Validate and test your product ideas. Estimate Market Potential. Concept tests
It is always worth testing product ideas to understand their potential, whether creating a new product or updating an existing one. Is a particular idea (of a product or a feature, for example) worth developing further? Which idea has better potential? Below is a simple framework and tools needed to answer these types of questions.
Step 1. Define the Target audience
The product’s target audience (TA) is all potential users/consumers who might need the product, even theoretically, and who can use the product in reality.
Describe your TA in terms of:
— Demographics (gender, age).
— Geography (target market).
— What is their core 'need' (around the defined territory).
Checking the 'need': Ask consumers, 'Have you done/shopped/used/had a need for [insert product idea] within a certain amount of time?'
Describe your TA in terms of:
— Demographics (gender, age).
— Geography (target market).
— What is their core 'need' (around the defined territory).
Checking the 'need': Ask consumers, 'Have you done/shopped/used/had a need for [insert product idea] within a certain amount of time?'
Example
Going back to our example from the previous chapter, you are making a recipe app which finds recipes for you based on what you have in the fridge.
Your market is the UK. Therefore, your TA description could look like this:
— Male Female 20−55 years old;
— UK, national representative sample;
— Cooked at home within the last month.
So, to figure out who exactly fits into this criteria, you can ask the question: Have you cooked at home within the last month?
Your market is the UK. Therefore, your TA description could look like this:
— Male Female 20−55 years old;
— UK, national representative sample;
— Cooked at home within the last month.
So, to figure out who exactly fits into this criteria, you can ask the question: Have you cooked at home within the last month?
Useful tip. Always keep your defined TA in view. Writing it down on a sticky note and placing it somewhere visible is simple, yet effective.
Step 2. Understanding Market Potential
Is the need big enough to justify making a business around it (product or a feature)? Do enough people have that need in your target market; is it a frequent enough need?
You can use the following formula to quickly calculate the market potential:
You can use the following formula to quickly calculate the market potential:
You can find information about your target audience age and gender in the market in open sources on the internet. However, to find out whether they have the need you defined and it's frequency you can use a survey. An agile service such as our DIY solution can find out the size of your TA, their preferences, unmet needs and usage patterns. With results available within 24 hours, you can make decisions about the market potential, fast.
Calculate market potential: Same Hour Courier Service Example
You are creating a same hour courier delivery service inside the city. Your TA is those working from home (always or during the pandemic). Your market is Canterbury. From open sources you learn that the population of men and women aged 18−65 is = 100,000 people.
You are conducting a quantitative survey with people who live in Canterbury in a given age range, and you know that 85% of them currently work from home. Therefore your market potential in terms of people is = 100K* 85% = 85K people. In the same survey, you learn that 20% of respondents needed to send something urgent using a courier with an average frequency of 2.5 times in the last month.
This way to estimate market potential in numbers of orders per month is = 85 000 * 20% * 2.5 = 42 500 = 510 000 orders per year.
If you know the approximate market price, you can calculate the market size in monetary value. You can also test the price elasticity on your TA in the same survey and use the result as an estimate.
You are conducting a quantitative survey with people who live in Canterbury in a given age range, and you know that 85% of them currently work from home. Therefore your market potential in terms of people is = 100K* 85% = 85K people. In the same survey, you learn that 20% of respondents needed to send something urgent using a courier with an average frequency of 2.5 times in the last month.
This way to estimate market potential in numbers of orders per month is = 85 000 * 20% * 2.5 = 42 500 = 510 000 orders per year.
If you know the approximate market price, you can calculate the market size in monetary value. You can also test the price elasticity on your TA in the same survey and use the result as an estimate.
Useful tip. Interview people from your TA. Ask simple questions to find out if people need your idea and quantity. Do not overcomplicate this stage. Useful tips on how to write the questionnaire are here. Sense check against what you know and the economics of the product itself.
