Market validation is a series of actions and steps organized for the purpose of determining whether your product can find its place in the market that you are targeting. This has become a very popular topic in the circle of businessmen and it’s easy to discuss, but harder to do.
Validation is the process that should be taken seriously because the statistics show that 90% of different start-up businesses fail and 70% of all new products also fail nowadays. The mistake that most people often make is avoiding this step, but make sure that you are not one of them. We will define steps to validate the product idea in order to avoid the problems of business failure and product rejection by the market.
How to validate the product ideas provided by a business
Leading the idea from stage to stage where the last stop is paying customers, is a very difficult path where we have to face the risk. The purpose of the idea validation process is to discover the practical side of the idea in the real world to make building and releasing the final product as close to success as possible.
Testing assumptions is actually what makes validation, and it is very important to know how to recognize the level of importance of each individual assumption. Why is that so? When you test the riskiest assumption you are trying to reach the worst-case scenario that might happen while trying to implement your business idea. In this way, you can speed up the validation process and save time.
The advantage of saving time is that your data on which you build your research remains credible because the market is an unpredictable territory where something new is constantly happening and if your validation process is slow there may be variations in research results.
Here you can find a way to learn how to validate the product ideas in 4 steps that are related and relevant.
1- Defining your business goal – opening stage of the validation process
In this early stage, you should be focusing on validating your assumptions and try to assess the potential of your idea and how it will be accepted. The main goal is to determine the target market and determine the connection that the idea and the market have. Before you start testing your product you need to make sure that your assumptions regarding your market and idea are valid.
Entering point into this process is defining your goals, determining what you want to learn, and what aspects need to be validated. For example, your goal may consist of the following things where you assess the situation in detail, from different perspectives.
- Problem– Where does your problem stand when it comes to being true/worth solving?
- Solution– Can your product or offer actually solve the problem you determined?
- Features – Are the core features of your product defined how they work?
- Business model – Can you say that your business model is viable and scalable?
- Price – Will your business work with the price you set? Is your pricing model going to work in practice with potential customers?
These examples are not the only ones but are used very often, they will help you identify the most critical assumption to make sure you start with the most significant ones. In this way, you can exclude the product that won’t be accepted by potential customers and eliminate any potential disruptions to the development of your new business idea.
2 – Developing a hypothesis based on the goal
The hypothesis should be based on the goal we have previously defined and represents a testable proposition and can very often be used for prediction. It gives us insights into future developments and the realization of our idea and if it is based on a well-defined goal, it can give a useful lead.
Articulating your vision is the process that can illuminate any assumptions that you have and provide you with an end goal that will be a turning point in your success.
Ask yourself …
Most important is to ask yourself WHY, WHO, WHAT, and HOW your product idea is going to work and to be wanted by the customers.
Let’s start with asking yourself these questions:
- Why do potential customers need my product?
- Who is my target audience, and what are the assumptions that I have made about them?
- What are the differences that my product has compared to others and do these differences have advantages over products that already exist?
- What is my most critical assumption?
- How the price is going to affect real people and will they be willing to pay for my product?
When you define your assumptions and hypotheses, when you have an idea plan in your mind, then you are ready to go further with your market validation.
3 – It’s time to experiment and revise
Once the hypotheses have been developed, we are all set to take the next step, and that is validating our assumptions by performing experiments. Experiments are required because they give us helpful results that we can use to create solutions for problems that stand in our way. Our business idea depends on good experiments that are valid and suitable to give useful results.
So here, your assumption needs to find a way in real life, that is, to affect target customers. Through the validation process, the purpose is to determine whether previously made assumptions are correct or incorrect and to find the fastest and cheapest way to test them. The main goal is to use resources wisely, but enough to get to the solution.
It is a concept that needs to be adhered to in order to win a place in the market. If you want to sell your business idea, you need to conduct an experiment to learn how to make your idea or product even better.
What are the different ways to conduct an experiment?
If you want to do your research that will help to validate the problem, conducting interviews and surveys is a common way to validate. At the start, you should build an MVP that stands for Minimum Viable Product.
What is MVP?
