The market is crowded and competitive. How can you be sure that your product has the highest possible chance of success? “Start with a hunch, start with your gut, start with your feeling, and then quantify that with research,” says Adam von Gootkin, author of Living Proof: Onyx Moonshine’s Journey to Revive the American Spirit and co-founder of Onyx Spirits Company, LLC.
Knowing the products you are competing against will help you identify the value that your product brings, customers you can pitch to, starting price points and potential distributors. An internet search is a helpful starting place, but don’t stop there. “Get your hands dirty, roll your sleeves up and dig in on research. Read industry reports; look at every product that’s on the market,” von Gootkin said. When starting Onyx Spirits Company, von Gootkin hit the pavement. “We scoured the market. We tasted spirits from all around the world. We looked at labels. We talked to a lot of people. We went out into the trade and we talked to liquor store owners, restaurant owners, bartenders, wait staff, we talked to consumers.”
Makenzie Marzluff, founder of Delighted By Hummus, the Original Dessert Hummus™ had a unique challenge when it came to identifying her competitors. To liken dessert hummus, an innovative and unexpected twist on the popular savory spread, to the standard fare is like comparing apples to oranges. “I knew I was launching something that didn’t really exist yet… I thought my competitors were the other hummus companies. I went in every store I walked by and went directly to the hummus section.” But sometimes when your product is unique, you need to think outside of the box to identify your true market. Because her product was so different than what was on the shelves, Marzluff had to dig deeper to find her product’s niche. “What is the psychology of our customers? What are they really replacing us with? It’s vegan ice cream and vegan cookies, other processed desserts on the market.”
Look at the industry as a whole as well and what is trending. Industry reports like IBISWorld, which provide annual reports that summarize an industry down to the number, can help you understand where your product stands in the big picture.
After you know your competitors, you need to identify your target market. Customer feedback will help refine and improve your product and will give investors confidence to finance your venture. Online research can again be a good starting place. Ask Your Target Market (aytm.com) is a service that allows you to design an online survey to receive feedback from potential customers. While the feedback is not precise, it is directional feedback and better than guessing or going with your gut alone.
Marzluff launched Delighted By Hummus at weekly farmers market and benefited from getting to know her customers face-to-face. She also curated various social media pages and paid close attention to who would post about her product. Once individuals reached out to her company or talked about her product online, Marzluff dug deeper: What are their behavior patterns? Where do they live? Do they go to fitness classes? She would then go to the next level and seek out others with the same behavior patterns and characteristics to pitch her product to.
When it comes to launching your product, the general consensus is to ignore your instinct to hold back and to jump right in. Business author, podcaster, and entrepreneur Rick Coplin said, “The right time is right now…The key is to get out to market. You won’t know the impact it can have on the market until you get feedback. If it’s not the right season or right time, you’re going to figure that out pretty quickly… Just get going, and refine as you go.”
K.B. Lee, CEO and founder of Ever Bamboo Inc., met initial failure when delaying in putting a product out to make sure the labels and packaging where perfect before launch. Once the product hit the market, numerous adjustments needed to be made based on customer feedback, and the packaging and design ended up being scrapped. Lee now launches products immediately, often without proper packaging or labels so that the company can begin the next iteration of the product without wasting money on unnecessary expenses.
The initial time and research conducted to get to know your product market pays dividends when considering timing as well. “Timing has more to do with market pressures and less to do about your own internal financial needs,” says Sebastien Dupéré, owner, president and CEO of Dupray, which sells steam cleaners and steam irons in six countries. “Whether it be communal, local, municipal, provincial, national or global, the market determines the necessary timing for releasing new products. It comes down to this - is your market ready to successfully and profitably sell your new products?”
Knowing your customers is also key to successfully pricing your product. Rick Coplin said, “That’s why the early customers are really valuable. They can tell you how valuable your product or service is to their business and by knowing how valuable it is to some early customers, you can make some educated guesses on how valuable your product is to a larger market and charge accordingly… Price has nothing to do with your costs. Price has everything to do with what the market will pay.”
When pricing, never assume that having the lowest price on the market will guarantee you customers. Adam von Gootkin had a business where he set prices to be comparable with a similar service business. He took a risk and decided to up the prices 50 percent while also increasing the value add to the customer by a great deal. The result? “People flocked to us, and we became a market leader in the business. If you really package great value for the customer, if you really obsess over the customer, you can charge more for a product.”
Pricing also draws from initial research on your competitors. “Look at the industry as a whole. What’s the lowest price and what are they doing? What’s the highest price and what are they doing? Analyze those values that each company is bringing to the table. Find ways to tweak it and make yours really unique and special. Find additional value adds that might be low cost and drive your margin up when you charge more for it,” von Gootkin said.
While the time is now to bring your product to market, there is one step that shouldn’t be skipped or shirked. Do your legal due diligence and make sure your product is compliant with intellectual property rights, product compliance and safety testing. “Anytime you have questions around compliance, get a lawyer involved. It may seem like a huge expense, but that money will pay significant dividends down the road,” Coplin said.
“You need to be vigilant in terms of bureaucracy. A bureaucrat’s best friend is paperwork. You have to play ball in their world. That means having a folder the thickness of a Harry Potter novel with documents that successfully navigate all the red tape. The best tip is to be prepared and organized! Transition to a paperwork mentality aligned with growth. Fill in every form as accurately as you would a two billion dollar lottery ticket,” Dupéré said.