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Step 3. Formulate your proposition: Concept writing tips
Concept is a description of a product or a service that you want to market and sell to your customer or consumer. There are different ways one can approach concept writing. The most popular ones are the one that is used in classical marketing: Insight-Benefit-RTB drills and a newer one, more common amongst UXers and product developers from Value Proposition Canvas: PAINs, GAINs and JOBs.
Whatever framework you choose, a good concept must include three key components:
1. Tackle an unmet need or an unresolved issue of your customer/consumer (Insight or PAIN).
2. Describe the key benefit of your product or service to the customer/consumer (Benefit or GAIN).
3. Explain how your product or service is going to work to resolve their issue (RTB=Reason To Believe or JOBs/Product Services).
1. Tackle an unmet need or an unresolved issue of your customer/consumer (Insight or PAIN).
2. Describe the key benefit of your product or service to the customer/consumer (Benefit or GAIN).
3. Explain how your product or service is going to work to resolve their issue (RTB=Reason To Believe or JOBs/Product Services).
Example
Introducing the manual toothbrush with replaceable heads.
Our new product helps to:
-Save you money [benefit people who hate wasting money by buying a brand new toothbrush every time]
-Save the environment [Benefit for people that hate creating more plastic waste]
-Enjoy your favourite toothbrush colour for longer [Benefit for Cool Colour Toothbrush lovers]
The handle is made of high quality recyclable plastic that lasts 5 times longer than your usual manual toothbrush. The head is also fully recyclable. [RTB]
Curious how this idea performed? Check the results here.
Our new product helps to:
-Save you money [benefit people who hate wasting money by buying a brand new toothbrush every time]
-Save the environment [Benefit for people that hate creating more plastic waste]
-Enjoy your favourite toothbrush colour for longer [Benefit for Cool Colour Toothbrush lovers]
The handle is made of high quality recyclable plastic that lasts 5 times longer than your usual manual toothbrush. The head is also fully recyclable. [RTB]
Curious how this idea performed? Check the results here.
Useful Tips:
- Use consumer-friendly language: imagine how you would describe your product/service to your grandma.
- Be single minded: just call out the key benefit and 2−3 main features of your product.
- One benefit per one concept: If you have more than one unmet need, or a few ideas on how to communicate the product benefit, create separate concepts.
- Understand your consumer first. Use observation and empathy techniques to get the unmet need right. Check out the Design Thinking Guide to learn more about empathy techniques.
- Use visuals that help to bring your idea to life.
- Use a punchy tagline like in real adverts.
Step 4. Quantitative Idea Validation/NPD testing
Once you get your concept ready, you can conduct research amongst your TA. Show the respondents a description of your offering. There are certain KPIs you can check while testing your concept: Clarity, Uniqueness, Relevance, Believability, Trial interest, Sharing (WOM) potential.
Our favourite tip that may help you to decide if idea resonates and if there is anything can be improved, is to ask at least the two following questions:
1. How clear is this idea?
— Perfectly clear
— Somewhat clear
— Some elements are clear, some aren’t
— Somewhat UNclear
— Completely Unclear
2. Would you use this offer?
— Will definitely use it
— Will probably use it
— May or may not use it
— Will probably NOT use it
— Will definitely NOT use it
For each of the questions you add the top 2 answers on your scale: perfectly clear+somewhat clear and will definitely use it+will probably use it. If even one of the values is below 70%, think about going back to the previous stages of development and rework your offering.
1. How clear is this idea?
— Perfectly clear
— Somewhat clear
— Some elements are clear, some aren’t
— Somewhat UNclear
— Completely Unclear
2. Would you use this offer?
— Will definitely use it
— Will probably use it
— May or may not use it
— Will probably NOT use it
— Will definitely NOT use it
For each of the questions you add the top 2 answers on your scale: perfectly clear+somewhat clear and will definitely use it+will probably use it. If even one of the values is below 70%, think about going back to the previous stages of development and rework your offering.
Don't forget to ask open-ended questions. What exactly is unclear? Why won't you use this product? Analysing open ended responses will help you understand what the problem is and adjust your offering. If you're still unsure, it's time to return to the step of identifying the need.
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