In this webinar, we delve into why it is critical for companies to validate product market fit by conducting user research prior to investing...
How to Perform Market Validation: A Step-by-Step Guide
It's essential to validate product ideas before investing time and money. Learn how to perform market validation and the user research methods that make it work.
How does that saying go, something like If wishes were business ideas, we would all have a few Fortune 500 companies under our belt? Okay, perhaps I made that up, but maybe it should be a saying. After all, how often have you come up with an idea and thought it wasn't practicable, only to see it come to market some months later from somebody else? Or you don't know if your great idea is feasible, so you move on and forget about it? Or someone else thinks it's pie-in-the-sky, so you scuttle your idea off to the Dead Ideas folder on your computer?
Yet some ideas are clear winners. How can you tell which brilliant idea for a new product or feature is worth pursuing and which might not be as valuable or need more tweaking? Market validation research is a vital step between ideation and creation that can answer that question before you invest too much time or resources into it.
Let's take a deeper look at what exactly market validation is, why it's essential for companies before investing in ideas, when and how to conduct market validation research, and the methodologies that can help you get the market validation your idea or product needs to succeed.
What is market validation research?
Market validation is the process of testing a new product idea for viability to determine whether a product or feature is needed in your target market. Simply put, does the public have an appetite for your product? It is a crucial step to take between product concept ideation and product creation.
By testing the practicality and feasibility of a new product with the target market before investing time and resources into its development, you will have a better sense of what your users' needs are and whether and confidence in whether (or not) your product will fulfill those needs.
Market validation research can also help garner buy-in for your product or idea. Early validation will allow stakeholders—internal team members or external funders—to be confident in bringing your concept to market. Further, market validation research can allow you to tweak and hone your idea to better address any unmet needs or pain points your users may have.
Market validation is generally accomplished by identifying the buyers or users of your product in your target market and then interviewing or surveying them for direct feedback about their needs and pain points.
Why is market validation a vital early step in the development process?
Having what feels like a wholly intuitive and ingenious idea can often motivate moving fast to push it into development. However, anyone who's worked in product management has probably had the unfortunate experience of discovering that what sounded terrific in a product dev meeting doesn't stand up under real-world scrutiny. Why?
- Perhaps your target market would like your idea but not enough to pay for it
- Maybe it's not as big of a problem for your market base as your team supposes
- Maybe your target users would love your idea, but their companies don't find it to be a value add for their budgets
- Perhaps your users have already figured out an easy way to resolve the issue your product is addressing
By conducting market validation research before investing in the development of a new product, your company can help justify buy-in and funding for the product while avoiding the waste of a product failing to meet expectations.
The real-world value of market validation research is that it will help you uncover the blind spots you or your team may have when evaluating your ideas, unearth pain points for your target market that you might have glanced over, and help to finetune your thinking before an idea moves into development. After all, running market validation research and finding out your idea is a clunker is much less expensive than developing and marketing an idea that underperforms expectations.
What research methodologies are used in market validation?
Many methodologies can be employed for market validation research, each representing advantages and disadvantages. Some lean towards quantitative data to provide a high-level understanding of the market, while others are more qualitative and can give you an idea of what users in your target market feel and think about the product. When choosing which methodologies might be best for your product, the goal is to employ multiple methods to give you a richer and more complex view of the market. First, let's look at the most common methods.
Surveys, focus groups, and interviews
Depending on whether the questions you ask your subjects are open or close-ended, surveys, focus groups, and in-depth interviews can give you both qualitative and quantitative data directly from your target market of users.
Additionally, each method provides the flexibility to learn in-depth feedback directly from interview subjects and gather data that can give valuable direction to your project. Surveys offer the opportunity to collect large amounts of data at one time. Focus groups and interviews can allow you to drill down quickly when you discover specific pain points your target users experience.
In observational research, you have your testers interact directly with your product and take note of their actions, behaviors, frustrations, holdups, habits, and pain points, often without giving them much direction. This is often helpful information for products with a less tech-savvy market base. It can also be beneficial if you've run alpha and beta testing and find disparate data from your two user groups.
Which leads us to usability testing. Like observational research, usability testing requires observing how users interact with your product following a determined set of steps while you watch and record their reactions and issues.
When users can directly interact with and comment on your product in an observational setting, you can assess how easy to use your product is, how useful the functionality might be, and how receptive your test market is to changes you've made.
Building out a minimum viable product (MVP)
Developing the minimum viable product (MVP) would be one of the last steps of market validation you and your team might take. That's because an MVP is your product's basic, physical version that can still offer usefulness to your users. However, producing one can represent a significant outlay of resources and costs—both in time and financial investments—so not every project or company will find building an MVP practical.
If you are working on a first product, rather than a new feature, say, it could be sensible to produce an MVP early. Not only will this allow you to have a basic version of your product to market validate with test consumers, but you can also begin making revenue from an early version while fine tuning your product.
One way to evaluate how much value a new feature for an existing product might add is by running A/B testing ads designed to test how many click-throughs you get for one idea compared to another. For example, suppose we were thinking about adding a feature to our verified research participant database that offered AI to complement traditional surveys. In that case, we could set up an SEM test with a campaign that offers "Verified research participants tailored to your needs" and compare it to another campaign offering "Verified research participant recruiting powered by AI insights."
