Determining the Product and Market Viability

The desire to earn as much money as possible prompts people to start their businesses. Well, of course, simply starting a business doesn’t guarantee its success.

In the journey, loads of businesses fail to survive, and hence all the parties involved suffer extreme financial loss.

While it is super enticing to start a business as soon as you get a product idea, launching it immediately wouldn’t be a wise choice. You will have to determine if the product lifecycle will sustain in the market for the long run.

How will you achieve the above? Product research and determining the market viability of your business plays a key role here.

This article will discuss product viability, market viability, and the steps you can take to evaluate if your product is a market fit.

What is Product Viability?

Product vProduct viability is the process of determining whether a specific product has the capability to survive in the market. It depicts a product’s total addressable market(TAM) and demand among the target audience.

Ask questions:

• Is there a whopping demand for the product in the market to build your business around this specific product?
• What will be your price point for the product?
• How much will be the profit margin generated by this product?
• Will it allow you to generate a return on sale(ROS)?

What is Market Viability?

Market Viability is the process that will determine the potential of your business in that specific Industry market. It entails if establishing the specific business is financially feasible and possible.

Ask questions:

• Is the specific market big enough to welcome the new business?
• Is there a growth room within the particular market?
• Is the specific product affordable among your set target audience?
• Is there intense competition in this market?
• What is the strength and weakness of your competitors’ business?
• How will you compete with your competitors?

To launch your business, you invest your funds in designing, manufacturing, and marketing your product. And in case your product doesn’t sell well in the market, you can end up experiencing loss.

The more capital you invest in establishing your business, the more risk you will be taking. You cannot strike out threats completely; however, you can take precautions to reduce them.

Here, conducting a viability test allows you to reduce the risk of losing your money by encouraging you to do market research, check how relevant the product demand is, the profit margin, and will the product sustain in the market throughout.

How to conduct a product’s market viability Analysis?

Here is how you can carry out your businesses’ product viability analysis.

Conduct market research

The simplest way to do market research is through SWOT analysis. 

SWOT analysis is a strategic planning and management technique that can help your organisation identify strengths, weaknesses, opportunities, and threats related to business competition.

SWOT analysis is all about being honest with yourself when mapping all your business strengths and weaknesses.

1. Identify your business strength. List out the strong factors that differentiate your business from your competitors. Is it high-end customer service, your product prices, your marketing strategies? That is for you to figure out.
2. Analyse the weakness. Map out the factors that put your business on a downside compared to your competitors. Your goal is to provide your customers with the best product.
3. Identify your business opportunities. It is all about creativeness here. Keep an eye out for the strategies you can apply to increase your product quality, lower the product price, and grow your business profit.
4. Find out your business threats. You will need to be up-to-date with the market trends and the possible downsides that come along with them. Be paranoid about how emerging technologies affect your business and which new business can affect your market share.

Once all the possible factors are diced out, you will need to actively irradicate the error and threats by building out the business strategy accordingly.

Always stay on top of all the market trends. Look out for who is following what trends and who is the top player in the industry.

Google trends can help you determine the demand for your product. You can search the keyword related to your product in the search space. 

It then provides you with the chart and search volume that depicts how many people are actively searching for similar products worldwide, or you can set the results to a specific geographic region.

If your business idea is not in demand at all, you can start looking out for the business ideas that are trending currently and are sustainable throughout.

Perform competitive market analysis

Here’s is an effective and quick way to perform competitive analysis. 

First, you need to figure out who your competition is in the market and their best selling product.

In the second step, you can start by analysing your competitor’s website and how they conduct online business. You need to observe their product listing, images, content, and UI.

The third step includes keeping a close eye on your competitor’s sales funnel. Note how they connect with the potential customers throughout their customer journey.

The fourth step is to note their social media and SEO strategy. Learn the strategies on how they engage with their audience.

You can also understand what keywords they rank for using tools like SEMrush or Ahrefs to understand the demand and positioning of their product.

Keep an eye on your competitor’s hashtags as well. 

The fifth and final step is to study their business model. Understand their marketing strategy, business functioning, how they outsource their product manufacturing, handling and maintaining the inventory, etcetera.

What is the outcome of this strategy?

• It helps you understand the type of business model you want to build yourself.
• Improve and provide a better customer experience where you think your competitor lacks.
• You can find effective ways to automate repetitive, time-consuming tasks for your business, unlike your competitor.

Determine your target audience

You can identify your target audience persona by demographics and psychographics. 

Demographics will include information about their age group, gender, occupation, income level, ethnicity, location, and homeownership.

On the other hand, psychographics will tell you about your target audience’s attitude, interests, personality, values, opinions, and lifestyle.

Your ideal target audience will be someone aware of their problems and are ready to afford a suitable solution to eradicate the issue. You can check their purchase history to track if they have bought similar products before.

Evaluate your product for sale

Consider the weight and size of the product. Large and bulky products such as furniture are difficult to ship, and you can never offer free shipping charges for such products to the customers.

It would be best to consider that choosing lightweight and medium-sized products is better to get your supply chain working smoothly. 

Even if you choose to go for a large-sized product, you will have to create a good supply chain strategy that doesn’t mess up the smooth functioning of your business.

Keep product fragility in the loop. If you’re selling something that is, for example, made out of glass or Porcelain, you will have to be very careful with the packaging so that it doesn’t break in the midst of shipping.

Partner up with experienced logistics centres to avoid such mishaps.

Set the price of the product. You can launch your product as one-of-a-kind to increase your profit margin and earn more. You should set a comfortable and affordable price for your prospects.

Start with the smaller inventory. In inventory management, a stock-keeping unit (SKU) is a scannable barcode commonly found on product labels in retail stores. The SKU is composed of at least eight alphanumeric characters, and these labels allow vendors to keep track of inventory. 

Now, as your orders increase, it will complex your logistics strategy. To avoid this, start with keeping a small inventory and expand it gradually as per your business needs.

Choose products with longer shelf life. Perishable products are likely to decay, spoil, or become unsafe to consume if they exceed their expiry date. If you ship such products, they might expire before reaching the customer.

It is better to avoid such products and stick with products with a longer shelf life.

Also, give preference to products people are willing to buy regularly, such as hygiene products, beverages, food, household items, etcetera. This way, you can get more orders, and that too in bulk.

Key takeaways

Using different market research and customer research assessments, you now know how to determine the viability of a product.

It would be best to eliminate markets that are too small, too competitive or consist of customers who cannot or will not pay your prices.

Avoid products that are insufficiently popular or have too little profit margin. Only launch your own business when you are confident and have done satisfactory research.