The formula for creating a hit product

This article combines the popular products in recent years and analyzes 18 popular factors and 4 product formulas. I hope it will be inspiring to you.

"Hot products" is a goal that countless brands and entrepreneurs dream of. I have seen many similar books and articles, which talk about the creation of hot products from the perspective of copywriting, operation or product experience.

In my opinion, these are only part of what makes a hit product. Excellent operations and copywriting alone are not enough to create a hit product. Winning awards or having a good product experience do not necessarily mean that the product is a good product.

I have been engaged in the hardware industry for many years and have created popular products myself. I also have friends who have made popular products. After reflection and many exchanges and reviews with friends, I have summarized the calculation formulas for 4 types of popular products and shared them for reference.

Are hot-selling products exclusive to well-known brands or large companies?

This article uses different types of popular products to reveal the calculation formulas behind them. These include start-ups, companies that have been in business for many years, and subsidiaries of listed companies. Every company has different resources, and the calculation formula for creating a hit product is also different.

1. Introduction of Hot-selling Products

This article will introduce a total of 10 hot-selling products, covering electronic products, personal care products, 3C peripherals, etc. My definition of hot-selling products has the following reasons:

• A The sales volume has exceeded 100,000 units at least. 100,000 units is nothing for products like mobile phones, but for general consumer hardware products, it is already a very good result.
• B has sales exposure in multiple different types of channels, with a high channel coverage rate. It involves full online network coverage, offline store coverage, and appearances in the live broadcast rooms of top anchors Li Jiaqi or Viya.
• C has attracted the attention of competitors in this industry, and similar imitation products have appeared on the market.

Let’s first briefly introduce the 10 products and the team backgrounds behind them one by one:

1. Xiaomi Power Bank

Xiaomi Power Bank is a product launched by Xiaomi in 2013. As of the end of 2019, the cumulative shipments have exceeded 100 million units. It is a well-deserved hot product in the market. Xiaomi Power Bank has, to a certain extent, changed the previous situation of rough workmanship and high prices in the power bank market, and is a very cost-effective product of Xiaomi.

2. Soocas Electric Toothbrush

It is an early company in Xiaomi's ecological chain. Its founder was a former mobile phone designer for Huawei. In 2016, it launched the Soocas electric toothbrush at a price far lower than that of electric toothbrushes from brands such as Philips and Braun. It also conducted crowdfunding on Youpin, and the actual transaction volume exceeded 10,000 yuan in 24 hours. Subsequently, the brand continued to launch a number of electric toothbrush products.

3. SKG Neck Massager

The SKG neck massager is a product launched by SKG in 2018. It is mainly aimed at the symptoms of cervical pain and strain among office workers. It supports muscle stimulation through low-frequency electric current, causing muscle contraction to achieve a relaxation effect.

SKG is a company that has been in business for many years. It has previously been engaged in the fields of small household appliances and beauty products, but has never received much attention. The emergence of SKG neck massager has directly increased the market share of neck massage products. As of 2019, more than 1 million units have been sold across the network.

4. 55° cup

The 55° cup is a well-deserved hit in the cup and pot category. It is a smart life product brand of Fifty Five Degrees Technology Co., Ltd. under LKK Rococo Innovation Design Group and was born in 2014. The 55-degree cup is a "fast cooling water cup" developed, designed and produced by LKK Rococo Innovation Design Group during its tenth anniversary season. It was all the rage in the entire cup and pot industry that year. Its shipment volume is expected to be more than 2 million

5. Lefan Magic Stickers

Lefan Magic Patches are a product of Lefan Technology, a subsidiary of Ogawa, and Lefan Technology itself is also an ecological chain enterprise in which Xiaomi has a stake.

Lefan Magic Patch is a product launched by Lefan Technology in 2016. It uses low-frequency electric current to stimulate muscle relaxation, which is consistent with the principle of SKG neck massager, but it is earlier than SKG neck massager. It can be said to be the first low-frequency product sold on a large scale in China. First appeared on the Mijia crowdfunding platform. As of 2019, Lefan Magic Stickers have shipped more than 1 million units.