By comparing the number of click-throughs each ad garners, we could have constructive insights into whether there's a desire or value in adding AI to our product. You can also tailor the landing page the ads take a user to garner even more validation of a product's potential value based on clicks, impressions, and conversions to compare results from each.
Prototype testing can be a valuable tool in your market validation toolbelt for allowing test users the means to have meaningful interactions with your product. For usability testing, having a prototype available for users to interact with can give you keen insight into how the product works in real-life settings, possible UX/UI issues, timely feedback on design issues before full development, and a better understanding of how your users interact with your product.
Utilizing SEO results and Google Trends
One of the simplest ways to begin market validation is to use free/low-cost tools your organization likely already has access to. Just like you'd check your SEO results frequently after you launch a new project, you can also utilize them before building your product to gauge what your user base's interests, needs, and pain points are by using Google Trends and SEO tools like Semrush, MOZ Pro, or Ahrefs.
By investigating how often particular keywords and terms associated with your product are being searched, you can get an easy view of what your user base needs and where your product does or doesn't meet those needs and monitor growth in interest over time and location.
The market validation step-by-step guide
Step 1 – Define goals, assumptions, hypotheses, and target customer
- Define your goals clearly
- Identify your target market
- Highlight any untested assumptions
- Identify unmet needs your customer base may have
- Define your unique value props
- Develop your hypotheses
The first step is to identify your goals for your product. Having a clear view of what you expect to accomplish, you can then clarify any plans that may still be assumptions that need to be verified.
Next, clearly define your target market for yourself. This will help you move on to the next step, which is documenting your hypotheses about the function of your product, how you will produce it, the pricing model, and so on.
Once you have a handle on your target consumers, define your unique value propositions, what makes your product useful, necessary, or unique, and how it meets your users' unmet needs. When you have a keen understanding of these things, you'll clearly understand what you will need to test with market validation research.
Step 2 - Assess the market size and share/competitive landscape
Next, get a fuller idea of your market size, the share that you think you could reasonably capture with your idea, and who your competitors in the market are.
Start broadly by researching the industry, its annual spending, and how your unique value props may disrupt that.
Utilize SEO search volume tools to better understand the demand for your product and how you can best capitalize on that demand to make your product stand out against competitors.
Step 3 - Perform customer validation research
Your next step involves getting into the nitty gritty and performing customer validation research that will give you actionable insights into what your target market segment needs–their pain points- and how your product can potentially alleviate these needs.
This will often involve conducting interviews with your target market by finding research participants to conduct interviews, holding focus groups, or gathering data via online surveys. You're looking to answer a few basic questions at this stage. That is:
- What are the pain points or unserved needs your market segment is encountering?
- What are their motivations and preferences?
- How are your competitors' products leaving these needs unmet?
- What are the workarounds they've developed to try to meet these needs themselves?
- Are they able to solve this/these problems?
- What is their level of satisfaction with the products they currently use?
- Would your product be useful as a solution?
- Are there any assumptions or hypotheses you originally created that need user feedback?
- Is there a feasible monetization of your solution for their needs?
When beginning this kind of research, you'll also need to look at what success means for your product by clearly defining your success criteria. First, understand what user responses will define success for your product or idea. Do this by looking at what percentage of respondents experience specific pain points, what percentage find your product idea to be a viable solution for their particular problem or problems, and what percentage would realistically pay for your product to solve their problems.
Next, analyze the data that you've gathered. Go back to the list of hypotheses and assumptions you created. You may need to revise your original assumptions. This could also be where you realize there isn't realistically a market for your product or idea, and that's okay, too. Ask yourself, if this isn't the solution our market base is looking for, what is? Work to improve what you have to offer, and then you can revisit test market validation again.
Step 4 – Test your product
Once you have a reasonably strong idea that your idea could be a solution, you can move forward in market validation testing and research that takes more investment, such as prototyping or creating an MVP. After that, you'll want to move on to testing your product.
First, test your product with focus groups or interviewees who can give you granular data about how the product works and what might need to be finetuned. Utilize test groups who will realistically be real-world users to get a fair and representative idea of how your product will function in the marketplace. Then, utilize these insights to tweak and adjust your product as necessary.
Next, it often makes sense to conduct alpha testing for your product with internal employees in a controlled setting that will allow you to check for issues, identify bugs or quirks, and address them before making your product public.
Finally, you can perform beta testing by releasing your product to a small, limited set of external users, with the goal being to identify problems, glitches, or UX issues before a wider release.
Ultimately, don't we all just need a little validation?
We all understand the value of having our ideas validated in our personal lives. With new products and features, validation is a meaningful way of proving market value, gaining buy-in, and providing a bridge between ideation and development.
The goal for market validation is about more than building a Fortune 500 company overnight, unfortunately. However, if that's a vision you have for your future, taking the proper steps when taking a new product, startup, or feature to market is a small step toward achieving that. Instead, market validation research is a process that can help you make the best use of your resources and determine whether your product or idea is ready to push into development so that your company continues to produce the best version of every product it offers.
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