An Entrepreneur’s Assessment of Real-World Market Potential
Complete confidence, tremendous enthusiasm and an absolute must-win attitude are just a few of the common traits that most entrepreneurs tend to have. The excitement level they feel for their product or market idea is palpable and enthusiasm seems to ooze out of their pores!
When questioned as to why they are so excited about their product and how they came to be so confident of their success, the response is inevitably something to the effect of “Everyone I have talked to loves my idea! I mean literally everyone loves it and thinks it is a great idea!”
Terrific! With nearly 100% positive feedback from virtually everyone queried, we must really be on to something here.
Or are we?
By taking a little deeper look and taking a few minutes to analyze the process, we just might find our approach is setting us up for a huge disappointment.
Let’s take a look.
When pushed a bit as to their market surveys, we find that most entrepreneurs have asked everyone they know or meet to offer an opinion about the product idea. The question is usually framed something like “I think I have this great idea for a new product. It is the XYZ product and it does so and so. What do you think?
The problem here is one of simple human nature. By and large, as a general rule most people are not willing to be critical — especially to a friend or acquaintance who thinks they have a great idea. The natural inclination is to agree and say, “Yeah, that sounds like a great idea. Go for it!”
One easy way to avoid this common pitfall is to simply remove the first person by changing the statement to something more like: “A friend of mine thinks they have a great idea for a new product. It does so and so. I’m not sure about it, what do you think?”
This simple change in structure and wording takes the pressure off the individual and by offering up that you’re undecided yourself, it opens the door to them giving an honest opinion, whether it be positive or negative.
A second aspect of the entrepreneur’s original approach that needs to be addressed is the total number of people contacted and what those people represent.
One of the basic tenets of properly surveying any market for the viability of a new product idea is to start with a minimum sample size of 100. It is not just the size of the survey that matters, but it is critical that the people we talk to are actually a part of the would-be end users of the product. This will help the entrepreneur to avoid some common (and critical) mistakes, and it will also better define the real-world market.
If you survey 100 people, and those people are within the target market of people who you think would buy and/or use the product, you can learn a lot. After having gathered the responses from this group, by putting the data in a spreadsheet and by making some basic categories, you will often be amazed at what jumps off the page at you.
Example: Let’s suppose of the 100 people surveyed, 50 were men and 50 were women. A further breakdown of the data shows that women in the 50 -60 age group were overwhelmingly positive — and at a much higher rate than other age groups of women or men in the survey. This could be a good indicator that the majority of your marketing efforts and resources should be focused on women in this age group.
This is simply one example of the different types of very useful and meaningful data that can be gleaned from a survey targeted at actual potential users. Your overall positive response rate should also be somewhere in the 75% - 95% range. Think of it this way: The further away you can get from the 50% mark, the better. Do you really want to spend time and money in an idea whose odds of success are roughly that of a coin flip?
In this type of scenario, a little common sense and ingenuity can go a long way in saving significant dollars by refining our approach.
Special thanks to Jim Cossler of the Youngstown Busines Incubator for his thoughts and suggestions on this topic.
Here at Lead Read Today, we endeavor to take an objective (rational, scientific) approach to analyzing leaders and leadership. All opinion pieces will be reviewed for appropriateness, and the opinions shared are solely of the author and not representative of The Ohio State University or any of its affiliates.