How to Determine Market Viability and  Conduct Product Research for Your Online Business

There is a high demand for plumbers. They are really hard to come by and consequently, those that are available are charging high prices. In the short term, this can be very profitable for them. In the long term, they may lose customers as people will have been annoyed or gone elsewhere.

 

This high demand can also result in many people joining the plumbing profession as a way to get part of high demand market.

However, what happens when this high demand reduces? Plumbers will still be needed, but perhaps they will not be able to charge what they are currently charging. This can result in some plumbers going out of business or not earning what they warn to earn.

 

When planning on starting any new business or career it is important to look at market viability.

 

Viable simply means practical, capable of success and continuing to be effective.

When we look at market viability, we are looking at whether a business is capable of being successful, and continuing to be successful, in a particular marketplace.

 

Using an online education business as an example, before setting up the business, we would need to consider –

• Is the online education market currently successful?
• Is it growing?

The COVID-19 pandemic and massive recent advantages in technology has meant that the online education market is a massive growth industry. It is estimated that by 2028, it will

• Have grown a further 20%
• Be an industry worth US$1 billion.

So there is –

• Potential for a new online education business in a currently successful market
• There is potential for a new business in a growing market

Product viability is how relevant a good or service is to a business’s customers.

Going back to the online education business, if they offer a course in typewriter maintenance, for example, they may find they do not sell that many courses.

Not that many people have typewriters anymore, so the course is not going to be a big seller. Therefore, we could argue that the course would not be viable.

 

However, if a course was offered in a new, up to date technology where there are not many courses, they may find they sell a lot of courses, so the course has a good product viability.

The US Bureau of Statistics states that 29% of new businesses fail within the first two years. Only 25% of new businesses last over 15 years.  One reason why they may fail is not looking carefully at whether a business and their products are viable.

It is important to carry out an analysis to determine whether the business or service is viable.

There are a lot of things that you can consider to determine if a business or product is viable. There may feel like there are a lot. But spending a few hours determining viability now can save a lot of wasted time, effort and money in the long term if a business fails. 

 

When looking at the viability of a product or business, consider –

Who are the customers ? 

 

Setting up a business hiring out surf boards and equipment, 100 miles from the sea is probably not a good business idea. The customers will probably be at the seaside!

 

Find out who your potential customers are -

• Their demographics – these are ways to describe or categorise people, such as –
  • • Age
    • Gender
    • Biological sex
    • Job
    • Income range
    • Location
• Their psychographics – These relate to the values and beliefs of a person, such as –
  • • Vegetarian, vegan or meat eater
    • Growing vegetables with pesticides or pesticide free
    • Studying online or not taking courses

With an online education business, the customers are, well, anyone basically as long as they have internet access.

 

The focus will most likely be adults and perhaps late teens.  We often hear the term lifelong learning and learning is just that today. People are encouraged to continue to learn and develop throughout their lifetime. 

 

This may be –

• To start their career
• To get a new job
• To start their own business
• To get a promotion
• For interest
• For enjoyment
• As professional development

 

This is a massive potential market and growing all the time.

 

Is there a demand for the business/product? 

 

Carry out some market research.  There are businesses available to carry out market research. Or you can conduct your own research. Ask potential customers questions.

• Would they use your services/buy your products?
• Why would they use it?
• Have they considered using a service/buying a product like yours before?

With an online education business, we could carry out market research to find out the answer to questions such as -

• Ask your potential customers, do they like to study? Take courses?
• Have they ever studied online?
• If not, would they ever consider studying online?
• Would they consider studying any of the courses you plan to offer?

Conducting market research like this is also a great way to get your name out there, to get yourself known.  Market research can be conducted face to face in the street, but with social media, we can post polls and ask questions of millions of people to find out more. AND it has the advantage of getting people onto your social media, ready for when you want to sell to them.

 

What are current market trends ?​

 

Find out more about the current market trends in the business you are setting up.   