6. Miaomiaoji Pocket Printer

Miaomiaoji pocket printer is a portable thermal printer launched by Xiamen Miaobao Technology in 2016. After more than a year of market operation, its target users have shifted from the original white-collar population to the junior and senior high school student market. It has begun to explode as a learning tool. Miaobao Technology is a start-up company, and it is rare in the industry that its first product can become an instant hit.

7. NetEase Strictly Selected Steam Foot Bath

NetEase Yanxuan Steam Foot Bath Basin is a product launched by NetEase Yanxuan in 2018. Its main function is to use steam to replace the previous method of soaking feet in water.

Products such as foot basins were previously exclusive to middle-aged and elderly people. This product from NetEase Yanxuan has expanded a large part of the incremental market and meets the health needs of young white-collar workers. Shipments on a single Yanxuan platform exceeded 100,000 units

8. Dyson Hair Dryer

The Dyson hair dryer is a product of the British company Dyson. Dyson's previous well-known products were vacuum cleaners and bladeless fans. The hair dryer was launched in China in 2016. Its price, which far exceeds that of the industry, is supported by technology and appearance. It has become a benchmark product in the hair dryer industry. Its high profits have also led to the emergence of many imitation products in China. Shipment volume unknown

9. Amrio Makeup Mirror

The Amrio makeup mirror is a product launched by a Shenzhen startup company, and is also an ecological chain enterprise in which Xiaomi has a stake. In 2016, the company launched a high-definition daylight mirror product, and later independently developed a simple version for the Mijia platform. The product covers both online and offline trendy channels.

10. Lofree Retro Origin Mechanical Keyboard

The lofree retro origin mechanical keyboard is a product of Shenzhen Lofree Culture Co., Ltd. The company's founding team is a group of designers. After years of entrepreneurial accumulation, they finally exploded in retro style 3C peripheral products.

However, the explosion of Lofree is not sudden, but the result of two years of operation. Starting with the retro keyboard, Lofree began to build a fun 2㎡ space product, and continued to use appearance as the primary productive force with a unified product style. It is consistent with the Elvis brand product line.

2. Summary of Hot Products

The above 10 hot products have all appeared in the past 2-3 years. From them, we can get a glimpse of the trend of consumer electronic products and market changes, which are mainly manifested in the following aspects:

1. Consumption upgrading is real. From the perspective of oral care products and personal care products, we can see that behind consumption upgrading is the change in consumer concepts brought about by the iteration of technological updates and cost reductions.
2. Young groups have brought about a new round of explosion in health consumption, and health products that were previously exclusive to middle-aged and elderly people are beginning to become younger, more mobile and portable.
3. Although Pinduoduo's rapid growth has revealed the current mainstream form of domestic consumption, low price is not entirely king. Product experience has begun to be valued, and products with upgraded appearance and experience have begun to appear in various categories.
4. Products for the student market have not received enough attention, and the consumption concepts and capabilities of post-00s have been underestimated. Product development is still concentrated in the white-collar group.

Key elements of a hit product:

Behind the calculation formula for a hit product is a series of factors that make it a hit. Through the review and analysis of 10 hit products, we will introduce each of the following factors one by one. There are four aspects in total, including 18 key points. These four aspects are users, products, channels, and supply chain.

1. Explicit public demand

There are already a large number of similar products on the market, and a certain scale of industry has been formed, such as cups, mobile phones, massage foot basins, etc.

2. Potential public demand

As lifestyles change, demands gradually emerge, but there are currently no targeted products to address them. Instead, they are mostly addressed with previous types of products, such as office health, fitness, etc.

3. Popular aesthetics

When it comes to appearance style, I have analyzed in a previous article that the current public aesthetic tends to be more inclined towards minimalism. Although this style is difficult for people to like very much, it will definitely not cause disgust - just like the three colors of black, white and gray.

