In this article, we’ll show you
You just came up with a new business idea, or maybe a new product/service for your existing business. The idea seems great, and you can’t wait for customers to try out your product and see how they feel about it. But you’re stuck with something…You’re not sure how, where, and who to test your idea with. So, how should go plan your go-to-market strategy?
This leads you to the most important step for your venture—market testing.
Most start-ups and innovators struggle here. With a small budget and limited resources in hand, you wish to maximize the chances of your product’s success in the market. Let’s say you’ve come up with a premium natural food concept. Now, your next step is to gain profits and minimize risk in the idea. This calls for a two-step approach—First, choose a test market to launch your premium natural food concept. Second, test your launch in the market with several experiments. The most important part? Finding the right market to test and launch your product in, while keeping the expenses in check.
Whether you have a Minimum Viable Product (MVP) or just a preliminary idea, you need to test the viability of your business idea before you dive into market testing. To know where you stand with your product, simply ask yourself. “What do I need to make this idea work?” You’ll find yourself listing some important factors, which can broadly be summed up into 3 categories—Desirability, Viability, and Feasibility (DVF). The list of hypotheses under this DVF view forms the base of the Assumption Map.
The Assumption Mapping exercise describes your ideal market conditions and gives clear direction on the right value proposition, business model, and market strategy to build on. It also shapes your go-to-market and experimentation strategies that are to follow.
Focusing on an insight-driven approach and extensive market scanning, we’ve developed an accurate tool to pick the right test market—The DVF Decision Matrix. The previously defined DVF categories serve as the foundational elements of the Matrix. With practical market data and elaborate research, we validate the DVF assumptions and feed them as inputs into our Decision Matrix. Throughout the process, we gather subjective insights from internan team members to augment the data.
We insert relevant information into this matrix with in-depth research and high-level assessment of the industry trends related to your premium natural food concept. The idea is to gain actionable insight into different buyer personas and sentiments to segment the market as per the DVF variables. With insights on size, growth rates, and specific levels, the markets are tested against each other on both a strategic and demographic level. Here’s what we look at:
Competitors Study and Market Info: Competitor analysis, industry vertical mapping, and market sizing are pivotal elements of research. Extensive local market databases show relevant information on key competitors. Knowing the competitors’ target audience for a similar product and analyzing its DVF variables serves as the foundation of your premium natural food concept’s test market.
Search Trend Analysis: This involves looking up the product niche-related search terms on search engines such as Google, and analyzing relevant data including keyword search volume, cost-per-click, and so on. Tracking customer preferences and purchase intent this way offers a detailed overview of the DVF variables across markets. For example, keyword mapping research on ‘best natural nutritious food’ will showcase big the consumer demand is, providing a solid base to start off.
Discovery Surveys: Surveys give in-depth market information on customer problems, product solutions, and their validity in the market. Reviewing the survey responses under the DVF lens offers a clever breakdown of the market environment, customer pain points, and their interests.
Quantitative Insights: Data from our market experiments are also fed into the matrix elements. Online conversion rates, customer acquisition costs, and other relevant KPIs indicate trends and real-time customer intent on the detox service.
Each element in the matrix is assigned a specific weight as per relevance. Collating these data and insights, we arrive at a weighted decision matrix describing the DVF factors of your premium natural food concept under different market segments. The final score clearly indicates the best-fit test market for the new product, which serves as our chosen test market.
Experimentation is a crucial part of innovation. When your product is unique, the market is new, and the solution is unexplored, the smartest course of action is to experiment and reduce the risk by learning. Testing your innovation involves experimenting at a smaller scale in different markets before going all out in one. For context, small failed experiments in 2 test markets to arrive at a successful one in the 3rd market is a smarter play than going all-in in 1 market and getting suboptimal returns or even losses. The approach permits close evaluation of the results from each experiment, ensuring that the final test market leads to a profitable outcome and successful go-to-market.
Testing your business idea clearly defines if it will survive in the market, and more importantly if it will bring you sustainable profits. But testing in an irrelevant market will result in a flawed suboptimal outcome. This is why we leverage our proven, systematic Decision Matrix to identify the ideal test market for your innovation. With this insight-driven, systematic approach to test the desirability, feasibility, and viability of your product/service, we guide you toward the right market that most needs it.
Laura Hasaers
Management Consultant
Olivier De Hous
Partner
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