Testing the market before taking the plunge
Coming up with new ideas for your business is essential for growth. And it’s exciting when you’ve got a new product or service to offer. But before you launch your new offering, it’s important to find out if there’ll be a demand for it. So you need to take some time to test the market and measure the response. You’ll then have a much better idea if you’re likely to succeed or not.
Find out about potential demand
What you’re looking to determine is if people are going to want to buy what you’re selling. Regardless of how enthusiastic you are about your new idea, it’s still important to find out if your customers feel the same way. So ask yourself:
- Who will buy my new good or service and how often?
- Who are our competitors in the marketplace for this new product or service?
Consider some new products or services that have successfully hit the marketplace, such as the GoPro camera. The company who developed this action camera did a lot of testing and produced some amazing videos to market it. Not only were they able to determine demand, but they actually created more just with their sample videos.
Why it’s vital to test the market
Any time you introduce a new offering you’re going to spend money. You’re also going to be spending time away from your core business. So it’s important that the time and money you’re investing in your new product or service is well spent.
You’re looking to maximize the testing time by generating some good PR for your business, so customers see you as innovative and creative.
Handled right, testing the market with your new idea can be an effective marketing strategy.
Ideas for market research
Before you spend a lot of money on the development of your new product or service, invest a bit of time finding out your potential customers’ initial reactions, so you can decide if anything needs changing in the R&D phase.
What you’re looking to do is conduct some market research, and there are great ways of doing this including:
- Setting up a focus group – ask some of your current customers to discuss their opinions, perhaps giving them a prototype as a freebie for their time. Ideally, you’ll chat to a group of 8-10 of your customers for 1-2 hours to get in-depth responses.
- Conducting a survey – use a service like SurveyMonkey to get a wider range of opinions and responses. Think about how many people you’ll need to survey to get a sufficient sample size.
- Interviewing a couple of your current customers one-on-one – to find out if they’re interested and willing to purchase your business’s new offering. These interviews have a different dynamic compared to focus groups where you’ll have time to dig deeper.
- Introducing your soon-to-be-released product or service over social media – gain initial feedback in a cost-effective way by using Facebook, Twitter or Instagram to share images and information about your new item.
- A/B testing – this means an experiment with two variants – A and B. If you run your business online, think about setting up an A/B test where you trial two alternate web pages aiming to sell your new offer using different layouts or highlighting different features. For example, the latest SimCity PC game by Electronic Arts was offered as a promotion on their SimCity website. Presales weren’t great, so they removed the offer from the home page. Sales increased because their customers intended to buy the game anyway; they just didn’t want to view the promotional offer.
Constructive criticism is probably some of the best feedback you can get from your likely customers, so be open to their responses and adapt your product or service if you need to.
Search out valuable advice
Try to obtain the latest data on your chosen industry, along with information that can help your business decide whether to move past testing and begin selling its new offering, by speaking to:
- The nearest chamber of commerce.
- Potential suppliers.
- Your industry or professional association.
- Similar businesses in other town or cities.