You can add featured products in HOMEPAGE as following.

1. ADD A NEW ATTRIBUTE

Go to Catalog > Manage Attributes and add a new attribute. Enter featured_product as Attribute Code. Change Catalog Input Type to Yes/No. In the left column click on Manage Label / Options and enter something like Featured Product as label. Click the Save button.

Now that we have a new product attribute to mark the featured products, we only need to add it to an attribute set so it actually appears as an option when we edit a product. Go to Catalog / Manage Attribute Sets and edit the attribute sets that you are using for your store. If there is only the default one, edit the default one. The right column is a list of unassigned attributes – drag featured_product into the middle column and place it where it makes sense. Now save the attribute list.

When you edit a product now, you will find a new attribute Featured Product. Edit a couple of products and set it to Yes.



2. CREATE THE TEMPLATE FOR FEATURED PRODUCTS

Your templates directory should be something like

"app > design > frontend > default > yourtheme > template"

yourtheme is the name of your Magento theme. Create a new directory custom inside the template folder. Inside this directory create a new file featured.phtml and copy the following code:



<div id="home-featured">
<div class="page-title featured-title">
        <h3><?php echo $this->__('Featured products') ?></h3>
    </div>

<?php
// some helpers
$_helper = $this->helper('catalog/output');
$storeId = Mage::app()->getStore()->getId();
$catalog = $this->getLayout()->createBlock('catalog/product_list')->setStoreId($storeId);

// get all products that are marked as featured
$collection = Mage::getModel('catalog/product')->getCollection();
$collection->addAttributeToSelect('featured_product');
$collection->addFieldToFilter(array(
array('attribute' => 'featured_product', 'eq' => true),
));

// if no products are currently featured, display some text
if (!$collection->count()) :
?>

<p class="note-msg"><?php echo $this->__('There are no featured products at the moment.') ?></p>

<?php else : ?>

<div class="category-products">

<?php
$_collectionSize = $collection->count();
$_columnCount = 4;
$i = 0;

foreach ($collection as $_product) :
$_product = Mage::getModel('catalog/product')->setStoreId($storeId)->load($_product->getId());

?>

   <?php if ($i++%$_columnCount==0): ?>
   <ul class="products-grid">
   <?php endif ?>
       <li class="item<?php if(($i-1)%$_columnCount==0): ?> first<?php elseif($i%$_columnCount==0): ?> last<?php endif; ?>">
           <a href="<?php echo $_product->getProductUrl() ?>" title="<?php echo $this->stripTags($this->getImageLabel($_product, 'small_image'), null, true) ?>" class="product-image"><img src="<?php echo $this->helper('catalog/image')->init($_product, 'small_image')->resize(135); ?>" width="135" height="135" alt="<?php echo $this->stripTags($this->getImageLabel($_product, 'small_image'), null, true) ?>" /></a>
           <h2 class="product-name"><a href="<?php echo $_product->getProductUrl() ?>" title="<?php echo $this->stripTags($_product->getName(), null, true) ?>"><?php echo $_helper->productAttribute($_product, $_product->getName(), 'name') ?></a></h2>
           <?php if($_product->getRatingSummary()): ?>
           <?php echo $this->getReviewsSummaryHtml($_product, 'short') ?>
           <?php endif; ?>
           <?php echo $this->getPriceHtml($_product, true) ?>
           <div class="actions">
               <?php if($_product->isSaleable()): ?>
                   <button type="button" title="<?php echo $this->__('Add to Cart') ?>" class="button btn-cart" onclick="setLocation('<?php echo $catalog->getAddToCartUrl($_product) ?>')"><span><span><?php echo $this->__('Add to Cart') ?></span></span></button>
               <?php else: ?>
                   <p class="availability out-of-stock"><span><?php echo $this->__('Out of stock') ?></span></p>
               <?php endif; ?>
               <ul class="add-to-links">
                   <?php if ($this->helper('wishlist')->isAllow()) : ?>
                       <li><a href="<?php echo $this->helper('wishlist')->getAddUrl($_product) ?>" class="link-wishlist"><?php echo $this->__('Add to Wishlist') ?></a></li>
                   <?php endif; ?>
                   <?php if($_compareUrl=$catalog->getAddToCompareUrl($_product)): ?>
                       <li><span class="separator">|</span> <a href="<?php echo $_compareUrl ?>" class="link-compare"><?php echo $this->__('Add to Compare') ?></a></li>
                   <?php endif; ?>
               </ul>
           </div>
       </li>
   <?php if ($i%$_columnCount==0 || $i==$_collectionSize): ?>
   </ul>
   <?php endif ?>

<?php endforeach ?>

        <script type="text/javascript">decorateGeneric($$('ul.products-grid'), ['odd','even','first','last'])</script>

</div>

<?php endif ?>

</div>


3. ADD A NEW BLOCK TO THE HOMEPAGE

Now that we have a template for featured products, we need to add this new block to the homepage. Go to CMS > Pages and edit the Homepage. In the left menu go to Design and enter the following into Layout Update XML:


<reference name="content">
<block type="core/template" name="home-featured" template="custom/featured.phtml"/>
</reference>