When you’re getting ready to start a new business or want to launch a new product or service, there’s important preliminary work that needs to be done before lift-off. An integral part of this is testing your new idea on the market.
Here, we walk you through the following topics to make sure this process is as valuable as possible:
- Why it’s so important to test your new product or service idea on the market
- When is the best time to carry out this type of market research
- How to go about market testing your product or service
Why is it so important to test a product on the market?
Here’s the thing: just because you believe something is a good idea, it doesn’t necessarily mean it is. Sorry.
But what do we mean by a ‘good’ idea? In this context, ‘good’ doesn’t just mean clever or unique. It also means profitable and sustainable in the long-term; something there will be continual demand for moving forward.
That’s why it’s so vitally important to test your product or service on the market before you go full steam ahead with an official launch. In fact, market testing is success-critical and not a step that you should miss out from your business plan.
Won’t it slow me down?
It can be tempting to bypass the market testing phase in a bid to actually get to market faster. The trouble is, doing so usually only means denying yourself invaluable insights into your target customers, competitors and industry trends. This crucial information will help you launch, grow, and sustain your business much more effectively.
What if the market testing fails?
Then you’ve either had a lucky escape, or know what to fix! If you test your product or service on the market, you may very well find that actually, there isn’t much appetite out there for it.
Discovering this at this early stage is a blessing in disguise for business owners, helping you to save time, energy and money being wasted on a business idea with a high risk of failure.
If there is demand out there, then great! You can then use your findings to help steer your business plan and go-to-market strategy.
When is the best time to test a product or service?
The most effective time to test a new product or service on the market is before any official launch and prior to any significant go-to-market investment. This is because the aim of this type of testing is to ascertain whether or not you actually have a viable business model, and assess the level of demand for your idea.
You can also conduct this type of research after you launch and on an ongoing basis. In fact, it’s recommended to do so, so that you can ensure you’re evolving and developing your offering in line with market demand. Don’t forget to update that business plan!
How to test your new product or service on the market
There are a whole host of ways you could test your new product or service on the market. Which methods you choose are up to you, though largely dictated by things like the nature of your offering, your desired timelines, and of course, your budget.
Below are some of the most common ways business owners test the waters, so to speak, before officially launching their idea to give you some inspiration.
Talk it out with friends and family
While this should by no means formulate the foundations of your market research, friends and family can still provide some helpful insights. They can help make sure you’re communicating your ideas and your objectives in a way that makes sense in layman’s terms wherever necessary.
Make sure this personal group also includes friends and family that aren’t your first connections. Include friends of friends and relatives of others to rule out any emotional bias. Your own friends and family, while their feedback is valuable, might be clouded by love and support for you. This is a lovely thing to have, but doesn’t necessarily always make for the most objective feedback.
Bring a focus group together
If you have the time and resources, convening a focus group is a highly effective way of testing your idea on the right market. It involves gathering a group of people from your target demographic, introducing them to your product or service and getting feedback from them. It only has to be a small number of people but whatever the size of the group, their perspectives are invaluable.
A focus group (sometimes referred to as a ‘control group’) can help you:
- Work out precisely who your target audience is (or should be).
- Establish how much demand there is for what you’re offering.
- What your target customer loves and where they would like to see improvements.
- Insights around things like how much they’re willing to pay for what you’re offering, and whether or not they’re currently purchasing something similar from competitors. If so, who, and why?
Working with a focus group doesn’t just have to be a one-off thing either. You can work with the same group or even a new and/or expanded group further down the line as your service or product evolves in the market.
Prototype product or beta service
When going to groups of people for feedback, whether it’s people you know or a non-biased focus group, it helps to have a prototype product or beta service to show them. This way, you can run demos and allow them to use the product or service as if they were going through the intended customer journey.
Not only will this make for more comprehensive feedback, it will also help you iron out kinks and see where you need to make changes.
Of course, building a prototype product or beta website/app comes at a cost, whether that’s financial or time, so it might not be viable for you at this point in the process. Don’t worry though, because it’s more of a nice-to-have, than a necessity. You can still progress without a prototype or beta version of your idea.
Set up some test ads
If you happen to have some spare cash that you’re willing to invest in this preliminary research phase, you could consider running a set of trial social media or search ads. These would be targeted to your desired audience and use relevant keywords.
Not only would this give you a good indication of online appetite, it would also give you an informed idea about things like:
- CPC (cost per click – if you chose to run social media or PPC ads, for example).
- CPA (cost per acquisition – how much it might cost you to acquire a potential customer).
Conduct a soft launch
Soft launches are where you launch your product or service but only to a specific group of people or for a prescribed amount of time. It’s similar to the concept of a focus group whilst being more like an official launch. This involves actually opening access to your product or service and assessing things like reception and sales, rather than gathering preliminary feedback.
This will help you monitor the performance of your product or service in a controlled environment before you fine-tune it to be launched to the wider market.
One more thing before you go…
Top tip: In the market research phase, we’d also highly recommend scheduling in some time with your accountant to assess the financial viability of your new business idea.
It might be a great idea and there might be sufficient demand for your product or service but is it a good financial move? A qualified accountant will be able to help you answer this question and make more informed business decisions.
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