So you have what you believe is a great product or service idea. A few friends and family have told you they like your idea, but how do you know there’s a market for it? It takes having solid facts about consumer challenges, your competitors, and product and service trends to gauge whether your product or service is valuable enough to get people to open their wallets.
A significant percentage of startups create products and services without doing market research, and that’s why so many startups go out of business. Product-market fit describes the research that goes into honing in on a specific type of person and seeing whether they’re willing to pay for your product or service to solve their problem. You know if your product fits the market by:
- Pinpointing your value proposition
- Identifying your buyer persona
- Doing buyer persona interviews
- Scrutinising your competition
Pinpointing Your Value Proposition
It takes one sentence to sum up your value proposition. In that sentence, you should describe the result your target customer will experience by using your product or service. Remember, problems create emotional challenges for consumers, so your value proposition shouldn’t sell features. It should sell results.
For example, take the value proposition of global brand Adidas. The short sentence, “Impossible is nothing” speaks to the target customer, an athlete. Whether professional or amateur, athletes are driven by the desire to beat the odds and do the impossible again and again. Athletes are known to experience sadness when they fail to achieve the impossible. So whether striving for a personal-best time in a mini-marathon or practising the bicycle kick hundreds of times to get it just right for the next football match, the value proposition offered by Adidas is that wearing its gear makes the impossible possible.
Identifying Your Buyer Persona
Buyer persona refers to that ideal, ready-and-willing customer who needs your product and service so much that you don’t have to spend much time marketing to them. Though buyer persona is an imaginary character, sketching them out and giving them attributes is a powerful exercise that helps you understand who, in real life, is most likely to buy your product or service.
The exercise of sketching out your buyer persona is about figuring out their challenges and then seeing if your product or service can solve them.
Imagine, for instance, that you’ve invented a more comfortable construction boot for construction workers. Here, your buyer persona is a male in his 30s who works long hours at construction sites.
You need to sketch out the persona’s challenges and goals to get a sense of whether the style of boots you’re offering is going to help them address any of these issues. You also want to gain an understanding of what might cause your buyer persona to object to buying your product and make them gravitate toward your competitors.
Doing Buyer Persona Interviews
As a final step in understanding your product-market fit, you want to interview people who might be your ideal customer. Plan on this activity being exciting and potentially a lot of fun, because it’s where you find out whether you’re onto something big. The point of these interviews is to ask your ideal customers about their problems and offer your product or service as the solution. Here, you want to encourage the people you interview to tell you everything they like and don’t like about your product or service, and also whether they’d pay for it.
As you interview subjects, you want to avoid people who already like you, such as relatives and friends, because they won’t be able to provide the honesty needed for business purposes. Interviewing cold leads yields the best results, people who have no idea who you are or what you’re selling when you first meet. Continuing the construction boot example, you and your team would want to walk up to around 10 random construction workers, and ask them if they’d be willing to answer a few survey questions. Some of the survey questions you might ask include:
- Whether they’re using a competitor product
- What they like about the product
- What they don’t like about the product
- What they would change about it
You can also offer a list of your product features and ask interview subjects to rank them in order of importance.
Scrutinising Your Competition
Depending on your target market, you might use the internet to research your competitors. If you sell your product or service online, your competitors might also be online. Through breadcrumbs like search terms and reviews posted on social media sites, researching your competition online can reveal ideal customer challenges and how well your competitors are solving them.
Offline market research requires a different set of activities to understand your competitors. Some of the things you can do to gauge whether they’re meeting consumer needs include:
- Visiting competitor places of business during peak hours to observe consumer interactions with competitors
- Hiring a market research expert to talk to consumers about their challenges and whether competitors offer products and services to solve them
It’s important to study all the data you gather both online and offline, because again, not doing so could lead you to invest in a product or service that has no market.
At the end of the day, no market research is ever 100% foolproof, but product-market fit research can go a long way in ensuring a return on your investment and decent profits when bringing a new product or service to market.