Offering a new product or service can better meet the needs of your current customers and attract new ones to your business. But it’s crucial to do your research and determine whether there’s actually a demand for what you’re offering. Here are five steps you’ll take to get started.
[Read more: 5 Quantifiable Ways to Determine It's Time to Grow or Expand Your Business]
Develop your idea
Many business owners come up with ideas for new products and services based on a gap they’ve identified in the marketplace. Once you have your idea in mind, continue to develop it and determine whether or not it's viable.
The first step is to evaluate whether it’s feasible given your current business finances and resources. Come up with an estimated budget for the startup costs, recurring costs, and revenue potential.
Next, you’ll want to determine the product’s unique selling proposition. What sets it apart from similar products that are currently available? It’s also a good idea to ask for feedback from your employees, mentors, and other industry experts.
Survey your customers
Before launching a new product or service, you need to survey your current customers to determine whether there’s a need or desire for it. One of the biggest mistakes many companies make is assuming they know what their audience is looking for.
This is the mistake Coca-Cola made in 1985 when it launched New Coke and replaced the original formula. Coca-Cola conducted nearly 200,000 blind taste tests, and more than half of the participants said they preferred the new flavor over both the original Coke and Pepsi.
However, there was a flaw in the market research, and the company failed to understand that customers were emotionally invested in the original taste of Coke. Had they asked survey participants whether they’d be willing to give up the original flavor for New Coke, they would have had different results.
If you want to have a successful launch, make sure you understand what your customers are looking for. The more market research you conduct, the more information you’ll have to work with.
[Read more: How to Survey Your Customers and Why You Should]
If you want to have a successful launch, make sure you understand what your customers are looking for. The more market research you conduct, the more information you’ll have to work with.
Do a competitor analysis
A competitor analysis is another helpful way to validate your product idea. Looking at similar products that are already on the market can help you determine whether there’s a need for what you’re offering.
It can also help you identify why customers would choose your product over what’s currently available. As you research different competitors, pay attention to their pricing strategy, target market, and market share.
Conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis for each competitor to assess their strengths and weaknesses. The information you learn from this exercise can help you discover what other companies are doing well and identify opportunities to improve on it.
[Read more: 6 Steps to Performing a Competitive Analysis and How It Can Improve Your Business]
Test the market
Product testing is an important aspect of the product development process. As you’re developing a new product or service, continue testing the market to ensure you’re on the right track.
You can do this by working with a small focus group that agrees to give you feedback on your prototype. You can use their feedback to modify the design or adjust your service offerings. Once your product or service is finalized, you may want to continue testing it before it goes to market.
Launch and monitor the results
Once you launch your new product or service, closely monitor its performance by tracking customer feedback and sales data. Don’t worry if your launch doesn’t go as well as you’d hoped — you can use this information to continue to improve your offerings over time. The important thing is to stay flexible and be willing to make changes based on what the market tells you.
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