Entering new markets or launching a new product is always a complex process for any business. Having a ready idea is one thing, but ensuring its successful implementation is quite another. Below are key aspects to consider before launching a new product.
What Needs to Be Studied in a New Market?
Market Size and Scope
When preparing for a launch, the first thing to assess is the size and scope of the market. This includes understanding the target audience and their needs. If the market already exists and includes strong competitors, their performance metrics can help validate the market’s potential.
Market size is typically measured in monetary terms since the goal of any product is to generate profit. Reports and studies often provide insights into market revenue, app downloads, and user numbers. These figures are essential for estimating potential profitability and user base.
If entering a new or emerging market, it’s important to ensure the problem being solved is real and widespread—not invented or exaggerated. Confidence in the product’s relevance is key.
Market Size as a Measure of Demand
Market size can also refer to how many people or businesses experience a problem that the product aims to solve. These problems are often directly tied to monetary value. In this context, it’s critical to analyze not only whether the company can enter the market successfully but also how it will withstand future competition.
Larger investments require thorough and thoughtful research that reveals how a company can maintain leadership as new competitors—either startups or major players—enter the space.
Research to Find Opportunities, Not Just Numbers
Market research should be seen as a tool to identify opportunities, not just to calculate potential profits. Before committing to a project, companies must weigh the risk-to-reward ratio. A theoretically profitable opportunity might have a very low chance of success, making it an unsuitable investment.
Even when a market appears attractive—such as CRM platforms generating billions in revenue—the real interest often lies in the “available market,” i.e., the portion of the market that is still open to new entrants. Simply looking at total market revenue is misleading, especially in mature sectors where most revenue is already captured by existing players.
Rather than chasing vague projections, it’s better to estimate how many potential customers exist, how many truly need the product, and how many are likely to switch to a new solution.
Pitfalls of Poor Market Research
Surveys as an Unreliable Source
Surveys can be misleading. Respondents might interpret questions differently, give random answers, or select the first option that comes to mind. Long surveys sent via email, especially those taking more than 10 minutes to complete, are particularly unreliable. While small, concise surveys can be useful, it’s important not to over-rely on them.
An example: a company surveyed users about what would encourage more purchases, and many answered “affordable or free delivery.” However, when free delivery was introduced, many users ignored it because it wasn’t provided by the delivery company they preferred—revealing a disconnect between survey answers and actual behavior.
One-Sided Research
Research can be biased if it is conducted solely to validate a preconceived idea. In such cases, the goal isn’t to determine whether a product should be launched but to find evidence that supports an already-made decision. This approach often leads to poor strategic choices.
Key Takeaways for Market Research
- Start by evaluating the size of the target market.
- Understand that a market is made up of people or companies with a problem to solve.
- Measure the market in terms of potential revenue or number of customers.
- Identify your target audience, major competitors, and market dynamics.
- Ensure the problem your product solves is real and significant.
- Analyze whether entering the market is worthwhile.
- Conduct a deep analysis of the company’s potential to gain a significant market share.
- Consider the potential growth rate of the market.
Understanding the Competitive Landscape
Companies should ideally enter a market when they have a clear competitive strategy, whether it’s inbound marketing, performance marketing, or a technological advantage. Timing is crucial: entering too early can be risky, while entering too late can make it harder to gain a foothold.
One strategy is to enter once a market category has been established and early adopters have paved the way. This allows a company to offer a familiar solution with unique differentiators aimed at a specific niche. On the other hand, if a company has a strong technological advantage, timing becomes less critical—they can disrupt the market even at a later stage.
Before launching, businesses must also consider whether the new product strengthens their overall strategy. If it doesn’t contribute to the company’s core mission or ecosystem, it could be outcompeted by focused startups or crushed by larger players with better distribution.
Target Audience and Its Analysis
Analyzing Competitor Audiences
When an idea is born, there’s usually an initial hypothesis about the target audience and their needs. By analyzing competitors with similar offerings, businesses can gather insights into who their users are and what drives their behavior.
In markets like photo or video editing apps, users are generally divided into content creators and consumers. Understanding the behaviors, tools, and preferences of creators—along with demographic data—helps in tailoring the product accordingly.
Research Is Helpful, but Not Absolute
Even with a clear image of the ideal user, real-world usage can differ significantly. That’s why it’s important to create user profiles and monitor how the audience evolves after launch. Audience data may change rapidly during the early stages, becoming more consistent only once the product matures.
In some cases, very different user groups—such as churches, students, or gamers—might use the same product due to a shared underlying problem. Businesses must eventually decide which segments to prioritize.
Targeting Jobs, Not Just Personas
One approach to defining the target audience is to focus on their job or problem rather than demographics. Instead of saying, “We’re building for HR managers in tourism companies with 500+ employees,” you might say, “We’re building for HR managers who need to solve a specific challenge.”
Unexpected Audience Segments
Sometimes, the intended audience isn’t the one that ends up using the product. For example, a system designed for healthcare institutions turned out to be more successful with the auto industry. That’s why it’s important to remain flexible and open to unexpected market segments.
Final Thoughts
When entering a new market, businesses should assess both its size and potential opportunities. While analytical tools and research are valuable, they must be applied with objectivity. Avoid relying on flawed surveys or confirmation-biased studies.
Regarding the target audience, keep in mind that your early assumptions may be wrong. Study competitors and observe actual behavior. Be ready to pivot when real usage data reveals a different customer base than expected. Focus on solving real problems, and your product will have a stronger foundation for success.
Read more: Finance affiliate programs UK
