Do you know your product market?
Are you responsible for evaluating the market potential for a new product concept? Maybe you need to determine why product sales have stalled for your previously successful flagship product?
Maybe you’ve got a new product idea and are considering doing a startup. Or are you interested in investing in someone’s else new product startup?
If any of the above apply to you, ask and answer the following three questions:
- How is your product better than the competitive product?
- Who will want to buy your product?
- Why will they want to buy it?
How, Who, Why, the answers to which can mean the difference between keeping your job or not losing a bunch of money misjudging your own or someone else’s “next big thing” idea.
Let’s briefly consider each separately.
How is your product better than the competitive product?
This is the most important of the three questions so let’s start with this: It must be better; if it’s not, it’s time to move on to Plan B. And don’t short change the process of deciding that it is better. That was ok when you were a kid and your mom cheered you on in sports, no matter how bad you were. You’re grown now and that no longer works. The marketplace is not your mom. It will quickly toss your existing or new product idea aside should collective market wisdom agree there is a better alternative.
So how do you do this?
Step 1: Begin by listing the products most competitive to yours. Not competitive brands; the specific individual models consumers will most likely buy were they not to buy your product. Keep in mind that may not be a direct competitor. (Just ask the makers of pocket size cameras who their direct competitors are and you’re sure to hear about smartphone manufacturers.)
Step 2: You picked whatever you picked for hopefully good reason(s). What are they? As with competitive models, be specific as to why you feel they are better. No motherhood; “better looking”, “feels better”, “not cheap looking”, “pretty color”, etc., are not specific reasons.
Step 3: Now that you know what you’re up against, what have you got? If a consumer interested in the competitive products you’ve listed were to walk into the room this moment, ready to buy some one’s product, what would your product offer relative to the competition?
This is the feature set and it includes everything having to do with the physical product as well as the deal surrounding the product. The price, who sells it, their reputation, the warranty, packaging, and increasingly these days, ratings given by users to products in online forums.
Don’t forget the “aura”!
Your product is much more than simply the product itself. It is that and its “aura”; the image consumers have about it. Need an example? What comes to mind when you consider a private label cola soft drink? Now what when you think of Coca Cola or Pepsi Cola? The first is just cola whereas for most Coke and Pepsi is that and much more.
Who will want to buy your product?
If you’ve done your homework answering question one, you’re on your way to answering question two. Correctly identifying honest product advantages and disadvantages will suggest a skeletal profile of who will likely buy what you offer to sell.
As with the first question, disavow motherhood. Things like “price conscious consumers”, “parents of young children”, “retirees”, or worst of all, so-called generational labels, the most recent being “millennials”. The first three and many others like them are as apt to tell you who will not buy as who will, and the last is even worse.
Assuming that everyone sharing a single demographic, in the case of millennials, an 18 birth year span, is important, regardless of gender, education, income, and all other critical demographic and psychographic indicators you can name, will lead you to the wrong conclusion every time.
Don’t see it? How alike do you think an African American female with a PhD in physics, born in 1981, the first year of “millennials”, will be in comparison to an American-born Caucasian male high school graduate, now in Navy basic training, born in 1997, the last year of “millennials”? And things only get worse if we compare individuals living in different countries based only on that one criterion.
Instead, focus on the attitudinal differences that exist in us all. Not who we are but why we think and believe as we do. How to do that is a lengthy discussion unto itself and time does not permit discussing it now. But rest assured there are methodologies available to help you do that. Feel free to contact me offline if you’d like to learn more.
Why will they want to buy it?
Just as answering the first question aided you answering the second, so too will it help you determine why consumers will buy what you sell. And when you think about it this is really just validating what you’ve done to this point.
You’ve identified what your product offers, benefits the competition doesn’t, and this enabled you to profile the most likely consumer. If you did that accurately, honestly without bias, you have a good understanding of who that customer will be as well as why they will buy your product.
If not, go back to the first two questions and consider it all again. The answers are there and you won’t get many second chances if you get it wrong the first time.