The Importance of Market Testing
Grow Your Business, Not Your Inbox
Enormous amounts of money are spent every year in market testing. Many thousands of prospective customers are surveyed extensively to determine whether or not to bring a product to market. But in spite of the most extensive interviews and surveys, fully 80 percent of new products and services fail within the first year.
Your time and money are extremely valuable to you--you can't afford to waste them by investing them in producing a product or service that fails in the marketplace. The more you test your product before you produce and sell it, the more likely you are to earn the sales and profits that you desire. Just remember, every dollar you spend in market testing will save you many dollars of losses later on in the marketing process.
Here's how to begin:
- Develop a prototype, model or description of the product or service that you can show to others. Most ideas for new products or services don't work the first time. With a model or prototype, you can photograph it or create a picture of some kind and demonstrate it to a prospective buyer. It also allows you to try it out for yourself to make sure it works. (Be sure to keep accurate notes of your research; you may come up with an even better idea later.)
- Determine the price that you can sell the product for in the current marketplace. Get accurate prices and delivery dates from suppliers, especially if you're purchasing the product for resale. Determine all the costs involved in bringing the product or service to market: the costs of offices, equipment, shipping, loss, breakage, insurance, transportation, salaries, etc. Include your personal labor costs at your hourly rate as a cost of doing business. Ask your friends and family if they'd buy this product at the price you will have to charge.
- Go to a potential customer with your sample or prototype and ask if he would buy it. Be sure to call on the individual who makes buying decisions. Then ask him how much he'd pay for this product. If people criticize your new product idea, ask them why. Ask how the product could be modified to make it more attractive.
- Compare your product with other products on the market. Continually ask, "Why would someone switch and buy from me?" Solicit the negative opinions of others. Don't fall in love with your idea--be an optimistic pessimist by looking for the flaws in your marketing plan.
- Visit trade shows and exhibitions--they're a terrific place to get immediate feedback on a new product. You can get into a trade show by signing up as either a manufacturer or wholesale buyer. Once you're in, find out what else is available that's similar or that performs the same function as your product. Other companies marketing similar products will have their products on display--take a good, hard look at what they have to offer. Then talk to product buyers--sophisticated buyers at the trade show can tell you immediately whether or not your product will be successful.
The only real test of a product is a market test, where you take your new product or service to a customer who can buy it to see if he likes it. As soon as you know your cost and price, make a sales call on a potential buyer. (The ability to sell the product is more important than any other skill--this will give you a chance to sharpen yours.) Listen carefully to the comments and objections of the buyer--their feedback is priceless.
Then once you've determined there's a large enough market for your product--at the price you'll have to charge to make a profit--immediately begin thinking of ways to improve both the product and the marketing. Continually tweaking your plans--instead of sticking only with your original ideas--will help ensure your product's success.
Brian Tracy is the "Success Secrets" coach at Entrepreneur.comand one of America's leading authoritieson entrepreneurial development. He's produced more than 300 audio and video learning programs that cover the entire spectrum of human and corporate performance through his company, Brian Tracy International.