Is there is a Market in the Gap
Many times people get excited and say that they have seen a gap in the market. The important question to ask is “Is there a market in the gap?” Sometimes there is a gap because there is no market.
When I was leader of the music association at university, many upcoming singers and rappers would tell my leadership team and me about what they had been working on and would make us listen to it. Most of the work was below standard but the owners believed they were perfect. Some would take feedback and work on it, while others acted with an attitude that said, “If you don’t like what I’ve got, then there’s something wrong with you.” It is like the case of Enron’s CEO, Jeff Skilling, who thought if anybody disagreed with him then he wasn’t smart enough to understand him.
Many entrepreneurs, especially technical people and artists, fall in the same trap of falling so much in love with an idea that they think that it will take off immediately and buy them their dream life. They get so obsessed with the idea that they can’t see anything outside it and cannot take advice or feedback from others. Don’t fall into this trap. Of course this doesn’t mean that you have to get 100% approval to go ahead with your idea. Do some research and get a feel of reality. If nobody is getting your idea, make sure you have a lot of money for educating the market.
I like this article, short and precise. The others were a bit too long for me to even finish reading them, coz i read these articles in-between doing my stuff.
But how can one carry out a research? If its word of mouth, how big should the sample be?
Thanks Charity. I will be posting more of the short articles.
To carry out market research, you can either hire a company to do it or you can do it yourself. Specialised companies will cost money but are better able to handle it for you.
However, if you do want to do it yourself you need to have a good sample of people to do your research on. Your results are only as good as your sample. The larger and more representative of your target your sample is, the better.
In the research, try to gather information about your product, your competition and the environment. Find out whether people would like your product and/or what they are willing to pay for it. Find out what the competition is doing. And find out political, market and other conditions that affect your product. This information can be gathered from secondary sources i.e. researching on the internet, in the library and reading produced reports and documents; or from primary sources i.e. from your own original information e.g. questionnaires, interviews and observation.
Market research takes time and money and hence most people don’t do it. However, it’s still cheaper than spending money on a product or service that nobody will buy.
Awesome article Sandras! And SO spot on.
I come across this almost every day in my dealings with business owners.
It goes back to why somebody starts their own business – because they have a specific skill or find a good product to market, very seldom because they can sell so well for example.
Here’s an example of how I advised a budding entrepreneur just the other day. He had a great inspiring idea. Probably a lot of potential. He clearly was in love with his idea – all sparkly. So he figured, well I need some money to pull this off and so he was sitting in the waiting room of an organsiation that helps people like him get in touch with financiers.
So I asked him who he’d sell his product to once he had the money. He has a huge database he told me. And he’d send them all an email and contact them. I asked him who he had spoken to in order to sell the product. He said none, he first wants the finance.
My next question was: imagine you picked the top 5 potential buyers from your huge database and made an appointment with them. Telling them here’s my plan, this is my product, this is how it can benefit you, will you be buying from me? In other words, go out and sell it! You don’t need to have it in masses manufactured already before you go out and sell.
Go and sell it and see what the response it.
And if the response is negative you have to go back and analyze why. Is it because the product sucks? Or is it lack of communication skills? Or what else?
Now imagine say 2 out of the 5 are as fired up as you and say to you, ok I want 5,000 each, by when can I have them? Whoa! Now you got urgency in your situation!
Imagine further that the minute you’re out that door you walk to your investor and say to them, look here, I’ve got 2 companies who have already given me an order for 5,000 each, now I need the money to produce them. How likely is it going to be that you will get the money to fulfill those orders?
And going back to having a good idea only, how likely is going to be that any investor will give you money based on just an idea and a huge untested database?
The best market research there is: go out and sell, for real. If people want to buy, you got a winner, if they don’t you got more homework to do.
Don’t waste your money on third party market research if you can barely afford it. I’ve just last week spoken to a top marketing manager of one of the biggest companies in the country and was told how useless those researches are, because they don’t catch you at the very moment when you make a buying decision, they pretend to do and by doing so you as the respondent have an option to think about how you should answer which is more often than not completely opposite to what you’d do in the actual situation.
Go out and sell – best way to see what your idea is worth 🙂
Excellent input Bettina! Thanks!
Charity, I believe that clarifies even further.