How can I test my ideas in the market quickly?
As a business you would be working on multiple ideas for growth and sustenance. Pursuing multiple ideas at the same time is difficult for any business. Resource commitment to wrong idea can set you back by many years.
Hence, you may like to prioritize, evaluate & drop some ideas prior to committing resources.
Basavaraj Angadi
All Ideas are good when conceived in mind but only few turn out to be successful. When you look back and evaluate all ideas that came to you, you would have mixed feelings, for some you would be very satisfied that you pursued, for some you would be regretting & for some you would be feeling left out.
Here you would find few simple ways in which you can classify your ideas, prioritize them & allocate your resources to bring some of them to life.
What is Business Idea & how do you classify them?
Business idea is a new product or new service which you would like to commercialize in the market
It primarily falls under following four broad categories,
- Existing Product in Existing Market – Incremental Idea
- Existing Product in New Market – Expansion Idea
- New Product in Existing Market – Innovative Idea
- New Product in New Market – Revolutionary Idea
Category of your idea may decide resources required & time to commercialize your idea. Like
- Incremental Idea – Low hanging fruit ideas – New variant of existing vehicle, this will not take long time for the company to launch.
- Expansion Idea – Understanding new market dynamics and establishing support structure to ensure after sales support is available are critical. It takes little longer than the first category of idea
- Innovative Idea – These ideas take considerable time, need resources & lot at stake. Example can be Maruti Launching Breeza, Baleno after lots of market study, designs variations, road testing etc.
- Revolutionary Idea – These are the ideas which change the entire business dynamics. It takes very long time, lots of resources & everything on stake. Example can be Reliance entering telecom market
Time required to validate & commercialize any new idea varies based on category of idea as mentions above.
What sets successful companies to differ from ordinary companies is the lenses through which all ideas are tracked. Dropping any business idea midway is the most difficult decision which leaders have to take. Any delays in dropping unrealistic ideas adds on to the cost & affect the bottom line.
Why it is important to scan the ideas & test it before committing resources?
You would agree that all ideas are not successful. There may be plenty of reasons why idea is not successful some of them are in your control & some of them are not in your control. Testing & dropping your ideas in early stage is very important. The most important thing for any leadership is to drop the ideas quickly when they fail in market test so the next possible idea can be pursued.
What are the ways in which you can do assessment of your ideas?
There are broadly two ways to do the assessment
- Inside Out ( Internal assessment)
- Outside In ( External Assessment)
Let’s understand more about these assessments
Inside Out Assessment
This is first filtering criteria for any idea. This is generally useful for all except Ideas falling in “New product & New Market” category. This is simply because there is no internal benchmark available to measure.
When you have bunch of ideas to select & prioritize you can put following criteria & give a scoring based on high medium & low ratings ( 1, 3, 5).
Some of the criteria would be
- Business opportunity ( $$) – More the higher
- Our capability to execute – Higher the better
- Competitive intensity – Very Low & very high both are extreme ends, rating for the same can be high or low based on your own business dynamics. Very Low Competitive intensity looks attractive but as there is no reference available it’s not easy to judge, more research is needed prior to ranking on this criterion.
- Timing to the market – Lower is better
You should rate all the ideas against these criteria. Give a composite score ( multiplication of all scores) to each idea. Sort all ideas from higher to lower score & your prioritized list of ideas would be available.
This step relies on the cumulative market knowledge of the business team. It’s important to present these set of ideas to leadership team & get their buy in.
Critical step here is to note down all assumptions. All assumptions would lead to the vast list of unknowns which you would like to know. This list of unknowns is nothing but your requirement for market research.
Outside in Assessment
This is the most crucial way & needs commitment from the management in allocating valuable resources like people, time & money. This step involved testing of your idea in the actual market. There are many names by which you would be knowing this stage as Beta stage, Pilot stage, Pre-Launch, prototype testing.
This test is a must for all but most relevant for “New Product & New Market” category. This is simply because there is no prior experience to the organization.
First step in this stage is to validate your assumptions & try to find out the unknowns you have identified in Inside out assessment. There are many ways in which you can try to complete this stage like
- Voice of Customers from target segment – Listening to targeted customer
- Market Research – Research to find information gaps & validate assumptions
- Behavior study – Consumer behavior study around the business idea.
- Competitor benchmarking – How efficiently they are meeting customer requirement?, are there any gaps in service or product etc.
Second step in this assessment is to reach out to early adopters in your market. They are instrumental in validating all ideas in early stage. There are many aspects which need to be validated & corrected, some of these aspects can be
- Product / service features valued by customer – listing of higher value to lower
- What benefits are perceived by customers & their listing from most valued to least valued
- What improvement areas suggested by customer from top to low
- Given a choice what price tag customer would like to see
- Level of excitement after possession or during usage
Third step in this assessment comes after reviewing step one & two thoroughly. Inputs taken in these two steps are used for finetuning your product idea or going back to the drawing board if there are major gaps identified.
Fourth Step is an actual pre-market stage where you do all the detailed assessment & prepare a detailed marketing plan.
Some of the key ingredients for this plan
- Segment – Cluster of customers based on buying behavior
- Target Segments – Your target segments from available clusters
- Positioning of your product
- Competition study – What’s the best alternative to your product / service today. What gaps are you addressing in the market?
- Entry barrier – How easy it is for your competition to follow you
- Revenue Projections – NPV for next 5 years
- Resource requirements for next 5 years
- Profitability & market share projections
- Market readiness
There are many templates you will find which can be used or customized for your industry segment or product category.
No idea is a bad idea unless it goes through the process. Always use criteria-based filtering mechanism to rule out any biases.
After following all due diligence there would be failures as certain factors are beyond anyone’s control like COVID situation, War, natural calamities, exchange rate fluctuations etc. Factors like these may delay your project or you may have to drop it considering your organisations priorities.
Great! So what do I do next?
- Classify all ideas as per idea categories
- Evaluate all ideas as per the internal assessment guidelines
- Periodically select top 5 ideas to pursue & put devoted team to explore
- Review the progress & drop few ideas if needed
- Take selected ideas through three steps of outside assessment
Keep populating ideas & keep growing.
About Author
Basavaraj Angadi
Basavaraj has about 2 decades of experience in sales and marketing. He works closely with corporates, SMEs & Startups enabling them to grow and expand their business.
Business Strategy, Business Development, Product development, Project management, Key account management & businesses with OEMs & government enterprises are his areas of expertise
He is fitness enthusiast, passionate about running & hiking.
