Testing the market before taking the plunge
Key points in this article
- Are people going to buy your good or services?
- How will you test the market?
- Will you interview customers, conduct a survey or set up a focus group?
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?
Potential demand will likely be one of your deciding factors as to whether to go ahead or not
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 maximise 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.
Decide how you’ll go about testing the market to get a clearer idea of demand
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 a few good ways of doing this.
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
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’ 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.
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.
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.
Surveys, focus groups and interviews are all methods you can use to gain market knowledge
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:
- your ANZ Small Business Specialist
- the nearest chamber of commerce
- potential suppliers
- your industry or professional association
- similar businesses in other town or cities.