What is Market Research and Why is it Important for Your Business?

The most important thing you can do for your new business idea is to conduct in-depth market research. In this article we’ll explain why.

 

Market research is the study of existing markets to evaluate products and services, and to identify and segment customers within those markets. Market research is typically used to determine exactly where and how a new product or service can fit into a market and provide value to a particular group of customers. 

 

In this article you’ll discover the key components of market research, and why it’s essential for any business.

What is Market Research?

When starting a new business the absolute first thing you should do is market research. You can save so much time and money during the product launch process by sizing up potential competition for your business, and by doing everything you can to understand the customers who may purchase your product or service. So let’s go over the market research process and key components that make up a great market research analysis.

Step 1 – Competitive Search

Start by thinking of the problems that your product or service solves. Now search on Google using as many keywords you can think of, including questions and phrases, that you would naturally use to search for a solution to those problems. Take note of those keywords because they will be very valuable later when you work on your marketing strategy. If you’re planning on launching a physical product, you’ll also want to search Amazon because it’s the largest eCommerce platform of all time and growing at a staggering rate. While Google still has about 2x more product searches than Amazon, Amazon has about 2x more sale conversions than Google. Buying intent is everything in eCommerce, and business in general, and so you have to look where people are buying, not just where they’re looking the most.

The key competitive information to compile a good competitive search are:

 

  1. Features

  2. Pricing

  3. Distribution

  4. Market Exposure

  5. Reviews

 

Let’s dig into each one of these key components to understand its impact on the market research process.

1. Features

When you’re trying to determine where your product fits into a particular market you have to have a deep understanding of your competition. There are several attributes that are most important to take note of. One of those attributes is understanding the key features of the competitive products and services. Features give definition to products and services as they provide solutions to particular problems for customers. For example, let’s look at a Vertical Freestanding Surfboard and Snowboard Rack from a company called Grassracks

Notable product features include:

 

  • 4 board capacity

  • Vertical board orientation for space efficiency

  • Freestanding so it does not need to be mounted on a wall

  • Pad on the base to protect the bottom of boards

  • No hardware and designed to assemble and disassemble in seconds

  • Packs flat for cost effective shipping and easy to move

  • Holes on vertical uprights to attach a bungee cord to and secure boards

  • Made from eco-friendly and super strong bamboo

  • Finished with a VOC-free material that’s eco-friendly and protects the product

 

When you first looked at the product you may have just thought, looks nice, but really not to much going on there. It’s easy to overlook a lot of the features of a product like this because they’re not necessarily obvious, but they have a big impact on the positioning of the product in the board storage market. 

 

While your product can have similar features to existing products, it should have new or improved features to give it distinct advantages over the competition. During this part of market research you should make sure to really understand the features of your competition because you may discover that the product or service you want to bring to market really doesn’t do anything all that differently than your competition. In that case you should redefine the concept of your product or service so it fits at least one feature gap that other products are missing.

2. Pricing

Pricing a product or service correctly is one of the most misunderstood components of creating good product-market fit. It doesn’t have to be a race to the lowest price where a product’s only competitive advantage is price and where it’s a constant battle between competitors to keep their price the lowest on the market. That tends to be more of a tactic with commodity products where just about every competitive product is the same, leaving the only differentiating attributes as branding and cost.

 

Instead, if a product or service can differentiate itself with better features (benefits) than the competition then they can be priced higher because there’s more value to the consumer. So when doing competitive pricing analysis it’s important to weigh both features and pricing at the same time so you’re comparing apples to apples as much as possible. While you can charge more for higher valued features, don’t get carried away with increasing the cost to the point where customers aren’t willing to pay what you’re charging even if they do get a better product. Because cost and benefits are inversely related, the following equation roughly defines how to calculate the value proposition of a product or service:

 

Value = Benefits / Cost

If benefits increase and the cost stays constant, the value increases. If benefits and cost increase at the same rate, the value stays constant. If benefits stay constant and the cost increases, the value decreases.

