One of the most intriguing question for a company is, ‘Will the product be successful in the market?’
Quite often companies build their products without sufficient market study and customer validations. Decision are made on the basis of gut feelings and assumptions of the potential market opportunity.This is a classic case of technology trying to find a problem.
Before investing in a product, here are some key questions to ponder on:
- Product Market fit – Is there a unmet need for your product in the market? This is a critical question as a large portion of the startup fail due to the lack of product market fit.
- Is there a large pool of potential customers, who are willing to pay for your product?
- Can you build it at a lower cost than what the market is willing to pay?
- What are the risks that come with this opportunity?
- Can I build a Minimum Viable Product (MVP) at lowest cost to test my assumptions about the potential market opportunity?
At a very broad level, there are 2 kinds of risks companies take
- Technology Risk - The technology risk is when companies know there is a market need but unable to create the technology to meet the need.
An example would be: A Robot that can manage my home including cooking, cleaning, anything and everything at a cost of say, $100.
The value proposition is very high and the cost is comparable. The challenge is that you have a significantly high technology risk to build this robot at cost less than 100.
If you happen to have the technology to build this at the mentioned cost, please mail me and I’ll find you the funding for your company *Market Risk* - Majority of the consumer companies face the market risk. You can build the technology but you are unable to find a market for it. E.g. A web developer can be successful in building a great SaaS product but is unable to find paying customers.Wondering where your company stands? Let’s take a quick shot at this quiz. Here you go…..
- Are your customers having difficulty in understanding the value of your product?
- Is your product receiving poor to average reviews?
- Is the product usage or adoption rate reducing consistently?
- Are you having hard time with long sales cycles?If you answered ‘yes’ to at least 3 of the above questions, it time to evaluate your product-market fit