• Is the market shrinking, stable or growing?
• Are there any niche market trends?

We can find out about niche markets by looking at –

• Industry journals and magazines
• Ask other industry professionals
• Look at google trends

For example, we have already seen that the online education business is a currently successful and growing industry.  We delved into this in our blog on the future of education  . 

 

Who are your competitors ?

• Who is selling similar goods or services?
• How well are they doing?
• What products are selling well? Why?
• What products aren’t? Why?

Looking at the online education business again, we have already seen that the market is growing, so that’s a good thing.  We could then conduct research to find out –

• Who are our competitors?
• How well are they doing?
• The ones that are doing well, what are they doing? What are they selling?
• Look at their websites. How well do they perform?
• Look at their sales funnel. How do they encourage people to look at a product and then move through to the sale?
• What is their marketing strategy?
• Try to reverse engineer their business model.
• The ones who are not doing well, what are they doing? What are they selling?

 Are the products viable?

When considering the market viability of a new good or service, we have to consider if it is likely to sell well and be a profitable product. Consider –

 

How do you know if a product will be viable?

• Conduct market research, as we have already mentioned.
• Ask people their opinion on a product, their honest opinion. We might think that an idea is amazing and brilliant, but other people may simply not see the point. They are your potential customers. You need to be able to explain WHY it is a great product and WHY they NEED it. The aeroplane and lightbulb were both dismissed as pointless ideas when they were first invented!   

So ask – what do you think of my product?

Listen to their comments

Then consider –

• You can give up.
• Think, “No, they are wrong, I need to find a way to explain why they need my product.”
• Think “OK, my product is not right, I need to redevelop it.”

 

Also consider when determining whether a product is viable –

• Who can I go to for help?
• Do I need someone to help me with this product?
• Do I need designers or programmers etc?
• Do I need manufacturers?

 

SWOT analysis

Conduct a SWOT analysis of your potential business.

 

SWOT stands for –

• Strengths
• Weaknesses
• Opportunities
• Threats

Going back to the online education business, here are some very simple examples –

 

Strengths –

• Growing market
• Huge potential customer base
• Great opportunities to diversity, eg.
  Selling a wide range of courses
  Selling eBooks etc

Weaknesses –

• Potential technical issues

Opportunities

• Massive growth market and huge customer base that you can sell to

Threats –

• Not having enough technical knowledge.

 

Now you have looked at your strengths and weaknesses and opportunities and threats, you make a decision.

 

Do I give up now? Yes, of course you can.

OR

Do you get your business going? Yes, there are difficulties here. You may be worried about your lack of technical knowledge. Well, there are ways to deal with that –

 

• Take training yourself.
• Find someone else to help you.

 

Look at your strengths as something you can improve upon. Look at your weaknesses and threats as something you need to find a way to turn into opportunities and strengths.

 

STOP!

 

At this point, you may be thinking “This is a lot of effort.” Or “Why bother? I know my product is good, so I’m not going to do all this.”

 

That is your choice.

 

But -

• • If we look at market trends, we will find out whether the business we are going to go into is growing and successful, so there is potential for you to get a market share. A shrinking market will have less opportunities and will most likely already be full of businesses trying to get their slice of the market.
  • If we look at our competitors. We can learn from what they do. We can see what doesn’t work. AND we can see what does work. We can use the lessons we learn to improve our own business. This doesn’t mean copy them or do exactly the same. It means use that knowledge to improve our own business model.
  • If we know who our customers are, we know who we are selling to! We know what they potentially won’t buy and will buy.
  • If we know what our strengths and opportunities are, we can work towards them. If we know there are areas in which we are weaker or there are potential threats, then we can try to find solutions now, rather than in two years’ time when the business (and you) is struggling.

Interested in an Online Education Business?

The online education business currently ticks all of the boxes –

• Successful market
• Growth industry
• Huge potential customer base

 

If you are interested to find out more  contact us below