3. Distribution

Another competitive attribute that’s important to consider is distribution. In other words, how a business delivers their product or service to customers. There are a few reasons why this is helpful to know. For one thing, distribution gives you an idea of how much traction a particular product or service has and therefore how difficult it will be to compete with them. If you’re developing a portable point and shoot camera, you’ll come across GoPro in your market research. You’ll find out that they sell online through their website, online dealers such as Amazon, and in brick and mortar retailers such as Best Buy. Big box retailers like Best Buy are difficult to get a product into, and maintaining shelf space indicates the product is successful with excellent market exposure. 

 

Another reason competitive distribution is helpful to know is because it gives a good indication of where your target audience is buying similar products. If a competitive product sells on a niche online dealer site then it’s likely your product will be a good fit for that online dealer.

 

Distribution Channels:

  • Website

  • Large Online Dealers – Amazon, Etsy, Wayfair, Etc.

  • Niche Online Dealers – Market Specific

  • Brick-and-Mortar Retailers – Target, Walmart, Best Buy, Etc.

 

The distribution of products, and especially services, can also include sources that are redirecting traffic to products instead of re-selling them. These promotional channels, referred to as affiliates, create additional exposure for products and services. Companies can pay for this kind of redirection of traffic but it can also come from organic non-paid content. This brings us to how you determine market exposure and get a feel for how much traction a company is getting with their product or service.

 

Referral Traffic Sources:

  • Product Review

  • Product Demo

  • Social Media Influencers

  • Customer Generated Content

4. Market Exposure

Market exposure or market penetration is an indicator of how well known a product or service is and how much sales traction it has gotten in the market. Products that sell through Big Box retailers tend to have excellent market exposure. However, just because a product only sells on the company’s website and not in large retailers, doesn’t mean they don’t have good traction and exposure. One way to get a feel for market exposure for a product you need to look at the amount of content that has been created for the product or service in the form of product write-ups, pictures, and video. This content can be created by the company itself, affiliate partners, media outlets, etc. The more content generated the more exposure and traction a product or service is likely to have.

 

You can also look at key performance indicators (KPI’s) like page views and page rank using tools such as SEMrush. Quantity of reviews on Amazon, the product website, and Google can give you a feel for how well a product is selling. To get a more detailed understanding of online product sales trends you can use a tool like Jungle Scout

 

Another way to determine how well a product is distributed and how successful it’s been is by looking at how many brick-and-mortar retailers it’s being sold in and how long it’s been in retail distribution. That’s because the longer the product stays on the shelf, the more likely it is that the product is selling successfully enough to justify this kind of distribution.

5. Reviews

Don’t think that because this is at the end of the list that it’s the least important. It’s super important to pay attention to the reviews of competitors. If you look close enough, customers are telling you exactly what they want or need by explaining how amazing a particular product or service is, or by expressing their frustration about why that product or service lacks certain features that they’d prefer.

 

The better the reviews, the more competitive another product or service is. But you can still find nuggets of gold in the 1 star reviews if customers are willing to share constructive criticism and genuine feedback about exactly what features they’re looking for. That allows you to identify gaps in the market and opportunities to deliver a product that will be met with high demand. 

 

5 star reviews also reveal helpful information because they are likely to contain exactly what customers like. That’s important because when considering features of your product or service you don’t want to drastically change what’s already been proven to work unless you know for sure that the new features you’re going to develop are just as good or better than the competition.

 

Be careful not to make decisions based on just a couple reviews. Instead, look for common themes where it becomes more clear that there is a real need for a particular product or service.

Want to launch your own physical product or mobile app?

Step 2 – Create an Ideal Customer Profile

Target Customer Attributes

Now that you’ve sized up your competition, it’s time to define your ideal customer. Where do they shop, what are the interests and frustrations, etc.? Knowing your customer and how to target them is so important but often underestimated. Noteworthy customer attributes are:

 

  • Age

  • Gender

  • Location

  • Income Level

  • Cost Sensitivity

  • Interests

  • Hobbies

Disregarding any of these attributes can completely screw up your marketing strategy and waste a ton of time and money focusing on the wrong target market. If and when you run ads to drive traffic and build awareness you’ll need to know your customer so well that you dream of them. Ok, hopefully your dreams are more interesting than ideal customer profiles, but the point is know and understand them well! 

