There are lots of ways for going about determining a good market.
The critical part bout picking a good market isn’t size. It’s finding a market that is a good fit for you YOU.
You defined as you + the product that you can be passionate about. This is critical to understand. It doesn’t matter how massive a market might be. If you can’t stand to be competitive in that market, you shouldn’t be thinking about how huge it is.
So the way I like going about this exercise is to start asking questions about ourselves.
I run through these questions and start writing down the answers. Through this process, you’ll end up answering a lot of gaps in your own thinking. Just take the time to answer them thoroughly.
If you have answers to all these questions, you will be somewhere near having “market certainty” which I think is the most important milestone before starting to build a product.
- Can you design the ability to pivot efficiently (sales/product)
- How easy is it to pivot on the market?
- How easy is to pivot on the demographic?
- How big is the potential adopting market?
- How big is the acting market?
- How easy is it to cross market the product to other markets without a shift in the core product strategies?
- How long does it take to reasonably test the market assumptions?
- Market peer dynamic / adoption Influence points (when u don’t get the value prop for something but you still buy it because you trust)
- How will the peer effect the adoption of other segments within the market adoption range?
- Dirty marketing sizing – real dirty
- note: you should do proper market sizing as well. this is a dirty way of doing market sizing. i think it is more honest and less bull shit. you need more clarity in the short term. this is for yourself.
- Most important: Define your Market Size as the ones who don’t need value props for you get through. The ones that will compare your product, understand their need and are pulling for your solution
- Less important: The tech savvy % of your total market size
- Ability to scale comfortably assuming infinite demand: Once you have the two above, look at the fastest you could scale your organization within the first year if the market demand was infinite
- So what’s your market size? use the smallest number between the ability to scale and total tech savvy portion of your market size.
- Now split this market into into Will Give it a Shot, Probably Not Gonna Buy It Within the Next Year (or 6 months?) and Would Buy it if Other People Would and you had to split the market into those 3 areas, how would split it?
- Now remove the the ones that probably not gonna buy it within the next year… now you have a somewhat realistic market size.
- To get an actual dollar value, take the pessimistic average dollar amount they would spend on your service * the market size that you defined in the previous step
- Market’s ingrained perception on services like yours and how that effects your profitability
- Will they pay me me high rate compared to other market choice given the amount of product investment?
- What does the average sale look like? When someone asks them why did you buy this product… what would they say?
- What would they mention about the price that they paid for the product if they mentioned it to a colleague
- What are the price points of 3 of our compared solutions?
- How much time will it take me to get the client up and running?
- How much time will it take me to service a client?
- Sales dynamics
- List 3 value props that have worked in this market and their relative CAC ratios
- Can you get the contacts of at least 2 – 3 decision makers within your network?
- Are there distribution partners that we can work with?
- How long will the sales cycle take for similar products? list 3
- How clearly fragmented is the market? does that translate into nice bucket for value props?
- How does your CA costs compare to a length of time for giving your product away
- Describe 3 different perfect reference clients? How can you get them as soon as possible
- Market insight ability, accessibility and sales learning curve
- Do you and the market use the same language when describing the solution?
- Do you know roughly the size of the budgets that this market spends on solutions like this?
- When you told them how much you were planning to charge for it, what was their reaction?
- Have you ever worked with one? Is one of your family members in this profession or positions?
- Perceived value of ANY (not yours.. let’s say the best) solution for the pain
- Do they current enjoy the task?
- What does the full process look like the user’s mind?
- If they could avoid this task, would they do it?
- How terrified are they of the task that you revolve the product around?
- Is it a common (how common?) problem in the market that you are looking at?
- Market perception of your service – degree of commodities to high service
- Do they see your product as a high service or a product that is basically a commodity?
- If you had to define the mix between service and product, what % value would you give to each?
- Market behavior transparency
- What pricing structures are they currently accustomed to?
- What types of offers are they most receptive to? What have worked?
- How do they hear, learn, and evaluate their decisions?
- Market perception of your service on technology
- When you explained the concept to the potential demographic, how long did it take them to get what you were talking about?
- Will they pay a premium price for this?
- How cynical are your users and purchasers about technology? look at the tyes of technologies they use for their own personal use
- Your organization’s potential in this market
- Who are these people?
- Do you care about them?
- Would you be ok with spending an entire day with one of them?
- Have you worked in one before?
- Can I create a must have for them that is better than the competition? If marketing didn’t exist and it was just the task and you guys went head to head… who would win
- How accessible are the decision makers to YOU?
- Marketing / wave riding / making a splash
- Is the entire industry talking about solving this problem?
- Could you get easy coverage?
- What market entry strategies would work best in this market? which ones would have the most lasting effects?
- Are there clear areas where you can directly target the highest likely adopters?
- Would you be able to be a topic in the industry forums and conferences?
- What your customer do now and what you want them to do
- What does it cost them to do the task?
- What are they switching from?
- How difficult is it to make them switch?
- How high are the switching costs for the customer?
- What concerns do they have about switching?
- Product use dynamic – purchaser vs user (b2b sales dynamic – doesn’t really apply to smb or consumer)
- Am I selling to a person that is different than is different than the one making the purchasing decision?
- Is there any price point where the person that uses the product can purchase my product?
- What is purchaser worried about when he makes a decision?
- If the user likes the product, what things would he say yes to that are closest to purchasing the product? be creative
- Ability to create compelling value proposition given YOUR product vision (assumed that you have one)
- If you can’t convince them on the first value prop, what’s the second one
- If the product was free, who would you would talk to and how long would it take to be adopted?
- What others items that are close to your product does your product user use?
- Have they heard my value props before? if so, what are the words that they keep repeating?
- If you posted the message on a Linked In discussion, would people think you are spamming?
- What are the other services that the customer compares our solution to?
- Do they see the medium or base tool of your product in the way that you intend it to? example: Empowerkit is the product. Client is Lawyers. The value prop is using personalized lawyer sites as a lead generation tool. problem: lawyers don’t think the web can generate leads
- Degree of demand creation ( you want this to be as low as possible )
- Are they understanding what I will put in my tag line?
- How difficult will it be to form a good value proposition for them?
- How confused are the users about what solution to use?
- How many other services need to be created in the market in order for my service to deliver the intended value?
- Reaching “market certainty” and aligning it with your “perceived whole product”
- Your goal should be to align your feature set with key milestones that allow you to pivot your feature set and build your architecture in a way that you’re not building feature-set for a market that you are not sure about. I think a good metric to use here is market certainty. It’s a point at which you have clarity on all the items outlined in this document + you understand the Perceived Whole Product by your client. You should design your market and product development stages around your market certainty date.
- Few ways of getting these answers
- Talking to potential customers without their guards up
- Giving them the product for free – helpful in understand the perceived whole product
- Market research reports to get a high level view – I think this is one of the first steps to figure out what things not to focus on or to kill a few of your assumptions
- Put together good questions. There is nothing worst than talking to people ad asking dumb questions that don’t help you figure anything out
- If you are done with all of above. Here are some additional ones:
- Are you OK with staying in this market for 3x the length that you had planned? and more importantly do you have the financial ability to withstand that?
- Are you honest with your team’s capabilities relative to the market? and if not, what do you have to add to your HR mix in order to be able to aggressively compete
- Will you be fighting with a massive player at any point in the first year? Think about how that will change your product strategy / value props. Bigger companies can out market you. You need to leverage your base feature-set and pivot on key area that allows you to focus on needy slice of the market that you were targeting
- Lots of smaller competitors are good if they are spending marketing dollars. They are bad for you if they are doing direct sales on the lowest hanging fruit in even in a low switch cost product
