Goal : To gauge market demand to determine if it is sufficient to build a profitable business out of the market
You might be wondering, won't solution validation and customer validation already proved a point that there is demand for your product? The answer is Yes and No. Yes, by doing validation over a certain number of sample size, you have your product validated from a couple of people's perspective.
However for a business to thrive, you need a healthy size of market demand to support your business, giving you sustainable revenue.
Hence, this validation focuses on whether there is a sizable demand to justify entering the market.
Answers to Discover
Doing market demand validation helps you discover the answers to these questions :
- Which industry does your product fall under?
- How big is the existing market demand? What is the size of the overall market in both dollar and number of customers? What is the current industry valuation or spending?
- What are the sub-markets? How did you determine these sub-markets? What are the sizes of these sub-markets in dollar terms and number of customers?
- What is the growth rate of the overall market? Is your market growing above, at or below the overall market growth rate? Is this growth rate expected to increase, remain or decrease over the next five years?
- If your product is futuristic, is there a trend that would create future demand for your product?
- How much interest can you generate with just a landing page or advertisement? Are the interested people willing to place an order?
- How many existing products that are similar to yours? (it doesn’t necessary have to be exactly the same, but solving the same problem using different solutions should be taken into account as well.)
- How popular are those existing products? (from number of searches in search engine, app store downloads.)
- What are people searching for? What do you notice after filtering the high volume keywords?
- What type of content appears in your searches? (articles or companies) Is this consistent for other keyword searches related to your idea?
- Where do people who are searching for the related keywords live? What barriers might exist that will prevent the introduction of the product or service?
- What is the volume of people who searches for keywords related to your idea? What are users talking about ideas closely related to yours? (Comes in handy for communicating your idea and for marketing materials later.)
There is no question bank in this section, as the methods that we will be using to validate market demand will be targeted towards mass amount of validation.
Takeaways
The takeaways that we should be getting after doing market demand validation are :
- You have a big picture of the current market size that allows you to have confidence in the value of your business and being profitable.
- You understand which industry that you are disrupting or entering.
- You know the market trend and where it is heading.
- It is best if you can compile a list of early customers.
