When you start out with a new product or service, you are starting from scratch. How do you find out whether your product has any chance of success? Will potential customers want your service?
Market testing involves taking your product or service and testing it on a small scale. The more honest and direct feedback that you can get from potential customers, the better. As one small business adviser said, testing your market acts as a bridge between having the big idea and launching a full-scale business. It provides useful, possibly essential feedback but the only downside is that it can reveal your hand to a competitor.
As a start-up founder or small business owner you don’t have the deep pockets to spend heavily on testing your product or service. It’s far more beneficial to find ways that are low-cost or no cost for market testing.
Before you go out into the marketplace make sure that you and your business look professional. It’s worthwhile to have a business name and a business address and even a business card, if possible. Let’s be frank, in the test marketing phase you don’t yet have a fully realised business so that you need to be honest about the stage of your business. You can’t go in bluffing that you are an already established business because it will undermine your credibility.
As I promised, here are some really dumb ways to do test marketing. One is focus groups. You are not going to learn a lot from focus groups. All you get is answers people want to give you and it is very expensive information because it can be utterly useless.
Next up is leaflet drops. How many people are going to respond to your leaflet? Although leaflet drops are relatively cheap they are not targeted and the response rate is low. One small business owner I spoke to who used this method said the results were pathetic.
Some so-called gurus mention using mailshots but how long are you going to have to wait till your mailer comes back to you with a reply? To get your small business off the ground quickly, you can’t use mail. The response rate is low, it takes long and unless you have a very specific targeted mailing list, you are just shooting in the dark.
Here are three better methods for testing your market. One is giving out samples of your product into the trade or taking samples to potential buyers. It’s even better if you take orders before you start production. One entrepreneurial couple started an energy health bar and to test market it they first took it out into the trade such as delicatessens and other speciality food stores and gave out live samples. In a matter of days they received calls from some of these delis who placed orders.
You might also want to consider exhibitions or trade shows. It may not be possible for you to afford to rent a stand at an exhibition tradeshow so check the names of exhibitors who are going onto the show and see if you can’t negotiate some space on their stand. If you can’t wait for a trade show or exhibition, see if you can’t find a local store in your community where you could display your product or information about your service.
Another possible way of testing your market is by placing an advertisement offering information about your product to potential customers who you ask to respond. The best way to do this is to put the advertisement in a publication that is specific to your product or service. If you are selling in a local community, choose the best or most effective local publication. The only problem here is that the response may be minimal because people have to take the trouble to contact you. Yet with social media such as Facebook, a website or email if people really want what you are offering the response can be fast.
Starting your own business can be a huge step to take and may even be a major change in the direction of your life. You can’t avoid learning the hard way but you can take steps to prepare you for some of the possible pitfalls on your entrepreneurial venture.
The first step you may want to take is to get hold of a comprehensive and practical guide to planning, starting and running your own business. Click on this link.