If you are gearing up to launch a new product you should be getting answers to these 9 questions before you start investing time and money! This is split into two parts, and here in part 1 we’re focusing mainly on market research and deciding what your early product versions will include. (Read part 2 here).
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1. What is the target market for the product?
A ‘great idea’ isn’t enough. You need to know that there are customers out there who are going to want to buy it, and even if you find a solution to problems or wishes, that’s not a market. A market is a contactable group of individuals or businesses who have the budget for your product now. You should find your target groups and physically talk to them about your product idea, obtaining early feedback and confirmation that they would be willing to pay for it (the book ‘The Mom Test‘ will give you some ideas about how to get this information).
Also, not narrowing down the market is a common error. Selecting a specific segment of the market and focusing only on those people is more likely to lead to success rather than taking a more scattergun approach.
Trying to sell B2B and B2C at the same time is very difficult. It may be better to focus on mastering one method rather than diluting your attention and budget. Over time once you have market traction, doing both becomes more feasible. (01:22)
Doing market research.
Go out and find the target customers where they work or shop ad ask them questions. You may also use surveys and interviews to gain answers.
You need to observe the potential customers using current products on the market and ask about what they do most often, problems they have, any wishes they have, how often they use it, etc. Instead of unveiling your product’s key benefits and features, question the prospect about their needs to see if they align with them, otherwise, they might just blindly agree that your features ‘are cool’ but with no commitment from them leaving you with little benefit. If you get the answers to these questions from, say, 20 different businesses for example, and most of them confirm that they do have the problem/s that your product will solve, this helps confirm how feasible your product is before you’ve invested a lot of time and money into design, development, etc. (07:51)
2. What problem does the product solve for the customer?
In your early market research, you should consider the following points…
- Are you selling into a market where the aesthetics are really important or one where the product simply ‘doing its job’ is paramount? This shows the difference between functional vs. emotional utility. For example, some customers buy Tesla automobiles because they look good, are perceived to be eco-friendly, and feature the latest technology. That’s quite an emotional purchase because they could spend less on a regular internal combustion-engined vehicle which solves many of the same ‘problems.’ Products that are a mix of both emotional and functional utility, like this, tend to be winners, although not every product needs to look great. For instance, a photocopier needs to do its job, be reliable, be easy to repair quickly, available for leasing, etc. Not many customers are going to be too concerned about how it looks.
- Define who the customer actually is. Is it an individual, a business, or a specific person in a company? Speak to these people first and foremost as they’re your buyers.
- Is the product a vitamin or aspirin? The former is a product that has features that are nice to have but not essential or maybe is a luxury option that some customers may consider but aren’t necessarily actively looking for, whereas the latter treats the ‘headache’ and the customer is looking for a solution right now in this case. An example of a vitamin is a high-tech backpack with a lot of features. The customer might choose it once their old backpack is worn out, but it’s not a must for them; in many cases, they might just buy a similar replacement. Whereas an aspirin might be a powerful power bank charger for the laptop of a busy professional who is always on the go and can’t be without power for their laptop.
By defining the above points, you will reduce your risks of failure and of starting to design a product that later needs to be expensively redesigned or redeveloped as changes to its looks or functions are required and also increase the chances of higher sales and profits as you have a product that solves existing problems. (13:26)
3. What is the unique selling proposition of the product?
If you’ve done the market research to address the points already mentioned, your product’s USP should be becoming quite evident, and taking the time to find out what problems customers have naturally leads to a product that addresses the problems as its USP. It may be that it’s cheaper, specifically made for older users, has features that its competitors do not, is higher quality, etc. No matter what the USP is, if you’ve addressed questions 1 and 2 thoroughly, it will be clearer and you market with a laser focus on your target customers as opposed to many Chinese factories that just blindly launch a lot of products with small changes and see what turns out to be popular. (23:03)
4. What features and functionalities should the product have?
If it’s clear what your target market and the problems you’re solving are, the product features and functionalities should come naturally, but there are pitfalls for you to be aware of when launching a new product:
- Over-complicating V1.0 of the product – the temptation can be to cram in all of your good ideas into a new product and make it very feature-rich. But this quest for perfection can be counter-productive because it will slow down your launch and be more costly due to the extra development and components required among other things, right at the time when you need to be getting your first product onto the market, testing that it is popular with target customers, and selling to make money. A good example is the iPhone 1 which shipped without some basic functions like copy/paste. This didn’t stop it from being a runaway success, because the focus was on its USP of an all-glass display and easy-to-use OS. Apple later added functionality to future models, but that was once market traction had been gained.
- More complex products are less reliable – there is more to go wrong with a highly-customized product filled with many different components. They also take longer to develop, assemble, and will cost more to launch, as well as being more prone to quality issues due to the customization. These are not attractive issues to face for V1.0 of the product. Instead, devise a roadmap where you start to introduce more complex features in V2.0, 3.0, etc, over time, once you have started building up funds from the earlier versions selling.
- Focusing on a custom product design when something off-the-shelf would do – do you even need a unique custom design for V1.0? There is a lot to do to launch a new product, so maybe it’s better to choose an existing product that is mainly how your idea needs to be from an ODM manufacturer and make some modest changes for V1.0 such as making a unique enclosure only for your product and one or two specific features. This could be ready for production in as little as three months, whereas developing a new custom product from scratch would take around nine months and be far more costly. Again, this approach lets you get a product onto the market and test it with your target customers, as well as raise money for the next iteration without investing too much time and money into a custom product at an early stage.
Remember, V1.0 of the product allows you to get feedback from your target market, confirming that it exists, what it costs to get to those customers, who the customers are, what they like and dislike, etc. In V2.0 and beyond you can remove unpopular features and build in those that seem to be more liked/wanted now that you have a confirmed market and, hopefully, funds from initial sales for further product development. Don’t be ashamed of launching a new product with fewer features and functionalities than you intend to have in the future, it’s an agile way to test the market that is suited to smaller and emerging businesses that can take risks and launch something as a ‘beta test’ without fear of blowback (unlike the big brands who will receive stinging criticism for anything less than very polished). (26:57)