Developing digital products for an informed group of audience is most certainly a difficult task and hence, you have to be extremely careful regarding what you offer. There are three fundamentals to developing profitable digital products and if you follow them it will easier for you to build a business strategy and a revenue generation model around them. The three fundamentals are:
Innovation
Innovation is a wide area per say, but you need to define innovation according to the product you are trying to sell. For example: there are many businesses, which have been working towards creating a platform where people can be a part of a community and share their lives and work. Now there are many such communities from hi5.com to facebook and each of these products have a thin line of difference. That is why when myspace.com launched, it became a huge success. There is a major line of difference between my space.com and hi5.com. Hi5.com is a community site where people can make friends and it stops at that. At myspace.com, you can make friends, put up your songs and videos on air and do much more in terms of freedom to express. As a result of this, myspace.com is a profitable product.
Launch a new product
Launching a new product is never as easy as it seems. There are many factors that drive the launching of a new product like existing markets and their behavior, target audience and their likes and dislikes, initial capital vs. output, break even period etc. These are applicable for any kind of product whether digital or non-digital and are also applicable for online products like a shopping store. For example: online shopping has been there for quite some time but there are two websites, which made the maximum impact and created a benchmark. One of them is amazon.com and the other is eBay. Now how are these two websites different from the rest of the websites? Amazon and eBay handle different segments of customers. Amazon is an online shopping mega store where new products are added on a daily basis so that the customer can have a varied choice. They offer a price that is discounted and apart from that they ensure that your shopping experience is wonderful.
On the other hand, eBay is an e-commerce portal where you can sell as well as buy products. It has two- way traffic. If you have a digital product that you want to sell, then you can put it up on eBay and get requests from probably customers around the world. So in a way, it is a bigger marketplace. As a customer, you will get to choose from different varieties of the same product: for example, you can find 10 different brands selling a digital SLR with almost the same features. You can always buy based on the features, the brand name or the price offered. So there is a lot of flexibility that has helped eBay become a highly profitable business.
Finding new markets
This is the mantra for any and every business. The markets of today are volatile and competition is fierce. The only way to succeed is either by creating a niche where only your product will survive or by expanding to newer markets that are replete with potential customers. For example: If you are selling a concept like customized travel plans then you know that your worldwide market is already saturated, so how will you be able to derive profit out of it. So what you can do is look for a new market by positioning your product in a different way or for a different class of people. One of the new markets in travel is backpacking and you can target your product to backpackers and thus derive maximum profit.
The important thing to remember here is that strategic imperatives can be voiced out with ease but the toughest part will always be executing the strategies. You need to keep in mind the following factors before you can think about deriving a profit:
1. Advancement of technology and the rapid changes
2. Shifting of customer preference
3. Developing a business model that is not change-resistant and risk-averse
If you are able to incorporate the above three then you will be able to capitalize over changing markets and derive profit from every venture.
By: Pawel Reszka
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