HOW TO IDENTIFY A NEW NEED IN YOUR EXISTING MARKET
In every business where you interphase with customers, there is the stated needs and the silent needs. To deliver products that solve your target customers’ problems, you must first identify market problems.
Stated needs are like this: I want a product or service that solves XYZ problem
Silent needs however are hidden desires of customers that they know there are no solutions for yet.
Your job as a small business owner is to find out the everyday needs of your customers whether you can solve them now or not, just write them down.
Example:
While doing market research, a major TV manufacturer uncovered the problem that people regularly misplace their TV remote control. Customers did not identify this as a problem that needed solving, but it was a common issue.
By listening to the customers’ silent need, the company was able to develop a feature that resonated with its target market (a “remote-control finder” button on the TV itself).
Using this outside-in approach enables you to concentrate on and solve your target market’s problems. It removes the guesswork from product development and reduces concerns related what your competitors are developing. Listening to the market is the best research you can do to ensure that you build the right solutions.
In order to do this you must first understand that your market consist of this 3 people.
- Existing customers: People who have already purchased your product
- Prospects: People who have not yet purchased your product but are considering it
- Target market users: People in your target market who are not currently looking for a solution
In conducting a market research don’t be tempted to make this mistake.
- Focusing only on innovation and the competition
As an entrepreneur, it is easy to focus on building innovative solutions that do not connect directly to market problems; just because you can innovate doesn’t always mean that you should.
It’s also easy to pay too much attention to what competitors are doing and expend resources on trying to beat them to market. In many cases, the customer does not care about extra features.
Instead, ask the following questions to ensure that you are solving a problem for your target market:
- What problem does this solution solve?
- Is this a problem experienced by my target market?
- What would my target market do if I didn’t solve this problem?
While it’s always a good idea to keep abreast of what your competitors are doing, ensure that the market wants the problem solved
- Focusing only on your own customers
Henry Ford said, “If I had asked people what they wanted, they would have said faster horses.” Customers understand problems, but they cannot help you to move your product forward. They know what you provide, and tend to stay inside that mindset.
Customers are a source of input, but not the only source of input. This is why talking to prospects and target market users (who have not purchased your products) is key to rounding out the picture. They often see things beyond your current product
- Focusing only on revenue
By listening only to prospects, and delivering only what the next customer wants, you will gain revenue but miss out on market opportunities. It is critical to find a balance between prospects and customers to ensure that your future revenue is protected, while still keeping existing customers happy.
The key to finding a market problem is to listen for frustrations, or “if only” statements, that arise during interviews
After doing this the next thing to do is to evaluate the problems diagnosed…
How to evaluate market problems
Evaluate the identified market problems by asking (and answering) the following questions.
1. Is the market problem urgent?
Once you identify a problem that applies to the market, ensure that potential and existing customers actually care about the problem. Is the perceived problem actually urgent? Will customers care if the problem is not solved? Do they have another way to solve this problem?
2. Is the market problem pervasive?
Determine if the identified market problem applies to a significant percentage of your target market. Use quantitative research to collect the data. Methods of data collection include surveys, census information and other primary market research. This can be accomplished without investing significant resources. Use free survey tools (for example, SurveyMonkey) and your personal network (depending on the target market) to collect a large amount of quantitative data.
3. Will your buyers pay to have this problem solved?
If the problem is significantly urgent and pervasive, chances are good that customers would agree to pay for a solution. The next step would be to understand how much they would be willing to pay for a solution to this problem. This can be achieved by conducting surveys or additional interviews with your target market. (To understand how to price a product, read the article, Pricing
Note: If you answered “Yes” to all of the preceding questions, then you will have identified a problem that is worth solving. Be sure to investigate whether your competition is already solving this problem, otherwise you might not have a competitive edge in your market