Market Validation Part 1: Discovering Customer Preferences

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When you have a new product or service to sell, it can be very easy to assume that it will be welcomed into the market, and make lots of money. However, sometimes we don’t want to acknowledge that our assumptions and perceptions might not reflect reality.

So how can businesses avoid this painful and expensive lesson, and check that their new product or service will succeed?

Market validation is about determining whether your new product or service will solve a problem better than anyone else. This is how you will make money. It’s as simple as that.

So, how do you find out whether your new product or service will sink or swim? It is crucial that you can identify who your potential customers are, and where they are. If your new product or service is for existing customers, then talk to them first. They may buy your new product or service, and are the
easiest people to sell to, as you already have a relationship with them. You could ask them:

•   How’s business?

•   What are their biggest challenges in the next year?

•   What will be ‘new’ in their business - industries, export plans, clients, technology, legislative changes, etc.

•   What would be their perfect new product or service?

•   What do they like (or not like) about your existing products or services?

•   If they have some of your competitor’s products or services, what features do they like or not like about them.

Other great people to talk to are your staff, distributors and suppliers. You can make really good use of the existing relationships you have to find out how well your product will be received.

Be an open and active listener, and don’t just talk about your product or service to the same old people that you always do. Hands-on people using products and services often have a dramatically different view than those in a design team or in management.

Fight the urge to immediately squash comments that don’t sit right with you. If you are going to sink money and time into developing a new product or service, don’t hold on to your biases. Write down what information you have gathered. It’s harder to ignore reality when it’s written down.

Now you will have an understanding of what potential buyers of your product or service think of their business, the marketplace and new offering. Does it match up with your perceptions? Can you use this information to make your product better and more attractive to buyers? Are there buyers for the product or service that will warrant the time and money needed to take things further?

If this all stacks up, then we can move on to another burning question that businesses often want to know - is someone else planning to launch or supply the same new product or service? I’ll show you how you can research this next week.