 

Imagine targeting premium, chemical free tampons to men. You probably won’t have much luck, besides the odd hockey player who needs something to keep nose bleeds at bay. That’s a bit of an extreme example, but for something more subtle, imagine targeting the same tampons to someone who is sensitive to cost and who may not be interested in a premium tampon even if it is healthier. That’s another mismatch and it’ll miss the mark for that customer. That’s not the description of an ideal customer so you’re much less likely to sell to them. However, when you find the woman (gender) who is happy to pay a premium (cost sensitivity) for a premium product then you have a much higher chance of being successful.

Market Segmentation

Market segmentation is the organization of customers into groups based on similar attributes. In general, each customer in a particular group is likely to respond the same way to certain products and services, which helps marketers efficiently connect with large groups of people with a single marketing campaign.

 

This is the next step in understanding your customers because by segmenting your ideal customer base, you can target each group in a more efficient and effective way. It allows you to think beyond a one dimensional market and connect with all of your customers in a more personalized way. The exercise of creating customer segments may also help you broaden your target market and build a more comprehensive marketing strategy.

 

For an example, let’s get back to the Grassracks Freestanding Surfboard Rack we talked about earlier. The product accommodates both surfboards and snowboards. So we could say that the ideal customer is someone who both surfs and snowboards and the product could be marketed as a surfboard/snowboard rack. While that’s ok on product pages, it would be much more effective to have targeted messaging to surfers and snowboarders separately. That way, because it has multiple functions, each customer segment can be connected with the product in a unique way that’s much more likely to convert to sales. 

 

You could also go the other way and make the assumption that if someone surfs or snowboards they do both activities and so the product could be marketed as only a surfboard rack or a snowboard rack to both segments. That could also miss the mark because not all surfers snowboard, and vice versa.

 

It’s best to identify different segments that are each likely to respond to different feature or functionality sets of a product. In this example you’d target the surfboard storage functionality to the surfer segment, and the snowboard storage functionality to the snowboarder segment. That ensures members of each segment are properly and completely served.

Attention! – Where are Your Ideal Customers Hiding?

At this point, if you’re following along, you’ve identified your ideal customer profile and what unique segments you have within your target audience. So where are these awesome people and how do you reach them in a financially sustainable way? That’s the million dollar question, literally. If you have a great product that solves a real problem, and you can put that product in front of an ideal, target audience, and then convert sales while making a healthy margin you will absolutely be successful. It’s as simple as that, but of course, easier said than done.

 

Here are a few places you can start searching to find where your target audience spends the most time:

 

If you can’t find your target audience engaging with at least 2-3 of those platforms, you either don’t have a good understanding of who your target audience is, or you don’t have a solid enough audience to market your product or service to. 

 

How do you capture your target audience’s attention most cost effectively? You don’t need to run expensive ads to be found, but you do have to engage your audience. When you find out where they are, interact with them. Find out as much as you can about their interests and buying habits. Trust is the foundation of any customer relationship and you have to constantly be working on building and maintaining trust. It’s so important and often overlooked by new and even established brands. 

 

Pro Tips:

 

  • Don’t be shy, engage with your target audience.

  • Don’t be too salesy.

  • Use your expertise in your market to offer some free help, if possible.

Step 3 – Conduct a Feasibility Study – Preliminary Development and Marketing Strategies

At this point you could do an in-depth development strategy and marketing strategy, but for now let’s just focus on determining generally how difficult it will be to develop and market your product. For this you’ll have to have a working knowledge of the product development process, manufacturing, and the marketing process.

 

To work through the feasibility study of a new product you have to ask yourself a few questions including:

 

  • What are the steps to design, engineer, and manufacture your product and what is the associated cost? Is the cost of goods sold (COGS) likely to be higher than 25% to 50% of what the product or service is sold to the consumer for (retail cost)?

  • Are there any significant technological hurdles to overcome in developing and manufacturing your product?

  • Are development and manufacturing resources readily available?

  • Is there likely to be a large minimum order quantity required, either imposed by manufacturing, or so that you can be cost competitive with your competition?

  • How competitive is the market? Do you have to compete and win against giants just to survive, or is the barrier to a successful, sustainable business much lower and more attainable?

