The process of establishing if your product has a demand in your target market is known as market validation. Validating your business idea can help you forecast whether or not people will buy your product or service, as well as whether or not your company will be lucrative.
It’s critical to validate your idea early on in the entrepreneurial process to avoid wasting time and money developing a product that isn’t a suitable match. Obtaining market validation can also give investors, crowdfunders, and banks that are contemplating funding your firm more confidence.
You can learn more about how your product meets or doesn’t satisfy the pain points of your target clients by going through the process of validating your company idea. The knowledge you gather can help you build a product that not only meets the needs of your target market, but also wins you your first paying clients.
Write Down Goals, Assumptions, and Hypotheses
The first stage in market validation is to write down your company’s objectives. The act of defining your vision can reveal any underlying assumptions and create a clear end aim.
Consider the following questions:
- What is my product’s worth?
- What assumptions have I made about the intended audience, and who are they?
- What sets my product apart from the competition?
- What are some of my assumptions about my product, pricing, and business model?
- Answering these questions can help you explain your product’s value and differentiators, as well as reveal assumptions and hypotheses that have yet to be validated and verified.
Determine the size and share of the market
Estimate the size of your target market and the share you could potentially grab before pushing forward with your venture. You can assess your company’s potential and justify its debut by doing so.
Professor William Sahlman of Harvard Business School uses the mattress company Casper to explain this concept in his online course Entrepreneurship Essentials. Casper’s founders calculated the size of the market for their product in 2014 by comparing its differentiating qualities to the bigger market.
Casper’s online business approach, 100-day return window, and viscoelastic foam substance utilized in its beds were all differentiating characteristics.
Casper’s founders narrowed down which segments they should target based on statistics for the mattress market at the time—including units sold per year, the percentage of the market owned by foam mattresses, and the number of mattress retailers who were e-commerce brands—and determined they could own a few percentage points of the total mattress market share.
Carry out this practice with your target market in mind. Investigate sales data, the number and share of present producers, and the percentage of the total market your segment occupies for products similar to yours. Determine where your product belongs in the market and how much of it your company might be able to own.
Research Search Volume of Related Terms
Researching the monthly search volume of phrases connected to your product or goal is another technique to determine the market validity of your business idea. When people are looking for a product or service, they frequently utilize a search engine to explore what is available on the market.
You can look into monthly search volumes using a variety of resources, such as Moz. A comparable search word for Casper may be “foam mattress,” which receives over 11,500 monthly searches, showing a desire for the product, according to Moz.
Use phrases that reflect buyer intent if there isn’t a lot of search volume around your product. For example, if you’re designing a mattress with a new, more supporting material, you might want to see how many people search for “best mattress for lower back pain patients,” which Moz data shows generates 240 monthly searches.
Conduct Validation Interviews with Customers
Interviewing your target market group might be a good method to learn about the possibilities of your product. Hiring a market research firm to conduct focus groups, sending out an online poll, or simply asking a conversation with someone are all examples of this approach.
Inquire about the motives, interests, and wants of potential customers, as well as the items they now use. Return to the list you made in the first step of the market validation process and ask your interviewer questions about any assumptions or hypotheses you made. Be receptive to comments and keep track of it for future reference.
You can utilize the input to improve your offering and redo the market validation procedure if the feedback indicates that your product does not have strong market validity.
Put Your Product or Service to the Test
Once you’ve determined that your product has a market, make sure you’re releasing the most useful, intuitive version possible. You can do this by putting your product through alpha and beta testing.
- Internal staff test a product in a staged environment during alpha testing. The goal of alpha testing is to find and fix any flaws, issues, or quirks in a product before it’s released to the general public.
- Beta testing is when a product is put through its paces by a small group of real-world users who are tasked with finding flaws. Beta testing may be open to the public in the case of software or apps, with a warning informing users that the version they’re testing is unfinished.
When it comes to determining market validity, testing your product with real users can be really beneficial. Customers may choose a competitor’s solution if there is a need in the market but your product is broken, complex, or difficult to use. Beta tester comments can assist you in better leveraging and meeting client wants.