Many small business owners are finding things tough in the current climate. Just this week, two of our customers cited rising overheads and a lack of consumer spending in key markets as reasons why they are finding it hard going.
At times like this many small business owners are thinking of diversifying, looking to market opportunities outside of their current ones. In the early 2000’s as the profits dried up in farming many UK farmers started to diversify; choosing to use their land for things like quad biking or adventure playgrounds.
The idea of seeing a new opportunity outside of an existing market place and moving into it, is very entrepreneurial. It’s rare to find a true entrepreneur who just sticks to one market; just look at Lord Alan Sugar, or Sir Richard Branson.
The advice I would give to anyone thinking of bringing a new product or service to a new market would be; really do your research. Without knowing who the customers are for this new project , you start with a major disadvantage.
Market and customer research is something very close to my heart. With the help of 3 others, I have spent the last few years conducting all of the research for a series of new services, Sage One. When we started, we had a clear purpose, to find out what very small business owners and their accountants wanted to allow them to manage their business finances online. The research undertaken was crucial to bringing our new product to market successfully.
When looking at developing a new product (and it’s similar whether it’s a completely new market as in diversification, or in an existing one) it’s important to gather as much information as possible. Use all available sources; trade shows, existing or potential customers, employees, local press, annual reports, press releases and of course the internet.
We focused on all of the above but found we got the most value from meeting hundreds of target customers and holding 1-2-1 interviews. The reason we did this? To get the answers to all of our market questions and really understand our potential customer’s needs. Engaging our target customers in this way also meant we had people who could help us test our product, answer our questions about pricing, and test the product before launch.
When developing a new product or service it’s important to know the answers to a number of key questions. The first and probably most important question is “what problem will this product or service solve for customers?” In our case the problem our customers faced was managing their books or finances when they had no experience of accounting.
If you can answer that key question then move onto looking at other key areas of product development, asking more key questions like:
- Can you build a value proposition?
- Are there other ways the customer can solve the problem?
- What about the competition? What do they offer? How much does it cost?
- What will customers pay to solve their problem?
- How do I get to my target customers? Is it easier to sell through a channel?
Hopefully your research will tell you if there is a market for your new product or service. You can then move to the next stage of planning how to create your product. But if the research indicates your idea is not ‘a goer’, just think of the costs you have saved, and remember the next opportunity could be just around the corner.