If you’re a visual learner like myself, you’ll probably appreciate an example to help paint a better picture of what I’m talking about here:

 

Feasibility Study Example 1 – New Battery Product:

 

  • What are the steps to design, engineer, and manufacture your product and what is the associated cost? Is the cost of goods sold (COGS) likely to be higher than 25% to 50% of what the product or service is sold to the consumer for (retail cost)?

    • Develop the new product from scratch or work with an existing battery manufacturer.

    • High development and manufacturing tooling/setup costs.

    • The retail cost is likely to be low so a serious effort will be required to get the COGS low enough for the product to be successful.

  • Are there any significant technological hurdles to overcome in developing and manufacturing your product?

    • Highly specialized technology which makes it difficult to develop something new from scratch.

    • Likely difficult to work with existing manufacturers unless you license IP to them.

  • Are development and manufacturing resources readily available?

    • Yes but they’re not readily available and they’re not easy to access.

  • Is there likely to be a large minimum order quantity required, either imposed by manufacturing, or so that you can be cost competitive with your competition?

    • Yes, there would probably be a very large minimum order quantity to have new or existing manufacturers produce the product.

    • It would also probably be necessary to produce in high volume to drive the cost down and be competitive in the market.

  • How competitive is the market? Do you have to compete and win against giants just to survive, or is the barrier to a successful, sustainable business much lower and more attainable?

    • Commodity product but with specialized production sources.

    • Highly competitive market with well established competition.

    • It would be difficult to be small and survive so competing and winning against giants would likely be the only way to gain enough traction to overcome the development and manufacturing costs.

Feasibility Study Example 2 – Grassracks Surfboard and Snowboard Display Rack:

 

  • What are the steps to design, engineer, and manufacture your product and what is the associated cost? Is the cost of goods sold (COGS) likely to be higher than 25% to 50% of what the product or service is sold to the consumer for (retail cost)?

    • Can be designed from scratch with reasonable effort.

    • Development and manufacturing costs are relatively low.

    • It should be reasonable to get the COGS below 50% of the retail cost.

  • Are there any significant technological hurdles to overcome in developing and manufacturing your product?

    • There are no significant technological hurdles.

  • Are development and manufacturing resources readily available?

    • Yes, but it will likely be difficult to find a manufacturer who can produce quality parts in low quantity, at the right cost.

  • Is there likely to be a large minimum order quantity required, either imposed by manufacturing, or so that you can be cost competitive with your competition?

    • Large quantities are always helpful for manufacturers and to help drive the cost down, but in this case it may not be necessary to produce high volumes to enter the market and be competitive.

  • How competitive is the market? Do you have to compete and win against giants just to survive, or is the barrier to a successful, sustainable business much lower and more attainable?

    • There are several competitors but it’s reasonable to compete with them and win customer trust and market share.

Asking these questions will help you to quickly determine if your product is worth pursuing or if you might want to pick something a little more attainable to start with. The more experience you have with a new product launch, the more comfortable you’ll be to take on more complex development and marketing challenges. 

 

Ideal Product Selection Pro Tips:

  • Small in size but high perceived value.

  • Easy and cheap to ship.

  • Low cost of goods (COGS should ideally not be more than 25% of retail cost).

  • High lifetime value with a consumable element in order to make money on a regular or subscription basis.

  • Solves a real problem that many people have often.

  • Significantly better than competitive products.

By the way, good Software as a Service (SaaS) products often check off most or all of the ideal product selection checklist, and that’s one of the reasons so many billion dollar companies are popping up in that sector. SaaS products are typically apps or software that assist a business or consumer with a particular task on a regular basis.

 

When determining what kind of product you’d like to bring to market, consider both physical products and SaaS and find something that can help customers solve their problems. At the end of the day solving problems and helping people is what this is all about. If you do that with a sustainable business model and cost effective marketing then you will be successful!

Final Thoughts

  • Do your due diligence with in-depth market research to record as much knowledge about your competitors as you can.

  • Lean about your customers and create an ideal customer profile so you can properly segment and target them wherever they spend most of their time.

  • Perform a feasibility study to determine the difficulty level of bringing your product or service to market.

Want to launch your own physical product or mobile app?

What is Market Research and Why is it Important for Your Business?

The most important thing you can do for your new business idea is to conduct in-depth market research. In this article we’ll explain why.

