Market Research for Product Validation or Business Idea
What is Product Validation?
Product validation is the consideration of the amount of demand that exists for our product/service in a specific market. It’s relevant to validate our products at the early stages of the entrepreneurial process to make sure that we don’t waste time and resources developing a product that isn’t a good fit for the market.
Securing market validation can also instill confidence among investors, crowd funders, and banks that are considering funding our startups. One of the best ways to penetrate the market is to create a unique offering away from what the competition is doing in order to increase demand.
By going through the process of validating one’s business idea, one can gain a deeper comprehension of how one’s product meets or doesn’t meet their target customers’ pain points. These insights we gain can help us create an offering that not only addresses our market segment’s needs but earns us our first paying customers.
How to Research?
These are five steps we have applied to help guide our research process and they have been tested and approved by the Havard Business school.
Lead with Goals, Hypothesis and Assumptions:
Goals can serve as vision boards leading us in a clear business direction. Without a stated plan or direction we might never uncover some assumptions and this could cost us a fortune in the future.
Remember to ask these simple questions;
- What value offerings does my business provide?
- Who is my precise audience and what don’t I know about them?
- What is the uniqueness of my product in the market?
- What plans do I have for my product pricing and business model?
When we answer the questions above we would discover the value of our business idea and we appear differently from the existing competition. This exercise would also bring our attention to our assumptions and the hypothesis we’ve created in the past.
Observe Search Rates:
Market experts have advised us to examine the audience’s search for words relating to our product critically. Remember, they might not be searching for the exact product but words that might lead them to it. We must consider how often these searches are being made with tools like google trends.
Also, using google’s keyword planner tool is a great way to see how many people are searching keywords that relate to our product or service. Thirdly, create room for feedback like surveys and questionnaires to understand the stage of the consumer and how we can offer more value.
Conduct Analysis of The Competition:
One way we can make sure there is a healthy market to sell to is to look closely at our direct competition. Find out what they are doing and how it compares to what you are planning to do. If there are competitors out there, it only proves that there’s existing demand for the product.
Businesses that don’t make money don’t stay in business, so learning about how long our competitors have managed to stay in business and roughly what their trajectory has been so far can provide some insight into the failure or triumph of our business idea.
Study sales, Data, Numbers and Size:
Before proceeding with our venture, we must estimate the size of our target market and if we could potentially capture a share of it. By doing so, we can gauge our business potential and justify its launch. For products similar to ours, we must research sales data, the number and share of current manufacturers, and what percentage of the total market our segment holds. Determine where our product fits into the market and assess how much of it our business could own.
Do a Product Test Run:
Immediately we decided that there is a place for our product in the market, we can then proceed to do a test run of the product to observe how the consumers respond and if they are willing to pay that particular price for the value we are offering.
These are steps that we have implemented thus far and they have guided our business structure and helped us achieve our goals.
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