Do you have an idea for a product? Maybe you’ve already sketched it out and have even started prototyping. Are you wondering if your concept could sell and turn into a profitable business venture? To help you determine if it’s worth pursuing, here are six factors to consider when initially evaluating the viability of your next product idea.
6 Factors to Consider Before Bringing Your Concept to Mass Market
You have a product idea—great! How do you know if it’s one that will actually sell, and grow the legs to turn into a business? Developing a new product from concept to market is a considerable endeavor, leaving many unsure where to begin. Before you jump into the time-consuming and expensive processes of product design, engineering, prototyping, and manufacturing, consider these six factors to make the most of your idea.
1. Is there a need?
Is there a need for your product? If so, what kind of need is it? Is it a necessity or a nice-to-have? It’s obvious to see why necessary products, such as personal protective equipment, sell so well in the midst of a pandemic. On the flip side, entertainment products, which improve quality of life, are important to consumers, too. Just bear in mind that non-essential solutions don’t always translate into viable consumer products since they are more unpredictable than other, essential product categories and business-to-business offerings.
Do people know they need it?
Do people know that they need this? If not, does this product help them solve a problem they didn’t know they had? Or maybe it’s an issue they’d given up trying to solve? These kinds of ideas create market opportunities, which are great due to the lack of direct competition. Still, you’ll have to think about how you’d get the word out about a new product that’s the first of its kind, which might require a more creative marketing approach. To encourage people to buy never-before-seen products, they should be easily understood, have an aesthetic, ergonomic design, and not call for a complete lifestyle change.
Is it a need people are searching for?
Alternatively, maybe the need for this product isn’t new at all, but something people actively search for. In this case, it’s often more straightforward to target marketing efforts to your customers, but you’ll likely face a higher level of direct competition with products already in the market. You will need to clearly differentiate how your product provides a better solution to their pain point than others do.
2. Does your product idea already exist?
Once you’ve identified a strong need, you should do research and determine whether or not similar products to yours are already on the market. A search must encompass not only products that look or perform similarly but those that might serve the same purpose and appeal to the same consumers.
How can you improve existing products?
For a market researcher, a session in front of a search engine or an online survey will just be the beginning. When you identify a similar product, investigate where it’s being sold, and to whom. You should also deconstruct how it works and how its functions could be improved.
3. How many people would benefit?
How many people would benefit from your product? In other words, what is the maximum potential number of sales you could attain every year if you captured 100% of the market? This question will require market research to not only pinpoint an approximate number of consumers but also to determine the rate at which consumers would purchase. When calculating the total size of the market for your product, try to avoid going too niche so as not to miss any potential market opportunity. Is there a way for your product to appeal to more than one type of audience?
4. Who are your competitors?
What does the competitive landscape look like for your product? Can you identify a unique angle or a way to sell this product that your competitors haven’t yet recognized? How do you go about stealing market share? How much of that market can you realistically capture? (Hint: 1-2% is a common figure used by angels and venture capital firms when creating financial projections for new consumer products). Even if you can get a half of a percent of market share, that might be worth investing, depending on expected revenue and expenses.
Is your competitor a mindset?
Keep in mind, it’s often the case that your largest competition won’t be another product at all. Rather, you’ll need to compete with the established way people have always filled the need, even if your product is clearly better. The mindset of, “Well, I’ve just always done it this way, why should I change now?” can be a formidable adversary, and you’ll want to have a strong, concise answer to that question.
5. How will you make it profitable?
First, how much would you charge for your product? How much are people willing to spend to make the problem go away? If directly competitive products exist in the market, you can look at their price points to determine how much your target customer will likely pay.
What is your revenue model?
What does your revenue model look like? Regardless of the actual numbers, the ratio of expenses to revenue must look promising. Let’s say you’re developing a new smartwatch. While you might be able to charge a pretty penny for each product, the engineering, manufacturing and marketing costs would be so expensive that you probably wouldn’t profit until years later. Keep in mind how much you’re willing to invest as well as how long you’re willing to wait until the break-even point.
Would you consider crowdfunding?
If you don’t have sufficient funds to complete the product development and manufacturing process on your own, could you use Kickstarter to finance certain elements of production and startup marketing? Here’s what to consider before crowdfunding your idea.
How can you generate recurring revenue?
If you plan to turn your product idea into a long-term business model, how can you obtain recurring revenue? Is your product something you can expand upon? If your product solves a single problem, then you have an opportunity to modify it and create enhanced versions based on user feedback. Likewise, if your product has multiple use cases or features, then you may have an opportunity to launch a whole line of products within that same category. Consider what kinds of product modifications can reinvigorate sales and what those changes will cost.
6. What is your marketing strategy?
What does your marketing strategy look like? Are you selling your product to other businesses or directly to consumers? If your product is software or an app, will you lure users in with a freemium business model, which offers the basic features for free and then charges for upgrades?
What marketing channels will you use?
How will you deliver your messages? Will it be in-person, in print or online? Will your strategy include digital tactics like email marketing, social media marketing, influencer marketing, or content marketing? How will you be managing day-to-day customer relationships? Are you planning on doing any PR? Would you advertise on social media or search engines? Depending on where you advertise and who your competitors are, acquisition costs can get pretty high. To make the best return on advertising spend (ROAS), we recommend testing your ads—as well as emails, web pages and pop-ups—so you know what messaging resonates best with your audience.
Will you invest in quality content?
Would you need professionally shot images and videos? Are you planning on creating a website, publishing a blog or using an Amazon listing? Since these can be reused throughout your marketing, it isn’t a bad idea to invest in high-quality assets, especially in the beginning when you’re trying to prove your product and business’ legitimacy.
When answering these questions, you should start online. Look up everything you can on your target market as well as relevant examples to your product, ideally in the form of case studies. How did they go about developing, manufacturing and marketing their product, and what were their costs? It’s also a good idea to look up the industry and any current events that might improve or inhibit your product’s ability to sell.
Challenge your own assumptions.
It’s also critically important to challenge your own assumptions as early and as often as possible. You may think you know what your customers want. But do you? Get out and talk to people about it (with non-disclosure agreements in place, if necessary). The book Talking to Humans by Giff Constable is a great introduction to how to do this. Furthermore, don’t assume your idea will be straightforward to an engineer and a manufacturer. Advise with a product development firm like Enventys to find out what it would realistically take—oftentimes the simplest concepts can be quite complex in practice.
Remember it’s always a risk.
Keep in mind that no matter how much you research, investing in a business venture will always be risky. You will never get 100% of the information you need and you probably won’t be able to calculate exact estimates for each of the above questions. Still, it will help you weigh the viability of your product idea and determine if it’s worth your time and investment.
Enventys Partners Can Help
You shouldn’t bring a product to market based on a feeling or a hunch. You must put in the research and proper due diligence before jumping into product development, manufacturing, and beyond. If you need help evaluating your product idea, reach out to Enventys Partners. For twenty years, we’ve been helping entrepreneurs like you grow their ideas into profitable companies.
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