New product ideas to start a business are quite exciting in nature. Each one of us has some form of business or startup ideas running into our minds. You might have even heard your peers talking about various ways they plan to start a business – either offline or online. But if you look at the product ideas that come alive and see the light of a business day, the number is a fraction of all that was once thought of.
This may make you wonder why not every online business idea is deployable, feasible, and scalable. Clearly, there is no shortage of product ideas around us that can succeed but do not. On the other hand, some of them should fail but do not. As per statistics, around 90% of startups fail.
If you are also working on setting up a business online and often let yourself get carried away in the problem your product solves, it may become difficult to differentiate whether it is a good product idea or not. There is nothing worse than investing your money, time, and efforts into product ideas only to find out there is no scope or market for them. This is where product idea validation comes in between.
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What is product idea validation?
Product idea validation refers to the process of determining the viability of a specific product idea, business, or service within the chosen market segment. It mainly involves a framework that allows you to understand whether it is worth pursuing a specific idea and building a business around it.
Validating product ideas in the initial stages of business analysis helps you make informed judgements while also limiting the risk of losing initial investments made in them. In general, the idea validation process answers the following questions for a business or aspiring entrepreneur:
- Does your product idea solve a real problem faced by target consumers?
- Should you proceed with building a business around the chosen business idea?
- Can the selected business idea be executed with the available resources?
- If yes, how can it be turned into a profitable business?
Product idea validation can help you lay the foundation of an intensive market-fit investigation for your business idea. While there can be several ways to validate your product ideas, we can make things simpler for you by letting you know how to validate product ideas with actionable steps involved.
But before that, let’s instill the need for product idea validation in your mind.
Why is validating product ideas important?
The most important reason why you must validate product ideas before trying to make them come alive is savings. You will save money, time, and effort before investing too many resources in any idea. The deeper you have reached in the product development cycle before realizing the true worth of your product idea, the more difficult and less appealing it will be to claw your path back to the bottom and start over.
You can also think of validating product ideas as making them participate in the survival of the fittest. This will ensure only the worthy ones that can bring real value to the world make it to the top. This will save the target consumers from another not-so-good product in the market.
5-step research process to validate your product ideas
Market or demand research
The first step toward validating your product idea is to identify the market and demand for what you want to sell. This is where you will get to know if there is an actual market or market segment having customers who want and will pay for your product.
One of the most important ways to discover the target audience is to identify a problem that your product can solve and then check for consumers who might have been using a solution to that problem if any. Dig further and understand the target audience, possible pain points, demographics, and peculiarities. The findings of this research will influence how you should design your product. Let’s break it into sub-steps:
- Identify target customers
- Find out underserved needs
- Understand consumer demand
- Consider the purchasing power of prospects
Competitor research
In terms of starting a business, market competition is not a bad thing but confirms that there’s a demand worth competing for. If the target audience has already found products in line with your product idea, you need not get discouraged thinking competitors have already grown their wings significantly. It will also give you a sense of the current market dynamics around similar products and how you can make yours unique or better.
You can perform effective competitor research by asking yourself the following questions:
- Are customers happy with the existing solutions to the problem(s) you want to solve?
- Are your competitors quite successful in what they deliver?
- What can be made better in the competing product lines?
- What should be the best business model for your product idea?
- How can you bring additional value to stay ahead of the competition with your product idea?
All these questions for product idea validation can help you figure out what to focus on going forward and starting your business.
Web research
The Internet, which will later become the ground for your prospects to reach your online store, is full of information for the product idea validation process. When researching the web to validate product ideas, you need to know:
Where to search for reliable information
This includes different channels where your target customers spend their valuable time. For example, you can start searching for genuine customer feedback on Facebook groups, LinkedIn, Quora, and similar other platforms.
What to look for
This is important because differentiating between authentic and promotional product information/feedback is often challenging for a layman. For instance, every positive review you read about a product sold online may not be truthful. It is the negative ones where you can find the gold for validating product ideas.
Live consumer research
By this research stage, you would have traversed the wilds of the World Wide Web to learn about your customers – who they are, what they need, what their problems are, etc. Now, it’s time to source the most reliable information for product idea validation, which is – interviewing consumers and asking for their feedback. You can simply create a predefined questionnaire that you can present to your prospects and include questions like:
- Do existing products/services solve the chosen problem/pain point completely?
- How satisfied are they with the current solutions?
- What would their expectations be like for an enhanced product for the same problem?
- Do they feel interested in your product idea?
- How much would they be willing to pay for your product if it exists?
You can run online surveys or ask questions on social media platforms to get the complete picture of the worth of your product ideas.
Product research
By this stage, you have gone through various sides of how to validate product ideas and established the fact that there is a market opportunity and you know what customers are looking for. Now, you have to come up with a solution or product prototype that solves the problem.
This is usually done in two steps:
- Prototyping and testing which involves designing a basic Proof of Concept (POC) for internal validation and checking whether it can be done with the resources available. You can create multiple prototypes to check which one works best.
- POC landing page launch to start generating some real interest in your product idea; you can even launch a beta version of your product and sell its early access to get even more accurate insights
TL;DR: Three main questions of product idea validation
- Can your product idea be built? If yes, how?
- Should it be built? If yes, for whom and why?
- Will customers pay for it? If yes, how much?
What’s next after product idea validation?
If your product idea didn’t make it to the last step above, there is nothing to worry about. You will be free to start brainstorming on other ideas and see how it goes. This time, you will have a better understanding of how to look at business ideas.
If it does reach till the end, you can be certain that you have a viable product idea. For the next steps and direction on how to set up an e-commerce business, check out our complete guide.
