Being in business is all about one thing: Building up a brand with a product and making a profit by selling it. However, this is much easier said than done. Just because you have a great product idea doesn’t mean that it solves consumer’s pain points. Nor, for that matter, does your product necessarily solve the problem at a price that customers want to pay. It’s no wonder that some 95% of product launches fail.
When a product fails, this often spells disaster for the company that developed it. For one thing, the company pours a lot of time and resources into product development. Then, the company must produce and store that product-long before they know that the product will fail. Meanwhile, the company or startup bleeds money that could have been better spent elsewhere. Is it any wonder that 90% of startups fail? The solution to this problem is to ensure that your product has a good chance of success before you start producing it. This process of gathering solid evidence that your product idea will succeed is called product validation.
A definition of product validation
In a nutshell, product validation is the process of researching whether or not your product idea is something that customers will actually pay for (and at a price that makes the product worth creating).
There are several factors that will help you answer this question. First, you’ll want to ask if the proposed product solves a problem that people have. That problem could be in their work, hobby, or everyday life.
Once you’ve determined that a potential product meets a need, you need to look around and answer a few questions:
- Are lots of people talking about the problem?
- Has someone else already suggested a way to solve it?
- Has someone already built a solution that works?
- And, finally, there’s the question of value: How much are people willing to pay, if at all, for a solution?
Strategies to validate a new product idea
There are several different ways to perform product validation. Often, product developers will need to do more than one type of study in order to be confident that a product is viable. However, the idea is always to reach the maximum certainty at a reasonable total cost. Here are some of the options.
Conduct dry testing
One of the best ways to perform product validation is through dry testing. Especially if you sell consumer products, this is one of the most accurate and economical options available.
In a nutshell, dry testing is a form of test marketing where you use a webpage to try and get people to purchase your product before the product exists. When someone attempts to purchase the product, you inform them that the product isn’t currently available. In many cases, you’ll ask if the customer is interested in getting an email newsletter or being contacted about the product later.
Of course, dry testing requires some money and time. Generally speaking, you’ll need a website to promote your product. If you’re developing a new product for an existing company, this can be another product page on the site. Otherwise, you might use an ecommerce site builder like Shopify.
Another thing you’ll need to perform dry testing is a set of images of the product you're envisioning. One way to do this is to have mockups generated for you, another way is to actually produce a prototype of your product and take pictures. These strategies are generally inexpensive. It’s always best if the mockup or prototype looks as much like your intended final product as possible, so you get the best results.
Finally, to conduct dry testing you’ll probably want to run a small marketing campaign. This campaign should include paid advertising to drive traffic to the product page where people can attempt to buy your product. Remember, your goal is to see if enough people are willing to try and purchase your product.
Dry testing is the most reliable way to perform product validation because it answers one question extremely well: "If this product actually existed, would lots of people pay for it?"
Want to get started with Dry Testing with minimal effort? Try the Product Demand app for Shopify.
Depending on what kind of product you’re considering, it might be worthwhile to sell the product in-person. Hobby shows, pop-up shops, and industry events are great examples of where this type of test marketing can happen. To perform this type of product validation, you’ll have to produce a small quantity of the product, which can be expensive.
With that said, selling in-person is a great way to get product feedback. This feedback is valuable if you need to fine tune the product before expanding your production and distribution. You can also use customer feedback to aid the marketing team when the product is ready to launch. That’s one reason why many companies continue to solicit reviews for products. When you are relatively sure that your product has potential, it might be worth spending the money.
Conduct a competitive analysis
An important part of product innovation is competitive analysis. When you conduct competitive analysis, you try to find out what competition your product-and company-would face. Unless your product appeals to a niche market, there’s a high chance you will have competitors. At this point, many competitors will be established in the market, so you’ll need to differentiate any new product from the existing options.
Analyzing your competition involves a lot more than just finding out who already makes products that you wish to compete with. Rather, you want to learn how they market the product, how much they sell, and how much this market might grow in the future. Finally, you want to find out what your competitor’s weaknesses are.
By exploring these questions, you can gain good insights into the marketability of your product. It’ll also give insight into how you can make your product more compelling. Competitive analysis also aids product development, in that you can tailor the product to best address the weaknesses of competition.
Research existing demand
Knowing the level of demand for your potential product is a critical part of product validation. For this metric, you want to determine to what extent people might be willing to buy, assuming the right price. It’ll also give a window into the growth potential for a given product.
If you research demand well enough, you’ll learn more than the basic “yes” or “no” of viability. For instance, you might find out that your product would be more popular in one country or region than another. Or, you could find unexpected potential markets for your product, such as consumers of a different age or socio-economic status.
Run a crowdfunding campaign
If you want to perform product validation and fund product innovation at the same time, consider crowdfunding. This technique uses websites such as Indiegogo or Kickstarter to raise startup funding from the general public. In return, most crowdfunding campaign organizers provide an incentive. For instance, you might provide donors with company swag or early access to the product.
Crowdfunding gives relatively good insight into the viability of a product. Even better, people who contribute through crowdfunding campaigns help ensure that the product is viable. Additionally, each person that contributes could be a long-term customer or help you with word-of-mouth marketing later.
Explore organic marketing
Another relatively simple method of product validation is organic marketing. In this case, what you do is market the potential product without spending money. For example, you might talk about how awesome the product idea could be on Facebook. As your friends pass on the message, the feedback you get can help decide if the product is viable.
At the end of the day, real customer demand the most important factor in determining whether a product will succeed. By leveraging the power of dry testing, combined with careful market research, you’ll be confident that you're creating a product that people will be willing to pay for.