What it Took (Part 5: Initial Market Research) – My Journey Launching a New Business and Becoming a New Father
Okay, so our story is just starting to unfold… this is the blog series where we examine how to bring a new product to market by looking at what it took to develop the SurfShelf.
So far we have talked about…
Building the first prototype to make sure it works
Performing your initial patent searches to make sure you can legally sell it
Filing your Provisional Patent application to put your stake in the ground as the inventor
And today’s topic… performing your initial market research to see if there is anybody out there in the world who would buy this thing.
That’s the real bottom line right? If you build it, will they buy it? And exactly how many people is “they”?
So that’s what you need to figure out.
Who is your user? Does your user have a specific attribute that will influence them to buy your invention?
For instance, the shark attack suit mentioned in the post about patent searches would only be sold to SCUBA divers right? And of all the SCUBA divers in the world, only the ones who dive in shark infested waters would really want to buy the suit. And why would someone dive in shark infested waters? Are there professions the require someone to do this. Or diving clubs for people who like to chase sharks? Who the heck would want to chase sharks?
Make a list of the type of people who you think will want to buy your product and try to break it down as far as you can.
Once you have your detailed list of exactly who these people are and why, you can go online to see if you can find any market research for these groups.
So for me, my customer was someone who already owned an exercise machine, someone who wanted to buy an exercise machine in the near future, or someone who frequented the gym.
The lowest hanging fruit was the home exercise machine user. So it makes sense that the first thing I did was to get a number on how many treadmills, exercise bikes and elliptical trainers had been sold in the U.S. in the last five years. This was my first potential customer pool.
Here’s a trick I use all the time. I perform Google searches on keywords to find as many articles, research papers, market reports, etc. pertaining to the fitness industry and home exercise. Then I scoured the articles for any references to market reports (“according to the recent market study America’s Home Gym Market published by Marketing Inc., the home fitness market grew 10% last year…).
Then I Google the name of the report (“America’s Home Gym Market”) and who wrote it (“Marketing, Inc.”) to try to find excerpts I can use from the study. Many times these types of reports cost thousands of dollars, but if you can find an executive summary re-printed somewhere, or a few sentences here and there from the report that gives you some info, you can sometimes get the market numbers you need for free.
Using this technique, I was able to find several reports from the Sporting Goods Manufacturers Association (SGMA) that gave me the yearly sales figures for exercise equipment broken down by category. Bingo.
Make a spreadsheet of all the different market figures you can find for all the different potential customers you can think of. Then add all the numbers up.
How many potential customers did you find? If you get 1% of these customers to buy your product, how many people is that? Run the numbers for a few different levels of penetration, like 1%, 2% and 5%.
Also, are the sales recurring (is the product disposable)? Or is the sale a one shot deal. Employ this into your spreadsheet as well.
So now that you have an idea regarding how many people might be interested in buying your invention, you need to figure out how much money you think you can make on each unit sold.
This is going to require that you get a rough idea on how much it’s going to cost you to make your invention.
So that’s what we’ll talk about next time: Estimating your cost of production.
Have a great day,