Market research is the proverbial first step to solidifying your place in history as the inventor of the next Facebook. Or, it just might make you realize that your idea is too ahead of its time and the average Joe will simply lack the intellect to comprehend its brilliance.
In a nutshell, market research allows you to figure out whether the people that you think will buy your product or service will buy it or not, and what they will be willing to pay. This preliminary step is super important because launching a product can get very pricey and it will save you a lot of money, time and energy if you have a clearer idea of what you can expect in return.
Sure, your ego may hurt when you find out people don’t dig your idea but at least your wallet doesn’t have to!
There are firms out there that charge an arm and a leg to tell you what will ultimately seem obvious, especially in hindsight. Sometimes it’s helpful but it’s also possible to hack it as long as you are creative, have some social skills, and most importantly, are SHAMELESS.
My market research almost “accidentally” happened. When Stanley, my first nephew was about 3 months old, my sister-in-law sent me a video of him giggling in the tub wearing what appeared to be a travel pillow around his neck. I was in awe.
For a good one month after, I enthusiastically made all my friends watch him “swim.” Yup, I am one of those aunts. It also happened to coincide with a time when my friends were having babies all at once. I had some serious baby shower gifting to do so I purchased a few of those infant neck floaties on a trip to Asia and started including it in my baby gift repertoire.
One of the recipients was Serena, my college roommate. She sent me an adorable video of her 3-month-old Saira “walking” around a humongous tub. It was hilarious to see her bumping repeatedly into a corner but equally fascinating to see how she eventually maneuvered her way out after several tries. She was learning to move in the water when she could barely do so on land.
Naturally, Serena started showing off her mini-me working through her first aquatic obstacle course to friends. At her 5-year business school reunion in Philadelphia, she called me up and said, “Tiffany, you have to do something with this. It's a really cool idea, and it may need some tweaks but all my classmates here think it’s neat!” Motivated by the nods of approval that I was getting from the brilliant minds of people who had graduated from one of our nation’s top business programs, I went to work.
My 5-year reunion at MIT Sloan happened a month later so I seized this opportunity by pretty much forcing everyone I could stop to watch videos of Stanley and Saira bobbing up and down in the water with this thing around their necks. Following the video, I had them tell me (honestly) if they would buy this bath toy for their baby if they had one, and how much they would pay.
The proportion of yeses to nos were so high that it was enough for me to at least starting thinking seriously about the infant neck floatie as a viable business concept. Then, I followed through with a lot of Googling on US birth rates, ceaselessly asking friends with babies their thoughts, and educating myself on the existing comp set so I can begin to differentiate my concept from the rest. But it’s a lot easier to do the research and self-educating when you know exactly who you want to target with your product and at what price.
Now you’re probably thinking that this didn't seem at all scientific. But, I sampled what I believed to be representative of my target demographic and they did confirm that they would pay $35 to $50 for something like this.
Still, it’s good to note what my mentor said once: there is a pretty big discrepancy in what people say they will pay and what they will actually pay. And this goes even if you are doing an anonymous online survey. So as you may note, our pricing falls on the lowest end of this range, but that’s sufficient to cover our higher product costs (learn about our design differentiation comparing to other cheaper and unbranded versions) and keep the business alive!
I will elaborate more on the value perception in a separate post but in the meantime, be shameless and brave about asking people for their honest opinions on your little baby (aka idea) before you start investing in its creation.