In this article you’ll discover the key components of market research, and why it’s essential for any business.

What is Market Research?

Market research is the study of existing markets to evaluate products and services, and to identify and segment customers within those markets. Market research is typically used to determine exactly where and how a new product or service can fit into a market and provide value to a particular group of customers.

When starting a new business the absolute first thing you should do is market research. You can save so much time and money during the product launch process by sizing up potential competition for your business, and by doing everything you can to understand the customers who may purchase your product or service. So let’s go over the market research process and key components that make up a great market research analysis.

Step 1 – Competitive Search

Start by thinking of the problems that your product or service solves. Now search on Google using as many keywords you can think of, including questions and phrases, that you would naturally use to search for a solution to those problems. Take note of those keywords because they will be very valuable later when you work on your marketing strategy.

If you’re planning on launching a physical product, you’ll also want to search Amazon because it’s the largest eCommerce platform of all time and growing at a staggering rate. While Google still has about 2x more product searches than Amazon, Amazon has about 2x more sale conversions than Google. Buying intent is everything in eCommerce, and business in general, and so you have to look where people are buying, not just where they’re looking the most.

The key competitive information to compile a good competitive search are:

Let’s dig into each one of these key components to understand its impact on the market research process.

1.Features

When you’re trying to determine where your product fits into a particular market you have to have a deep understanding of your competition. There are several attributes that are most important to take note of. One of those attributes is understanding the key features of the competitive products and services. Features give definition to products and services as they provide solutions to particular problems for customers. For example, let’s look at a Vertical Freestanding Surfboard and Snowboard Rack from a company called Grassracks.

Notable product features include:

When you first looked at the product you may have just thought, looks nice, but really not to much going on there. It’s easy to overlook a lot of the features of a product like this because they’re not necessarily obvious, but they have a big impact on the positioning of the product in the board storage market

While your product can have similar features to existing products, it should have new or improved features to give it distinct advantages over the competition. During this part of market research you should make sure to really understand the features of your competition because you may discover that the product or service you want to bring to market really doesn’t do anything all that differently than your competition. In that case you should redefine the concept of your product or service so it fits at least one feature gap that other products are missing.

2. Pricing

Pricing a product or service correctly is one of the most misunderstood components of creating good product-market fit. It doesn’t have to be a race to the lowest price where a product’s only competitive advantage is price and where it’s a constant battle between competitors to keep their price the lowest on the market. That tends to be more of a tactic with commodity products where just about every competitive product is the same, leaving the only differentiating attributes as branding and cost.

Instead, if a product or service can differentiate itself with better features (benefits) than the competition then they can be priced higher because there’s more value to the consumer. So when doing competitive pricing analysis it’s important to weigh both features and pricing at the same time so you’re comparing apples to apples as much as possible.

While you can charge more for higher valued features, don’t get carried away with increasing the cost to the point where customers aren’t willing to pay what you’re charging even if they do get a better product. Because cost and benefits are inversely related, the following equation roughly defines how to calculate the value proposition of a product or service:

Value = Benefits / Cost

If benefits increase and the cost stays constant, the value increases. If benefits and cost increase at the same rate, the value stays constant. If benefits stay constant and the cost increases, the value decreases.

3. Distribution

Another competitive attribute that’s important to consider is distribution. In other words, how a business delivers their product or service to customers. There are a few reasons why this is helpful to know. For one thing, distribution gives you an idea of how much traction a particular product or service has and therefore how difficult it will be to compete with them. If you’re developing a portable point and shoot camera, you’ll come across GoPro in your market research.

You’ll find out that they sell online through their website, online dealers such as Amazon, and in brick and mortar retailers such as Best Buy. Big box retailers like Best Buy are difficult to get a product into, and maintaining shelf space indicates the product is successful with excellent market exposure.

Another reason competitive distribution is helpful to know is because it gives a good indication of where your target audience is buying similar products. If a competitive product sells on a niche online dealer site then it’s likely your product will be a good fit for that online dealer.

