Many businesses owners I’ve met over the years fixate on how they are going to sell their next “greatest” product or service. They imagine the numbers they will eventually sell and the massive profits that will roll in.
Some go to the extent of doing preliminary business surveys to reaffirm their beliefs. They then promote the heck out of their product and weeks later, realize that few are actually buying.
What really happened?
Their surveys told them there was demand. They thought their product would be desired by their target market.
Unfortunately, it isn’t so simple. Let me explain…
In a recent business article on CNN , it demonstrates that all too often we need to establish actual demand for the product or service before investing a lot of money in IP protection, production and promotion. Without knowing the potential demand and whether there is sufficient demand to meet the needs of the business owner, it’s best to either:
- Stay clear of the product or service
- Investigate it in depth before investing large sums in developing and promoting it
Doing otherwise can prove to be very risky. Business need not be a risky proposition. There are already enough unknowns to deal with so you don’t need to add more to the mix. Savvy entrepreneurs and business owners know how to mitigate risks and manage them by performing market intelligence. As a small business, your resources could be limited and outsourcing a specialist to do this could be costly. I will show you some simple, yet cost-effective ways to do market research in a moment.
Let me first address the issue of why the business owners who took the time to do preliminary surveys didn’t get the results they expected.
Surveys and focus groups aren’t that great. I participated in several just to see how the process actually worked. As a participant, I realized, however, several flaws with the survey and focus group system.
Survey respondents can sometimes provide erroneous information on purpose. They can also not be a good sample data based on the target market meaning it could be only a small segment of the actual market you are targeting and therefore not yield the right statistics. Lastly and more importantly, the respondents aren’t forking out their cash to buy the product/service. They merely answer whether they would be “likely to purchase” this product. Thinking about and actually buying are two different things altogether.
Now, how can you do some cost-effective, yet get fairly accurate data on demand? Here are some simple ways that can be adapted to any market:
- Check out Amazon.com and see what people are searching for. Read the comments and see what the market is really looking for. What’s lacking? How popular is the subject matter? etc.
Use the popular search engines. Consider using specialized do-it-yourself keyword research services like Wordtracker available here and find out how many actual searches are being done for the product or service.
- Lurk around popular forums online specialized in your subject matter. Read past posts and ask questions to clarify feature/product/service requests with the forum members. These people are interested in your area of expertise and are likely to be your target. Hear it straight from the horse’s mouth.
- Go to the library and research any statistics readily available which are done by the government. The government spends millions doing detailed surveys on various subjects and these are readily available to you as a tax-payer. The library itself is a wonderful repository of information for your business. Browse books written on the subject and see if there are any indications of a gap in the market.
There you have it. A quick list of action items you can use on your next research activity. Drop me a note and tell me of your success.
[dels]target market strategic, understanding target market demographics, most popular keywords[/dels]