Entrepreneurship: Exploring Market Needs

So, How Do I Explore Market Needs, Anyway?

So, you’re standing in the shower one night, or taking a quiet walk alone, and all of a sudden, it hits you. It’s perfect. It’s complete. It’s radical. It’s the coolest thing you’ve thought of, possibly ever, and you’re sure others would agree! You immediately want to rush home and put pen to paper, plan to action. But wait…how are you so sure that your grand idea is salient and marketable? How do you know people will care? Is it a real business opportunity, or simply a cool idea?

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In this blog, we’ll attempt to address those questions. It takes a creative mind to come up with a unique idea, but a more pragmatic approach is important for proper execution and implementation. It is important, first of all, to consider a potential customer bases’ needs. A need in a customer base is simply an unsolved problem. Take, for example, Google. Google was started by a group of friends who identified a need that they themselves had – a way to easily and exhaustively search for specific data. This need happened to also affect a greater community, and Google grew to be the powerhouse it has become today. Solving your own problem can be the first step toward marketing yourself or your own company.

Similarly, an idea does not have to be brand new in order to solve a problem or bring in market share. For example, think for a moment about rental car companies. This is a business that has been around for decades. So whenever someone needs a car for a day or a week, a car is available. Seems complete, right? Simple, effective, done. But then in 2001, Antje Danielson and Robin Chase realized that sometimes you needed a car just for a trip to the grocery store, or to take your grandma to the doctors, and thus Zipcar was conceived. Zipcar identified a need within an already functioning market, and grew quite well. This is an important point to make. Identifying a problem within a market that already exists ensures that you have a built-in customer base. 

However, the creators of Google and Zipcar didn’t just conceive of a problem and solution all by themselves. The creators of those companies, or any successful company, were clever enough to identify a widespread problem. If your product fixes a problem, but the problem is only shared by you and your neighbor, then it doesn’t really make sense to try to market it to your entire town. Creating a business requires that a fairly large number of people benefit from your innovation. Additionally, it is easier to solve problems that customers are already aware they have. In the case of Zipcar, everyone knew that it would be lovely to have the option for hourly rentals. It was easy to listen to customer complaints and wishes and find a new way to solve a known problem.

So, if you identify a problem within an already existing market, then your customer base is there, and the problem is fairly obvious and clean-cut. But what if your idea is actually very new, radical, even? What if it doesn’t quite fit into any existing market, how do you know how many people have a need for it, and where they are?

There are actually quite a few ways to answer these questions. Market analyses evaluate and gather information focused on your needs. But market analyses require capital, time, and manpower. Most startups don’t have that from the get-go. In that case, there are several consulting firms like ours who would be happy to assess your situation and needs, free of charge.

Remember, it is important to not overextend yourself. You don’t need to meet all customer needs. Focus on what you can realistically provide, and what will bring you sufficient returns to grow your business. Separate and rank preferences and costs for your innovation to prioritize customer needs. Beware, while it may be tempting to develop many add-ons to your solution to maximize the number of fixes, each add-on may not offset the cost of producing it. Furthermore, it may take away the focus from the core benefits of your product or service. There is such thing as being in too small of a niche.

In summary: When you are beginning to think about entrepreneurial ideas, you want to recognize real needs and wants. You do this by researching creatively. Ask yourself the business test questions outlined in our home page. Think about market niches: is there a specific, narrow market that you can begin to serve? Use that to build your skills and as a base to launch yourself into a bigger market. If you are not comfortable with some of the answers, reach out for help. We will be happy to bounce your ideas.

 

Feel free to comment/discuss/share. If I missed anything, Tweet to DrFranzC or leave a comment. Thanks for your feedback!

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