Product Fads: Should You Buy In?
What exactly is a fad? Fads are considered to be objects or behaviors that achieve high popularity when they are first introduced but are often times short-lived once the perception of novelty is gone. Think about Hula-hoop®, a classic example of a product fad. When the product first hit the market in 1958, an estimated 100 to 120 million Hula Hoops were sold within the first six months. By the end of that same year, sales were almost dead (source). Product fads seldom serve a useful purpose and due to the lack of utility, there is usually a quick decline in sales and popularity that follows. However, often times businesses want to invest in these upcoming, hot products in order to capture demand, but it’s important to note that not all products that are adopted quickly prove to have long-term success. Before you make the decision to ride the wave of the next product fad that comes through, be sure to consider these few things before buying in.
Have you done your research?
As stated before, it’s difficult to determine the longevity of a new product early on in the adoption process.
Demand alone should not be enough to sway you to buy in. Before investing in a hot product, consider this: the specific product doesn’t matter; your market does. You don’t want to spend money and time on a product that your customers will not be interested in. Research the product, identify who the early adopters are and see if there is an opportunity to market such product to your target audience. When you perform the necessary product research, you increase your chances of selling a successful product.
Do your homework on the manufacturer.
Product fads usually have an overwhelming marketplace reaction immediately upon launch. Let’s look back at our Hula-Hoop example. When Wham-O Manufacturing Co. introduced the product to the market, the company couldn’t produce the highly sought after plastic hoops fast enough. Popularity rose so fast that 15 or 20 other companies began putting out hoops and as many as 50 million may have been manufactured by other companies in that first six months (source). Companies do not usually intend to release fad products, they want to release continuously profitable products. With this in mind, most manufacturers are not prepared to meet the mass-market demands when a new product rapidly takes off. If you choose to invest, make sure your manufacturer will be able to supply you with the product. Which leads us to our next point…
Don’t buy in more than you think is reasonable.
It’s enticing to want to buy in to a hot product as it can get you big profits relatively quickly. However, when hype drives demand, like many products fads, and that hype inevitably dies down…it can leave you stranded. Be cautious of how much you invest in fad products and never rely on a fad as your only money-making cash cow. Fads tend to diminish as quickly as they started so be sure you have a way out to eliminate the dangers of being left with piles of inventory that nobody wants.