If the style tends to be safe, you must work hard on the proportions, materials, texture, and workmanship in order to gain the user's love and recognition.

The same clothes are loved in black, white or grey because of their unique tailoring. The principle is the same.

4. Experience upgrade

The product experience involves many aspects, but generally speaking, it is mainly about higher efficiency, better quality and more convenient operation.

5. Appearance Ratio

Appearance ratio is a keyword proposed by Wu Xiaobo in his 2019 sharing, and it is also a product trend. The current product style is beginning to spread from minimalism to various emotional style designs, but the penetration rate in different industries is different.

Appearance is gradually becoming more important to younger consumers, just like how postmodern design wanted to subvert modern design back then. In order to fight against the boring style of modernism, young people back then began to come up with highly personalized design styles such as pop art.

6. Low gross profit

Low gross profit does not mean low cost. Low gross profit is a strategic coverage, which maintains the operation of the enterprise with extremely low profit margin and huge shipment volume. However, the adoption of low gross profit strategy has many prerequisites, such as capital, traffic, supply chain control, etc.

7. Profit margin

Profit margin refers to the normal ratio of cost to selling price in the industry. Most industries generally maintain it at around 3 times. Leaving a reasonable profit margin can help channels to expand effectively. In some industries, the profit margin will be even greater. For example, the agent discount in the gift industry is generally around 30% of the market price.

8. Product reputation

Product reputation is a comprehensive term, behind which is an entire product system, which is based on product quality, centered on humanity and efficiency, and spread through appearance and style.

9. Product Communication Attributes

The propagation properties include two aspects:

The first is whether the product is used in a group environment.

The second is whether the product itself has a unique selling point that can be promoted, or an appearance feature that distinguishes it from other products in the industry. Good communication attributes can help products achieve twice the result with half the effort during market communication.

10. Technology Replacement

Technological replacement is the use of different technologies to meet the same demand. The use of this technology can bring about a completely new product form. Different from the previous way of using products. Compared with technological upgrading, this has a certain disruptive effect. While replacing technology, it will also bring about the cost of popularizing technology education.

11. Technological breakthrough

A technological breakthrough is to improve performance or reduce power consumption based on the original technology. This is also the main direction of annual upgrades in the mobile phone industry. Compared with technology replacement, technological upgrades will exist for a long time in product updates and iterations. It is also the main direction of product innovation. Key technological breakthroughs can even completely change an industry.

12. Patent layout

If a hit product wants to continue to be popular for a period of time, patent layout is essential. The patent layout should be comprehensive. It is not just the layout of the existing solutions for the product, but also protective applications for all conceivable solutions to prevent other brands from being listed in a short period of time and causing market damage.

13. Product Quality

Product quality is the cornerstone of a hit product. No matter how outstanding your performance and appearance are, quality problems will have a magnifying effect in the market and can ruin the product in a short period of time.

Quality control depends on the control of the product supply chain and the acceptance standards of each link.

The purpose of small-batch trial production is to prevent products that have not been tested on the assembly line from being put on the market in large quantities. There is no room for luck in quality control. When product sales double, even the smallest problems will be magnified.

14. Large platform UV

UV of a large platform refers to the traffic that can be delivered to products on a single platform. Although platforms such as Taobao and Tmall have huge traffic, the product SKUs are abundant and the traffic that can be delivered to products is limited.

As for the traffic of a single product on platforms like Mijia, it was huge in the early days, which was also the early traffic dividend of the platform. The same is true for the now popular live streaming sales, which is still in the traffic dividend stage.

15. Complete channel system

A complete channel system means that the brand has a complete channel layout in online or offline channels, has a powerful distribution or direct sales system, and has a set of methods to control it to prevent cross-selling and price gouging.

Pricing is the most common problem in distribution channels and it is also a problem that hinders the continued development of products.

