Having a great idea, creating a watertight business plan, nailing your IP, ensuring it has a first line of defence, and creating the beginnings of a kick-ass brand. All this takes time, and it could be anything from a few weeks to many months.
- Innovation and ideation
- Case study: Big fish, bigger ambition
- Early stage business planning
- Case study: Think BIC
- Early IP management
- Early stage brand development
- Case study: Design power
- Market validation
- Case study: Got a tough problem?
- Prototyping and testing
If you’re sensible you will have done your damnedest to keep in touch with your customers throughout this process with constant research, even if this just means trawling online and asking the right friends what they reckon—you may have been reluctant or unable to spend big money on market research up to this point. But now, it’s time to get serious. Think of it as a final check before you leap out of the plane.
A lot can go wrong at this stage. The market or the economy may have moved on, faster innovators may be chowing down on your lunch or the government may have created a regulatory assault course you may not wish to attempt.
Alternatively, you may find yourself in a much better position than you realised. Other technological advances may have prepared the ground for you, offering new connections and new customer awareness. Or, as in the case of the electric vehicle and healthcare markets recently, the President of the United States may have decided to spend billions on the area you are hoping to tap into. And new needs emerge all the time, which you may have a solution for.
So look hard before you leap.
The work you have done on honing your idea should have defined your target market in a great deal more detail than when you started out. Now is the time to really stalk your prey, get to know their every move and the right moments to strike. You need to know who they are, what they buy, what they read, what they watch, how much money they spend and where.
One inexpensive option is BNZ’s MarketView, which provides you with detailed information derived from BNZ credit and debit cardholders’ spending with retail merchants throughout the country. All you have to do is decide which pies you want a slice of, which slice, and then work out a way to get it.
But be prepared for the ones that get away. What you learn now may mean going back through the steps you thought you had completed, and doing them again, or abandoning the idea altogether. Although in theory you are confirming what you should already know, you need to be clear that success is not a foregone conclusion. Overconfidence at this point can mean you don’t react in time, and a minor setback becomes a hugely expensive mission to nowhere.
“There may be no point trying to muscle in on a competitor’s action if their customers are deliriously happy with them, but where there’s moaning, there’s a market”
Ask a stupid question...
What you get out of market research is largely a measure of what you put in. You should have a very clear idea of what you are selling, and what you need to know to ensure it connects with and wows the customer. This should create really useful questions that generate really useful answers. If you find yourself asking very general questions and getting useless answers, go back to your core idea.
DNA’s Grenville Main suggests that once you have your side of the story straight, the research challenge is, “Seeing customers more as people you really give a shit about. What do people really think?
“It is really easy to bag market research,” he says. “There’s the old joke about market researchers holding up a yellow card and asking, ‘Is this yellow?’ But the best research comes from the best questions. You’ve got to know why you’re conducting research. You are trying to change the bounds of what people understand.”
This can be especially challenging if what you are offering is really new. Your sample of willing volunteers may find it hard to articulate how they feel about a Gestacklebaum Rental Bifuser, if you just invented it.
““It very much depends on the product. We are restrained in some categories and broadminded in others. You have to get out and talk to people. It’s really not hard to get Kiwis to open up their homes, fridges and houses and talk about what they spend their precious money on””
“Market research works really well when you are talking about beer, because people can understand what you are talking about. But the nature of innovation is that you may be talking about something they have never heard of, so people can’t understand what you are saying. The question is, can you relate it to anything else?”
If there is something similar out there, you need to know how people feel about it. There may be no point trying to muscle in on a competitor’s action if their customers are deliriously happy with them, but where there’s moaning, there’s a market.
Main says: “What it comes down to more often than not is how you define your market, who you can access, where the early money is. People get obsessed with how they can make it happen at all, rather than how it can be a longterm product that people can’t do without. It is also quite scary if your sample size is you. You may be aiming at different people than you first thought.
The myth of the perfect test market
New Zealand is sometimes seen as a comfortably small version of our export markets. But be warned—think global if you want to go global
CEO and co-founder of The Hyperfactory
“In the early 2000s, people were talking about the idea that New Zealand is a great market because you can test-bed ideas with international companies and then you can take them offshore. I don’t know if that’s true.
“You can test a product, test a team, test a process, but the guy who runs Nestlé in England or the US doesn’t particularly give a shit about what the guy in Nestlé New Zealand thinks. It doesn’t get you the meetings. We thought it would. That was the initial idea, ‘We’ll start it in New Zealand and then we’ll go overseas and tell them what we do.’ I wouldn’t do that again. It works the other way round. If you get hold of the guy in Nestlé headquarters in the US and he buys what you are selling, then you come to New Zealand, you can probably walk in through the door and see the CEO. I would just build the model, from the outset, to be global.”