How do you determine the market viability of a new product or service?
Determining market viability for a new product or service is a common dilemma for growing businesses. You may have been trading for some time. You may have a solid client base and growing revenue, and you have now grown to the point of launching a new product or service. Even if this new venture is in line with your current offering, you will still need to determine its viability before moving forward. This is because, although the product or service may be complementary, it is likely to be orientated to a different buyer persona. For this reason, you will need to conduct thorough market research, as you would have done initially, to determine whether to move forward.
Product and market research stage
Product viability and market viability are two sides of the same coin. The former is about if your new offering will pique interest, generate demand and produce a profit. The latter investigates if the target market conditions are capable of reaching your target profit. Both of these areas need to be thoroughly researched before launching a new venture. Putting out a product or service without proper planning can be costly, not only in revenue lost, but in potential damage to your brand’s reputation.
What are the elements of market research?
Market research is made up of three key elements, which you will need to evaluate before launch your new venture. These are:
- The market size. Knowing the market size will help you to determine if there is enough room to accommodate your new offering. You will also need to know if the market is amenable to a new competitor and to changes, improvement and new products.
- Your target audience. You need to understand who your target audience is. Once you know this, you will need to research if your target audience will pay for your product or service. Are they likely to be a repeat customer? Are they likely to recommend you? Remember, there is a big difference between liking a product and committing to buy.
- Your competitors. You will also need know who your competitors are and if they are offering a similar product or service. If they are, you will be able to assess their success on the market. This will also help you to target your offering to the right audience and locate any current gaps in the market that you can fill.
Product testing is vital for any new offering you are planning to put on the market. This stage in your research will provide you with useful information about if there is a real need being met by your offering, if the price point is right and if it is competitive.
There are a number of ways in which you can product test in a safe way before undertaking any more formal feedback. For example, seeking the feedback staff who understand your business is important and will keep them on board with the new venture. It is also a good idea to test the offering on two or three trusted clients who can give you solid feedback.
This stage can also highlight logistical difficulties you may face, such as if you will be able to distribute your offering and how and if you will be able to meet demand. Piloting your offering in this way can iron out any potential problems early on, setting you up for a more seamless launch.
Soft launching a product or service
The old adage “don’t’ oversell and under-deliver” is a useful mantra when launching a new offering. It can be tempting to launch a product or service with all your marketing and sales guns blazing. But, unless you are very sure about your new venture, this can be a costly move that you cannot back track or adapt from. This is where soft launching a new offering can be the best option. By launching your offering in a reduced way, perhaps to an existing client base, by a certain location or for a period of time, you can gather vital marketing information. This will help you determine how the offering may perform in a larger market or if adaptations need to be made before a hard launch.
Knowing when a product won’t sell
It can be a hard fact to face, but not all new offerings are going to be successful, no matter how great the idea is. To grow a successful business, you need to make difficult and objective decisions based on your research. This can feel like giving up, which, for many business owners, is not in their vocabulary. Yet, dropping an offering that does not have a future, either because it does not work as a product or does not have a place in the market, is the smart financial move, which can ultimately provide a stepping stone to better ventures for your business.
Your target audience holds the key
By far the most important of the three elements of market research is knowing exactly who your target audience is. Failing to understand your clients and their needs is a very common issue for new and old businesses alike. The key is to never get complacent. Your customers’ needs can be changeable, as can the market you are in. As such, you need to keep up your research on your client base.
Unfortunately, this is rarely a straight forward data gathering exercise. Information on your target audience can come from a host of places and in dribs and drabs, making analysis and cross referencing tricky. But, as a base line, you should always aim to be able to answer these three questions:
- What problem does your product or service solve? Why do your customers need it in their lives? How does it make their lives easier?
- What value will your product or service deliver to your customers?
- What features does your product or service offer that make it unique?
The target audience journey
It is very likely that after going through all of these steps you will find that your target audience is smaller than you originally envisioned. It is important not to see this as a reduction in potential customers, but rather a refinement that will enable you to sell your offering to the right target audience. The more focused you get, the easier it is to market your offering.
Do you need help with your marketing a new venture?
If you are looking for help with a marketing strategy to help grow your business or advice on marketing a new product or service, please get in touch.
You can find out more about our team and their experience, here.