At Equidam, we aim to provide business founders with the tools they need to grow the value of their business. Some aspects of your business, for example the industry you are in or your business experience before starting a business play a significant role in this process. In the coming weeks, we will talk about several topics related to your business and how these topics impact your company value.
This month we will focus on the idea, that is, the product or service you are selling. Before putting your product on the market, it’s important to test if the market is actually willing to buy your product, whether you are a new venture that is developing its first product, or you’re an established business that is expanding. Below, we’ve gathered some practical tips and tricks for you that might be useful!
A very easy and quick way to get a feeling how much demand there is for the product idea you have, is using Google’s Keyword Planner Tool. Enter some keywords that describe your product or service best and Google will tell you how many monthly searches are performed for these keywords. Google also shows you the competition of this keyword; how many businesses already provide products/ services related to a specific keyword. It’s clearly not a good thing if no one searches for your keyword, but if the competition is very high, it will be hard to distinguish yourself. For example, if you sell bracelets made by Dutch designers, you could search for ‘Dutch designers’, ‘bracelet’, ‘Dutch bracelet’ and so on. Try different keywords to find the combination of words people search most!
You can also check Google Trends. Search for a product idea- like iPhone cases, and view the search volume for your keywords over the past years.
Look into your target market and determine its potential
One way to assess the size of your market is the chain-ratio method, where you start with a large group (like the American population) and narrow it down according to characteristics, like age, nationality, profession etc. You should also look whether the market is growing or shrinking and how innovative the market is. Is your target market ready for your new technology, or is it still somewhat conservative, and do they need education first?
A mistake that many entrepreneurs make is overestimating their market share. Especially in a large market, they might say: “Oh, we only need 1% market share to become a success!” but they don’t realize that thousands of businesses like theirs want to grab 1% market share. Never underestimate your competition!
Who are your competitors, and where are they?
If you’re an established business that wants to launch a new product(line), you probably already know who your competitors are. However, when you launch a new product, there might be other competitors to take into account. Understand what markets they serve, and find out their online presence. Their follower base on social media channels is a good way to get an idea of their popularity, and what other people (read: your target market) think of them. Moreover, they might apply approaches or address parties you did not think of yet.
Also, figure out why your product is different from theirs and use that to market your product later on. Your product might have a new feature, or you can position your product differently, which can give you a big advantage. The way you position your product impact the expectations customers and other parties will have, and is therefore very important!
Go out there, and sell!
People might say they like your product, and claim they would be willing to pay for it, but to really test the demand for your product, go out and sell it!
Since you are at testing phase, I would not recommend to charge your customers the full price, so if your original price is $50, offer them your product for about $30- this also depends on the stage of development of your product. Asking people to pay for your product will reveal their true opinion about it, since the difference between paying nothing and paying something- whether that is $20 or $100, is really big.
So, rather than finalizing your product over and over again, it’s better to collect customer feedback in an early phase, and use this to improve your product efficiently and effectively. This approach, called the Lean Startup, is a perfect way to get products in customers’ hands quicker and receive instant feedback.