16. Flashpoint

A better way to say it is that the breaking point has something to do with luck. This breaking point may be to catch a large traffic platform, or it may be to find the core user group of the product through continuous exploration.

17. Production cycle

The production cycle refers to the product replenishment cycle, which is the time for a series of processes from incoming materials, product launch, and product offline. The shorter the production cycle, the more timely the product replenishment will be, and it can effectively respond to market demand. If the product production cycle is too long, it will easily cause market gaps and give other brands an opportunity to take advantage.

18. Production capacity

Production capacity refers to the maximum number of product shipments per month. Capacity ramp-up means that the number of product shipments will increase over time. It takes a certain amount of time to adapt in the early stages of production. The more complex the product assembly, the slower the capacity ramp-up.

The above four aspects and 18 elements constitute the hot-selling calculation formula to be introduced in this article. Based on the 10 hot-selling products I know, I have speculated that there are 4 combinations of elements for hot-selling products, and have conducted some visits and understandings on the core behind each hot-selling calculation formula and the risks under this model. Let's take a look together:

3. The method of calculating the best sellers and its core and risks

Formula 1: explicit mass demand + mass aesthetics + low gross profit + large platform UV + product quality + word of mouth + supply chain capabilities

• Representative hot-selling products: Xiaomi power bank, Soocas electric toothbrush, NetEase Yanxuan steam footbath
• Model core: capital chain
• Model risk: capital chain + platform restrictions

The biggest highlight of Formula One is the introduction of a large number of UVs on a single large platform, which directly increases product sales through low prices. This model was invincible in the early days of Xiaomi, and a large number of emerging brands emerged. However, due to the low profit margin limit of this model, the development of the brand itself is heavily dependent on financing. Under the unfavorable financing environment, a group of entrepreneurs without financial strength behind them fell one after another.

At the same time, due to the performance requirements of the Mijia platform itself, SKU began to expand rapidly in 2018, the natural traffic within the platform began to disperse, and the largest traffic entrance became the crowdfunding section.

This has also led to many startups making some product decision-making mistakes in their efforts to gain traffic in this section.

The core of low gross profit margin is the support of capital chain, which directly optimizes the ecological chain structure for Xiaomi and introduces many companies with factory production systems. The model of introducing orders to factories through new brands can still maintain operations compared to start-ups with thin capital chains.

However, if a low-profit model is adopted, ecological chain enterprises will become heavily dependent on the platform, and the brands themselves will not receive support in terms of profits if they want to open up channels.

This is also the main development limitation under this model. However, there are also many visionary companies in the Mijia platform ecosystem chain. In the early product planning of the brand, they did not rely entirely on Xiaomi channels, but actively expanded their own channels. Those who made this attempt early on had already laid the channels before the platform’s traffic dividend disappeared.

Formula 2: explicit mass demand + experience upgrade + appearance + profit margin + complete channel system + communication attributes + word of mouth + patent layout + product quality + supply chain capabilities

• Representative hot-selling products: lofree origin mechanical keyboard, amrio makeup mirror, skg neck massager, 55° cup
• Core of the model: Product: Experience & Appearance
• Model risk: competitors copying

The biggest highlight of Formula 2 is the upgrade of product experience and appearance, which caters to the product demand direction of consumer consumption upgrade. Products are changing from being sufficient to being easy to use, and from being just okay to having good appearance. It is also in line with the trend of changes in consumer psychology, but the development progress in different industries is different. Generally speaking, for the female user group, the changes in consumption upgrading patterns will be more positive.

A large number of start-up companies with designers as the main entrepreneurs have been born under this model. Beauty has begun to step onto the stage and be tested. In recent years in Shenzhen, a large number of designers have begun to change their identities and take on the helms of enterprises.

Under the premise of transparent prices and channels, product competition is the core competition in this model. The term "appearance ratio" has begun to be taken seriously. At the same time, the popular products under this model have strong communication attributes. They are either applicable in office scenes, where their outstanding appearance naturally attracts attention, or they are combined with users' daily high-frequency topics. The highlights of the products can be effectively communicated.

