In the world of Hollywood, filmmakers often screen varying versions of their latest film to select audiences. This practice, though resource-intensive, is their way of testing product viability – ensuring the final cut not only resonates with audiences, but will optimize box office returns. But what if you're a small business looking to release a new product or service, and not a major film studio producing the next blockbuster?
Though growing companies might not have the deep pockets or vast resources required to conduct Hollywood-scale testing, they too can navigate the complex process of determining product viability before launch. Creating a soundgo-to-market strategyis one way to get started, but it’s far from the only time- and cost-saving way to conjure a vision of the future.
Here are seven practical techniques small businesses can use to assess product market fit – before investing in the time and resources required to perfect it, market it, and sell it.
1. Test Whether the Product Will Sell
Product testing can be key to ensuring a product’s viability and enhancing its market appeal. Also known as consumer or comparative testing, it refers to the process of evaluating a product’s potential for success in the market before it’s launched. Will the product appeal to the right audience? Will it solve their problems?
There are several ways to test whether a product will sell. Here are a few strategies:
- Conductmarket researchto understand consumer behavior and trends (more on this below).
- Use preorders or crowdfunding to estimate demand (more on this below).
- A/B test to compare different product approaches.
- Analyze social media engagement around the product.
- Prototype test to get early user feedback.
While product testing won’t give you the exact results you can expect later on, you’ll at least be able to gauge whether there’s demand for your product. Remember: A successful product also depends on factors such as price, marketing, and customer service.
2. Engage with Potential Customers
Getting feedback from potential customers can be an effective way to achieve market fit. It’s also a good way to test demand for a product. Ask your target audience about what they need, what they want, how much they would be willing to pay for a product that meets those desires, how likely they would be to buy it, and what features they might suggest.
The more you can learn about customer needs, the better able you will be to design a successful product that meets those needs.
One way to engage with potential customers is through a survey, whether online, through email, on social media, or even in person. Pick the media that your target audience is most likely to engage with. Keep the survey short and simple with clear and concise questions, as this will help increase response rates.
3.Ask People to Consider Buying Now
Tallying preorders or crowdfunding pledges can be a useful product success metric, but it requires some initial confidence in your product design. With preorders and crowdfunding, you get to tell people about your new idea. But rather than asking if they’d buy your product at a later time, you’re giving them the chance to open their wallet right then and there. For example, if they like the idea, you might allow them to put 25% down to get the product upon release – eventually paying in full, of course.
Watch your potential customers’ actions. If they aren’t willing to put down some money, they're indicating they might not buy it. Tracking preorder and crowdfunding page views and conversion rates can help you judge actual interest.
4. Harness Insights Through Market Research
Conducting market research is a key step in determining product viability, product-market fit, and to test if a product will sell. This step may take some time and effort, but it helps reveal market trends, consumer demand, and competition – vital information for developing an effectiveproduct differentiation strategyand a successful product overall.
Here’s a brief guide to conducting market research:
- Define your objective.What do you want to learn – for example, market trends, competition, ideal pricing strategies, consumer preferences?
- Identify your target audience.Who are your potential customers?
- Choose your research method(s).Surveys, interviews, and focus groups are all great ways to connect with consumers, while data analysis and observation can be used to tap into market and economic trends.
- Collect data.Using your chosen research method, begin to collect data. If you’re using surveys, for example, distribute them to your target audience and begin to collect responses.
- Analyze data and apply findings.Identify any patterns, trends, or other key findings. Use this data to inform your product development, marketing, and pricing strategies.
5. Remain Positive
Determining product viability can be a challenging process filled with uncertainty and potential setbacks. A positive attitude focused on persevering can go a long way toward ensuring the success of your product or business. Why? Positivity can help maintain motivation and drive while fostering a willingness to adapt, learn, and improve. And, if you don’t believe in your offering and aren’t passionate about it, why should others be? Getting – and staying – in the right frame of mind can also encourage you and your teammates to surmount challenges even in the face of adversity.
Still, it’s important to balance positivity with realism. Being overly optimistic can lead to ignored risks or problems, and ultimately a lackluster product. Try to use positivity as a way to confidently and constructively adapt to necessary changes, not as a way to ignore harsh facts.
6. Become the Customer
If you don’t truly understand your target audience, how can you expect to deliver apositive customer experience? Don’t just focus on selling your customers something. Instead, put yourself in their shoes. This can help you see your product through a different lens and evaluate what it needs to deliver.
As mentioned above, engaging with customers and conducting market research can be effective ways to “become” the customer and improve product viability. Here are a few additional ways to empathize with the customer experience:
- Map the customer journey.Visualize the customer journey from initial awareness to final purchase and beyond. Identify each touchpoint and interaction at every stage to uncover pain points and better understand customer perspective along the way.
- Create customer personas.Based on customer and market research, develop fictional representations of target customers – complete with name, age, occupation, interest, and goals. Put aside your own biases and judgments to realistically connect with their emotions and challenges.
- Actively seek feedback.Gather feedback from current and potential customers through surveys, interviews, or social media engagement. Ask them to share their experiences, challenges, and suggestions.
- Read reviews for similar products.Look at competitor products. What do real users have to say about their experience with these products? Take note of gaps and opportunities that your company can fill, as well as what positive experiences customers have had. Use these insights to better understand customer experience and inform your own product decisions.
7. Conduct an Extensive Competitive Analysis
Competitive analysis is a strategy used to identify a company’s main competitors and their products, customers, sales, and marketing strategies. The goal is to understand the competition’s strengths and weaknesses to improve your own product and marketing strategies.
To conduct an extensive competitive analysis, first identify key competitors who are offering comparable products or services in the same target market. Examine their offerings carefully, taking note of features, benefits, pricing, and customer reviews. What are their marketing strategies and how are they engaging with customers? What about sales strategies? How do they sell products and where are they available? Lastly, assess the competitors’ strengths and weaknesses.
Gathering this information can help you release an offering that’s a good product-market fit, ultimately leading to greater product success and long-term viability.
Unlocking the Path to Product Success
Keep in mind that these seven tips are only guidelines. They can’t determine the viability of a product with absolute certainty, and no business owner can account for everything that can happen after a product is launched. However, these tips can clue you into whether or not your product will be a good fit for your market and whether customers are likely to be happy with your offering.
And remember: After launch, the path to product success requires regular reassessment of your competitors’ offerings, your target audience’s needs, and whether your customers are actually happy with the product. Success also requires a good pricing strategy, a differentiated product, and great customer service – especially if your business is selling in anoversaturated market.
The Bottom Line
It’s hard to predict whether your product will be a success. The good news is that there are several strategies that can help you get a better sense of what’s at stake before investing time and resources into developing a new offering. Before going to market, run some product tests, engage with customers, conduct a thorough competitive analysis, and gauge buy-in. These steps can provide valuable metrics that can help you release an offering that best suits your prospects’ needs. And even after launch, don’t rest on your laurels. Keep conducting market research and regularly step into your customers’ shoes to ensure the long-term viability of your product.
A version of this article was originally published on July 25, 2011.
Photo: Getty Images