Distribution Channels:

The distribution of products, and especially services, can also include sources that are redirecting traffic to products instead of re-selling them. These promotional channels, referred to as affiliates, create additional exposure for products and services. Companies can pay for this kind of redirection of traffic but it can also come from organic non-paid content. This brings us to how you determine market exposure and get a feel for how much traction a company is getting with their product or service

Referral Traffic Sources:

4. Market Exposure

Market exposure or market penetration is an indicator of how well known a product or service is and how much sales traction it has gotten in the market. Products that sell through Big Box retailers tend to have excellent market exposure. However, just because a product only sells on the company’s website and not in large retailers, doesn’t mean they don’t have good traction and exposure.

One way to get a feel for market exposure for a product you need to look at the amount of content that has been created for the product or service in the form of product write-ups, pictures, and video. This content can be created by the company itself, affiliate partners, media outlets, etc. The more content generated the more exposure and traction a product or service is likely to have.

You can also look at key performance indicators (KPI’s) like page views and page rank using tools such as SEMrush. Quantity of reviews on Amazon, the product website, and Google can give you a feel for how well a product is selling. To get a more detailed understanding of online product sales trends you can use a tool like Jungle Scout.

Another way to determine how well a product is distributed and how successful it’s been is by looking at how many brick-and-mortar retailers it’s being sold in and how long it’s been in retail distribution. That’s because the longer the product stays on the shelf, the more likely it is that the product is selling successfully enough to justify this kind of distribution

5. Reviews

Don’t think that because this is at the end of the list that it’s the least important. It’s super important to pay attention to the reviews of competitors. If you look close enough, customers are telling you exactly what they want or need by explaining how amazing a particular product or service is, or by expressing their frustration about why that product or service lacks certain features that they’d prefer.

The better the reviews, the more competitive another product or service is. But you can still find nuggets of gold in the 1 star reviews if customers are willing to share constructive criticism and genuine feedback about exactly what features they’re looking for. That allows you to identify gaps in the market and opportunities to deliver a product that will be met with high demand.

5 star reviews also reveal helpful information because they are likely to contain exactly what customers like. That’s important because when considering features of your product or service you don’t want to drastically change what’s already been proven to work unless you know for sure that the new features you’re going to develop are just as good or better than the competition.

Be careful not to make decisions based on just a couple reviews. Instead, look for common themes where it becomes more clear that there is a real need for a particular product or service

Want to launch your own physical product or mobile app?

Step 2 – Create an Ideal Customer Profile

Target Customer Attributes

Now that you’ve sized up your competition, it’s time to define your ideal customer. Where do they shop, what are the interests and frustrations, etc.? Knowing your customer and how to target them is so important but often underestimated. Noteworthy customer attributes are:

Disregarding any of these attributes can completely screw up your marketing strategy and waste a ton of time and money focusing on the wrong target market. If and when you run ads to drive traffic and build awareness you’ll need to know your customer so well that you dream of them. Ok, hopefully your dreams are more interesting than ideal customer profiles, but the point is know and understand them well!

Imagine targeting premium, chemical free tampons to men. You probably won’t have much luck, besides the odd hockey player who needs something to keep nose bleeds at bay.

That’s a bit of an extreme example, but for something more subtle, imagine targeting the same tampons to someone who is sensitive to cost and who may not be interested in a premium tampon even if it is healthier. That’s another mismatch and it’ll miss the mark for that customer. That’s not the description of an ideal customer so you’re much less likely to sell to them. However, when you find the woman (gender) who is happy to pay a premium (cost sensitivity) for a premium product then you have a much higher chance of being successful.

Market Segmentation

Market segmentation is the organization of customers into groups based on similar attributes. In general, each customer in a particular group is likely to respond the same way to certain products and services, which helps marketers efficiently connect with large groups of people with a single marketing campaign.

This is the next step in understanding your customers because by segmenting your ideal customer base, you can target each group in a more efficient and effective way. It allows you to think beyond a one dimensional market and connect with all of your customers in a more personalized way. The exercise of creating customer segments may also help you broaden your target market and build a more comprehensive marketing strategy.

For an example, let’s get back to the Grassracks Freestanding Surfboard Rack we talked about earlier. The product accommodates both surfboards and snowboards. So we could say that the ideal customer is someone who both surfs and snowboards and the product could be marketed as a surfboard/snowboard rack. While that’s ok on product pages, it would be much more effective to have targeted messaging to surfers and snowboarders separately. That way, because it has multiple functions, each customer segment can be connected with the product in a unique way that’s much more likely to convert to sales. 

