When you create products or solutions, you must vet them to figure out if there is a fit in the market. In this guide we will explore how you can evaluate your product in the market.
We will also explore how to discover the overall market size and opportunity to ensure that if there is a need, the size of that need is measured. That is the most important piece of this guide.
Is there a need for the product? There are many different ways you can evaluate if there is a need in the market:
I recommend this for brand new products and newer companies that may not have a good idea of their customer base. It will help reach a broad audience and have a starting point to dive deeper into the market research.
I recommend this for companies that have existing customers. This will help you understand if your current customers are open to these products and solutions.
Assuming you use a third party to run your focus groups, I recommend these to get the most open and honest opinions. However, you will need to make sure you write the questions and follow ups so the third party is prepared to execute your vision.
This one can also be used to get the most open and honest opinions. If the customer and market know they are not talking to the product owner or developer they are likely to be more honest.
This simply means engaging your current customers, and can be done in meetings or casual conversations. You could also set up a customer council to get more formal feedback. Your customers want to be heard, and you need to hear them to evaluate market fit.
I recommend you read my guide on interviewing your customers to learn more about exactly how to conduct effective surveys to understand your market.
Additionally, my guide on data gathering will help you develop customer-focused solutions, which can save you a ton of time. Evaluating to ensure something is customer-focused will ensure you will be able to successfully sell the product you are developing.
The bottom line is that you need to make sure there is a place in the market for you product. There are many different ways to evaluate this, and these different methods of evaluation will help you get to what you need.
Market evaluation has more to do with qualitative data, whereas market opportunity and market size are based on quantitative data. Once you do your market evaluation and determine there is a need, you need to figure out the size of that need. This is where market opportunity and all the numbers come in.
These are things to explore for market opportunity:
Who are these customers? Is it a specific industry? Is it a specific buyer in a company? For example, are you selling to small enterprise customers only or are you selling to IT buyers in all sorts of enterprises?
Should you be looking at other customers to sell to? You may be aware of who you are primarily targeting from the bullet above. However, is there a second target for you? Is there another use for your product? Perhaps you sell a consumer good that can be sold in mass quantity to a business. These are things to consider in a second customer base.
When do people buy this product? How do they buy it? Do they go online or go into a store? Or does it require a sales rep and more of a customized experience?
Who is your competition? Perhaps it’s a new vertical industry and there isn’t competition. However, most times this is not the case. Look at opportunities to consider what your competitors are selling and how you will take a share.
Exploring these factors is going to help you to determine the overall opportunity in the market.
This is just as it sounds: how big or small is your market? You need to ensure you understand the opportunity but also the size. When building a product there is a cost to do so, although often for manufactured goods it is much more than for software.
In the Market Opportunity section you evaluated your primary and secondary customers so you could look at the size of this market, then you looked at how much of these markets your competitors have and how much of the share you plan to take.
Market size is often a spreadsheet of your target customers, and shows the potential revenue from each that you plan to capture as part of a product launch.
This metric is key for executive communication and evaluation because it shows potential revenue and helps you understand how much you can spend getting this product to market.
Is there a season for your market or will you be able to sell this product all year long? This is a really important part of the market fit and product strategy. For example, do your customers only need it when they bring on new hires? Do they only bring on new hires a certain time? Are there periods of peaks and lows?
Market seasonality is something that people don’t always consider, except those in the Halloween market. Seriously though, it is important to see when customers purchase your products and bring that into the product plan. It is an important part of market fit.
As a product manager, you need to be innovative and develop new ideas. However, you must also make sure these products and solutions from these ideas are needed. Evaluating a product for market fit will help you ensure that there is a need in the market, and determine the size and overall opportunity of the market.
I recommend watching my executive briefing on innovation to learn how to create a culture of innovation.