By: Marilee Fehr
Your product design is complete, testing was brilliant, you have a strong team of support, licenses and patents are coming through, and your finances are begging to be resourced. Now what about the market? This necessary hurdle is an important step often initially avoided by entrepreneurs. As a successful business however, one must establish a crystal clear awareness of the market, and identify the level of potential.
Step 1: Identify your target market.
Consumers are often thought of as the general population, when in reality they exist at each and every point along the supply chain for any given product. Your target market may be farmers, natural gas companies, government, the global gardening community, or children. Define specifically your ideal consumer including age, industry or industries and values (of either an individual or a corporation). Specifically identifying the values, challenges and goals of each potential consumer allow you to make your product most attractive to them.
Step 2: Stages of adoption.
Are you entering a competitive market, advertising a superior product? Or is your product completely novel? Everett Rogers published his Diffusion of Innovations Theory in 1995, which has become one of the most influential diffusion theories utilized today. Rogers defines and characterizes each type of consumer, highlighting where they fit into societal leadership structures including the evolution of adoption.
Although this model has proven to be quite resilient, Morgan Gerard notes that the adoption curve has its flaws like any theory. He points out a number of common misconceptions people make when applying the adoption curve. It is important for example to appreciate the meaning behind the numbers. The curve does not suggest that 13.5% of the global population are early adopters, but instead refers to the proportion of the population that has adoption potential for one specific product.
Step 3: Statistical data.
This stage entails quantifying not only your target market in terms of profit, but also in terms of growth, supply and conversion. Growth refers to the rate at which current sales of similar products are increasing. Supply refers to established or potential supply chains including raw material costs, and conversion refers to the potential of your product to replace older forms. The smart phone market for example, is growing as consumers replace their more basic mobile phones.
Not only do these steps allow an entrepreneur to construct personalized financial projections that reflect both consumerism and supply, but also allow them to refine their understanding of the target market and facilitate a basis for developing a robust strategic market approach.
Marilee is a Altitude Accelerator Intern, working in Market Research. She is currently finishing her last year of a BSc, in Biology for Health Sciences and Psychology at the University of Toronto in Mississauga. She is strongly interested in the application of marketing and psychology in the world of biology.
The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers provide a wealth of information based on their personal and professional experiences. Visit Altitude Accelerator for more information on how RIC can accelerate your ideas to market.