You could also go the other way and make the assumption that if someone surfs or snowboards they do both activities and so the product could be marketed as only a surfboard rack or a snowboard rack to both segments. That could also miss the mark because not all surfers snowboard, and vice versa.

It’s best to identify different segments that are each likely to respond to different feature or functionality sets of a product. In this example you’d target the surfboard storage functionality to the surfer segment, and the snowboard storage functionality to the snowboarder segment. That ensures members of each segment are properly and completely served.

Attention! – Where are Your Ideal Customers Hiding?

At this point, if you’re following along, you’ve identified your ideal customer profile and what unique segments you have within your target audience. So where are these awesome people and how do you reach them in a financially sustainable way? That’s the million dollar question, literally. If you have a great product that solves a real problem, and you can put that product in front of an ideal, target audience, and then convert sales while making a healthy margin you will absolutely be successful. It’s as simple as that, but of course, easier said than done.

Here are a few places you can start searching to find where your target audience spends the most time:

If you can’t find your target audience engaging with at least 2-3 of those platforms, you either don’t have a good understanding of who your target audience is, or you don’t have a solid enough audience to market your product or service to. 

How do you capture your target audience’s attention most cost effectively? You don’t need to run expensive ads to be found, but you do have to engage your audience. When you find out where they are, interact with them. Find out as much as you can about their interests and buying habits. Trust is the foundation of any customer relationship and you have to constantly be working on building and maintaining trust. It’s so important and often overlooked by new and even established brands.

Pro Tips:

Step 3 – Conduct a Feasibility Study – Preliminary Development and Marketing Strategies

At this point you could do an in-depth development strategy and marketing strategy, but for now let’s just focus on determining generally how difficult it will be to develop and market your product. For this you’ll have to have a working knowledge of the product development process, manufacturing, and the marketing process.

To work through the feasibility study of a new product you have to ask yourself a few questions including:

If you’re a visual learner like myself, you’ll probably appreciate an example to help paint a better picture of what I’m talking about here:

Feasibility Study Example 1 – New Battery Product:

What are the steps to design, engineer, and manufacture your product and what is the associated cost? Is the cost of goods sold (COGS) likely to be higher than 25% to 50% of what the product or service is sold to the consumer for (retail cost)?

Are there any significant technological hurdles to overcome in developing and manufacturing your product?

Are development and manufacturing resources readily available?

Is there likely to be a large minimum order quantity required, either imposed by manufacturing, or so that you can be cost competitive with your competition?

How competitive is the market? Do you have to compete and win against giants just to survive, or is the barrier to a successful, sustainable business much lower and more attainable?

Feasibility Study Example 2 – Grassracks Surfboard and Snowboard Display Rack:

What are the steps to design, engineer, and manufacture your product and what is the associated cost? Is the cost of goods sold (COGS) likely to be higher than 25% to 50% of what the product or service is sold to the consumer for (retail cost)?

Are development and manufacturing resources readily available?

Are development and manufacturing resources readily available?

Is there likely to be a large minimum order quantity required, either imposed by manufacturing, or so that you can be cost competitive with your competition?

How competitive is the market? Do you have to compete and win against giants just to survive, or is the barrier to a successful, sustainable business much lower and more attainable?

Asking these questions will help you to quickly determine if your product is worth pursuing or if you might want to pick something a little more attainable to start with. The more experience you have with a new product launch, the more comfortable you’ll be to take on more complex development and marketing challenges

Ideal Product Selection Pro Tips:

By the way, good Software as a Service (SaaS) products often check off most or all of the ideal product selection checklist, and that’s one of the reasons so many billion dollar companies are popping up in that sector. SaaS products are typically apps or software that assist a business or consumer with a particular task on a regular basis.

When determining what kind of product you’d like to bring to market, consider both physical products and SaaS and find something that can help customers solve their problems. At the end of the day solving problems and helping people is what this is all about. If you do that with a sustainable business model and cost effective marketing then you will be successful!

Final Thoughts

Want to launch your own physical product or mobile app?