Having a cool new product isn’t enough, people need to want it too. If you are introducing a new product or service that people don’t even know they need you will be spending most of your time educating your customers as to why they would need your product or service in the first place. Educating consumers is an extremely costly and difficult process and you should avoid it whenever you can.
Instead, validate your target market before you invest a great deal of your own money to ensure there is actually demand for that product or service already. If you have a product that has clear market demand, and little to no competitors, then you may just have a winner on your hands.
Validating your market is actually a very simple process, and most of the time can be done for free . Here is how I did it for the Hexels:
First step, use the Google Adwords Keyword Tool to see how many people are searching for topics around your market. For the Hexels, I knew that my target market was gamers who play the Settlers of Catan, so I used the terms “Settlers of Catan”, and “Catan”, to see on a monthly basis how may consumers self-identified themselves as being interested in Catan.
So on a monthly basis there are 90K+ people searching for “settlers of catan” and 200K+ people searching for something based around “catan” in the United States alone (Local Monthly Searches usually denotes your country of origin, in this case the US). If we could capture even 2% of the smallest number listed here (90K+ consumers) that is 1,810 potential customers every month. That’s a pretty good number of people. Lets say we plan on selling our product for $35-$50 to those 1,810 people every month. That means on a monthly basis we would be doing $63K-$90K in sales which puts our yearly sales numbers at $760K-$1.08M in sales.
As a bonus, the approximate CPC(Cost Per Click) is pretty low so advertising on Google is a very real possibility for our marketing in the future. As a comparison, the term “web hosting” has an approximate CPC of $14.24.
So far everything is looking pretty great! We have a large market to work with and based on our estimated sales we should have plenty of capital to work with as well. Our next step is to check Google Trends for the long-term feasibility of our product. There may be a market now, but if there is evidence of a steady decline we may not want to enter this market at all. Google Trends works on a scale of 0 to 100. Where 100 is the highest highest number of searches for one of your search terms over a specific period of time. Google Trends works best as a comparator of search terms and market interest over a period of time and cannot inform you as to the number of searches happening (that’s why we use the Adwords Keyword Tool first). We can use the same search terms we used on the Google Adwords Keyword Tool, so “Settlers of Catan” and “Catan”.
It appears that interest for the Settlers of Catan was a bit higher in 2004-2005, but since 2007 has been pretty steady with seasonality peaks even appearing (in this case they are consistently appearing around Christmas time). It’s been 6+years without a significant sign of decline in market interest, so I think it is pretty safe to say we have found a good market to work with.
You can even find regional interest based on country, state, metropolitan area, and city to find exactly where you would want to advertise your product. In the case of the Settlers of Catan, if you had only one place you could “open shop” it should probably be Salt Lake City, Utah.
As a comparison, lets use Google Trends and look at the results for “web hosting” again.
Ouch, I don’t really want to get into web hosting anytime soon.