The slightly higher price brought by good experience and appearance is worth consumers' payment, which also increases the profit margin of the product. I remember Mr. Lin of the KaWa brand said that according to their calculations, appearance can increase the retail price of the product by up to 20%-30%. This part of the profit also directly helps the brand gain an advantage in channel layout.

However, since the creation of the product itself relies on appearance, the patent layout of the product appears to be relatively simple, which is also the consequence of the lack of technological research and development in designer entrepreneurship.

The protection of product appearance patents in China is very weak. The biggest problem of products under this model is that they are quickly copied by competitors, and then the channels are used to quickly cover the channels that the brand wants to expand. How to quickly bring products to the market and expose them is the second core of this model.

Formula 3: Potential mass demand + technology replacement + patent layout + profit margin + communication attribute + explosion point + word of mouth + product quality + supply chain capability

• Representative hot-selling products: Miaomiaoji pocket printer, Lefan magic stickers
• Model core: market opportunities, products
• Model risk: Misjudgment of demand

Formula three is the pre-research and development of products based on potential mass demand. Judging and satisfying potential mass demand is a magic weapon for many companies to overtake others. For example, our current VR glasses are the pre-research and development of products for future needs.

After determining future consumption trends, early product layout is something every company will consider. However, since these products have not been sold in the market before and the sales channels have no sales data for comparison with competing products, it will be more difficult for the brand to expand its channels in the early stages.

This requires brands to constantly look for opportunities for explosions in the market, which may be a top live broadcast or a brand collaboration. Through a relatively impressive market performance, they can gradually cover the channels. In the past, channels such as crowd testing were built for such innovative pre-developed products.

Of course, more products are buried in time costs. Failure to find the right breakthrough point will seriously affect the revenue of startups, and many of them will eventually go bankrupt.

Maybe in the second year, other powerful companies will open up the field, and at least entrepreneurs can comfort themselves.

Of course, if you are lucky enough to come across the right opportunity, it is not impossible for the product to gain an absolute leading position in the market with advanced layout, such as Lefan’s Magic Sticker product on the Mijia platform and Miaomiaoji on the education channel.

Formula 4: explicit mass demand + experience upgrade + profit margin + technology upgrade + appearance + patent layout + communication attributes + channel system + word of mouth + product quality + supply chain capabilities

• Representative hot-selling product: Dyson hair dryer
• Core of the model: technology research and development and transformation
• Model risk: the market is smaller than expected

Formula 4 is centered on technological upgrades and breakthroughs. Compared with technological replacement, a key breakthrough in a technology is more difficult and requires continuous R&D investment. Once the high R&D investment is converted into finished products, it will inevitably lead to excessively high product costs for a period of time.

Technological breakthroughs usually occur in a corporate culture centered on R&D. In China, Huawei and DJI are the representatives, occupying the market with technology. Obviously, such products have almost no competitors in terms of performance and other parameters, but the core problem lies in the market capacity. The process of converting technology into products is the key point in creating such products.

Let’s take Dyson as an example. Before the super digital motor, its products were household products such as vacuum cleaners and fans. The brand has always been a niche brand. It guided the emergence of hair dryers and chose to start with the demand of women for beauty. With the help of the user’s own communication attributes, the Dyson brand quickly expanded its popularity in China. This type of model is both a success and a failure due to technology.

For a product to become a hit, it must be the result of multiple factors. For an enterprise, it means concentrating resources on one thing. It sounds like a chemical experiment. The difference is that having the above factors only increases the probability of the product becoming a hit. The purpose of summarizing the formula for hits is to find a clearer path to create hits. Different companies have their own suitable routes. Choosing the route to create hits based on their own advantageous resources can fill in the gaps and achieve twice the result with half the effort.

Author: Jazz

Source: Jazz