MVP is a version that has enough features to attract early-adopter customers and has applications in the early development stage of the product. So, to simplify, its purpose is for the product team to receive user feedback as quickly as possible in order to make the product more advanced. Building MVP includes landing page, email, physical prototype.
A landing page can be very useful because it can convert visitors into leads and if you want to test customer reaction, this is the solution for you. In this case, you have insights into how your business idea has been accepted in the target market.
Validate your idea with other ways to conduct an experiment:
- Conducting an interviews/surveys
- Using crowdfunding platform
- Start A/B test (using different versions of advertising campaigns just to see which one will perform better)
Idea validation might save you a lot of trouble because with research your business idea has many more chances of success. With market validation, you will run into problems that your business idea has and that you will want to solve. Through the idea validation process it is easier to find solutions that are suitable for the market conditions.
4 – Time to validate and develop
The next stage is confirming your assumption to be either valid or invalid. If through idea validation you realize that your idea has potential then you can start refining your idea. Idea validation cannot ensure success but it can definitely help to reach the goal because having validated the most critical assumptions and using the data you’ve gathered in the validation process is useful research whose feedback is very important.
Get more resources and guide on how to start and grow your business here
How do you validate a marketplace business idea?
A simplified way of looking at the process of idea validation and a way to bring the ideas to the market can be divided into three simple stages. It is enough that you have enough will and enthusiasm and that you do not give up on your ideas. No idea easily found its place on the market, but perseverance resulted in success. The Quran teaches us to be persistent and diligent in our work and to pay attention to detail so when we have a problem, the only way is to solve it is to break it into several parts and solve it piece by piece. This is exactly how the validation process works.
Find your startup value proposition
The purpose ofthe value proposition is to make the product attractive to the customer, and we will achieve this if we follow the following three different stages in detail:
- Market Validation stage
- Idea Validation stage
- Product validation stage
The main goal is to present your idea the way you see it, that the customer understands your perspective, because many innovative things that changed the world were not immediately understood. For example, let’s take Google, it needed time to be tested and become what it is now.
So, in the first stage we need to make a concept that will contain the following:
- Is there going to be a place in the market for our product?
- How big is the market?
- Is there already a product similar to ours?
- Does our product offer an actual solution to a problem that people normally have?
- Are people willing to pay and buy our product?
The next step in validating an idea, when everything from above is defined, is to be sure that it is worth starting to spend time, money, and effort. At this stage, you can lean on a simple landing page where you can show your total offer with short descriptions of customer benefits and should also include an order form and a subscription form. Also doing in-person interviews might have an important impact where you get actual feedback from your potential customers.
When you get to the last stage, you are already convinced that your idea makes sense and that’s different from other ideas, that there is a market for your product, and that people are thrilled and can’t wait to buy.
Results of ideas being validated
It is not easy to recognize a good marketplace idea, but with detailed research and anticipation of real problems, your idea can have a successful future. By now, as an aspiring entrepreneur, you have certainly already crystallized your idea and chosen a viable business model for it.
The validating process is not over yet, because the final records of the success of your business idea are shown only after the startup. After you have launched the product on the market, you can now see if the solution to the problems you had during validation was the right one. At this stage, you can see how the customer really reacts to your product and whether the customer is willing to buy and pay for your product.
That is the main goal, to get the customer’s attention and offer them a product that will benefit them and for which they will not think about whether to buy it.
The path from discovering an idea to its implementation is demanding and many people give up on that path, but when we research and find successful people and read their stories, the motivation awakens again. One such example is the following story of the difficult path to success by successful and hardworking businessman Mohamed Geraldez, who explained what investors look for in a startup.
There are many benefits and reasons why to validate your idea, and the most important one is to make sure that you will not waste time and resources on ideas that may not have good quality. When we come up with a new idea, we are carried away by the enthusiasm and cannot objectively assess whether our idea is needed or not, but that is why the solution lies in validating a business idea step by step.
Nedma Aganovic is from Bosnia and Herzegovina. Her Engineering degree is in Petroleum Drilling and Exploration. She is also a writer where gained experience in writing creative, business and research articles. As a student, she was working as an online teacher.