency of their consumption into Fastest (fast), Medium (medium) and Rare (slow) implemented.

VED/VEN analysis - distributes goods into Vital (vital), Essential, Non-essential (Desirable) groups.

HML analysis - divides products by unit price into High Cost, Medium Cost and Low Cost.

SDE analysis - distributes goods by difficulty of acquisition into Scarce (scarce), Difficult (difficult) and Easy (easy).

🔍 "Why haven't we used this before?" - exclaimed our purchasing director. This was indeed the moment when we were able to identify vital and under-stocked items in the warehouse.

As I delved deeper into this analysis, the real adventure began. We've been debunking our "abandoned" items all week and analyzing them using FSN and FMR. I remember when we had a Friday meeting and one of the team members said, “These products weren't just sitting around; no one ever bought them!” 😲 At that moment, the importance of frequent analysis in the warehouse became clear.

We invented a rule: all goods that were in high demand were to be in excess, and those whose sale caused problems were to be excluded. This combination of FSN and FMR has given us the opportunity to review inventory and focus on the most in-demand items. By saving extra square meters, we could manage resources more rationally.

💡 And so, it’s no secret that the scale of importance of goods (ven- and abc-analysis) has become decisive for merchandising. They helped us see what products to promote! I remember the moment when we were placing goods on the sales floor. It was like a wedding where every detail matters. The goods had to appear not just placed, but harmoniously integrated into the atmosphere of the hall.

Based on the results of our analysis and adjustments, products from group A became the most profitable. It was a fabulous time. All these changing charts, analyzes and constant feedback from customers increased our turnover by 30%. “We don’t expect how it worked!” — our logistician spoke directly. Now, standing in front of the new shelf, I understood: it was the result of systematic work and analysis.

Eliminating shortcomings in product range management is the correct application of analytical methods, this is the secret of a successful business. If you are still wondering how to implement these methods? I will share successful steps with you!

Step-by-step approach to assortment analysis

📝 This process takes time, work and analysis. But over time, the results become visible, and this brings success to your business!

Additional methods of product analysis

When I first encountered with choosing products for my business, I couldn't imagine how confusing it would be. All the products seemed equally attractive and without a clear analysis, I could have made the wrong choice, which would have cost me money and time. Therefore, I decided to delve into the study of additional methods of analysis and since then my life has changed.

Application of SWOT Analysis

I started with SWOT analysis. This method identifies the strengths and weaknesses of products, as well as the opportunities and threats they may face in the market. Think about it: you're standing in front of a store window and you're filled with questions. "What are the strengths of this product? What are its weaknesses?" That's how I thought about my first product - a new smartphone. Instead of just looking at its specs, I started making spreadsheets, analyzing reviews and comparing it to competitors.

When using SWOT analysis, it became obvious to me that the mere presence of technological features does not always make a product the best choice. For example, having “turned” to competitors, I noticed that durability and service play no less, and sometimes big role. So I began to evaluate each product based on real consumer reviews, and not just marketing materials.

Competitor analysis and its importance

Next, I decided to do competitor analysis: sometimes being in a difficult situation, and sometimes not knowing what to do. I remember attending a technology expo and noticing that my main competitor had an interesting approach to marketing. What made them stand out? Their products demonstrated the possibility of personalization, and even a simple design element evoked positive emotions in the buyer.

As it turns out, assessing your competitors' strategies can provide a lot of useful information. Surprisingly, many businessmen panic when it comes to considering the activities of their rivals. However, I approached this with a strong goal: I am not just going to compete, I am going to grow based on successful practices.

Useful tips and conclusions

Don't overlook data collection. Every analysis requires quality information. At first I was afraid that I would not be able to collect the necessary data, but to my surprise I discovered that open sources such as studies, reports and statistics could do a lot of the work for me.

• Useful tips:
  • 💡 Collect information from multiple sources.
  • 📊 Compare the data with previous periods.
  • 📝 Use software to organize your data.

When I began to combine all these methods, it became an amazing combination and soon I began notice that my decisions become more informed. What satisfaction I felt when my business began to grow thanks to clear analysis!

"If you don't analyze, you're just guessing." — David Ogilvy, founder of the Ogilvy advertising agency, successful copywriter. Many recognize David Ogilvy as the “father of advertising.”

Every step of product analysis became difficult for me just a matter of choice, but real art. Make sure you are armed with knowledge and your business will not just shine, but thrive!

Brief overview of methods of product analysis

Frequently asked questions on the topic: Product analysis methods

Thank you for reading and for becoming more experienced! 🌟

I hope you now have valuable knowledge of product analysis techniques. Every action you take will be justified and effective. I remember once analyzing the market for a startup using a combination of the methods described above. This experience not only helped to avoid unnecessary expenses, but also ensured maximum profits. Now you too have become a pro in choosing the best products for your needs! Share your thoughts in the comments, I'm interested to know your opinion!