7 ways to evaluate market viability of a product before launch

It's hard to predict a product's success before it's launched. These 7 tips help businesses learn whether their new product idea is a viable market fit.

Hollywood filmmakers often screen varying versions of their films to select audiences. This practice, though resource-intensive, is their way of testing product viability. It ensures the final cut resonates with audiences, optimising box office returns. But what if you're a small business looking to release a new product or service, and not a major film studio producing the next blockbuster?

 

While growing companies might not have the deep pockets or vast resources required to conduct Hollywood-scale testing, they can still determine product viability before launch. Creating a sound go-to-market strategy is one way to start, but it’s far from the only time- and cost-saving way to conjure a vision of the future.

 

Here are seven practical techniques to assess product market viability before investing extensive time and resources to perfect, market, and sell it.

1. Test whether the product will sell

 

Product testing ensures a product’s viability and enhances its market appeal. Also known as consumer or comparative testing, it refers to the process of evaluating a product’s potential for success in the market before it’s launched. Will the product appeal to the right audience? Will it solve their problems?

 

There are several ways to test whether a product will sell. Here are a few strategies:

 

  • Conduct market research to understand consumer behaviour and trends (more on this below).
  • Use preorders or crowdfunding to estimate demand (more on this below).
  • A/B test to compare different product approaches.
  • Analyse social media engagement around the product.
  • Prototype test to get early user feedback.

While product testing won’t give you the exact results you can expect later, you’ll at least be able to gauge whether there’s demand for your product.

2. Engage with potential customers

 

Getting feedback from potential customers is an effective way to test product demand. Ask your target audience about what they need, what they want, how much they would be willing to pay, and how likely they are to buy it.

 

The more you learn about customer needs, the more likely you are to design a successful product that meets those needs.

 

One way to engage with potential customers is through a survey, whether online, via email, social media, or even in person. Pick the media that your target audience is most likely to engage with. Keep the survey short and simple, with clear and concise questions, as this will help improve response rates.

3. Ask people to consider buying now

 

Tallying preorders or crowdfunding pledges is a useful product success metric, but it requires some initial confidence in your product’s design. Preorders and crowdfunding give customers a chance to provide feedback and either buy the product or put down a deposit.Watch your potential customers’ actions. If they aren’t willing to put down some money, they're indicating they might not buy it. Tracking preorders and crowdfunding page views and conversion rates helps you judge actual interest.

4. Harness insights through market research

 

Conducting market research is a key step in determining product viability. While it may take time and effort, market research uncovers important trends, consumer demand, and competition – vital information for developing an effective product differentiation strategy. Here’s a brief guide to conducting market research:

 

  1. Define your objective: what do you want to learn? For example, market trends, competition, ideal pricing strategies, and/or consumer preferences?
  2. Identify your target audience: who are your potential customers?
  3. Choose your research method(s): surveys, interviews, and focus groups are all great ways to connect with consumers, while data analysis and observation can be used to tap into market and economic trends.
  4. Collect data: using your chosen research method, begin to collect data. If you’re using surveys, for example, distribute them to your target audience and begin to collect responses.
  5. Analyse data and apply findings: identify patterns, trends, or other key findings, and use this data to inform your product development, marketing, and pricing strategies.

5. Remain positive

 

Determining product viability can be a challenging process filled with uncertainty and potential setbacks. A positive attitude focused on perseverance goes a long way. Why? Positivity helps maintain motivation and drive while fostering a willingness to adapt, learn, and improve. If you’re not passionate about your product, why should others be? Getting – and staying – in the right frame of mind also helps you and your teammates overcome challenges and adversity.

 

In saying that, it’s important to balance positivity with realism. Being overly optimistic leads to ignored risks or problems, and ultimately a lacklustre product. Use positivity as a way to confidently and constructively adapt to necessary changes, not as a way to ignore harsh facts.

6. Become the customer

 

If you don’t understand your target audience, how will you deliver a positive customer experience? Don’t just focus on selling your customers something. Instead, put yourself in their shoes. This helps you see your product through a different lens and evaluate what it needs to deliver.

 

As mentioned above, engaging with customers and conducting market research are effective ways to “become” the customer and improve product viability. Here are a few additional ways to empathise with the customer experience:

 

  • Map the customer journey: Visualise the customer journey from initial awareness to final purchase and beyond. Identify each touchpoint and interaction at every stage to uncover pain points and better understand customer perspective along the way.
  • Create customer personas: based on customer and market research, develop fictional representations of target customers, complete with name, age, occupation, interests, and goals. Put aside your own biases and judgments to realistically connect with their emotions and challenges.
  • Actively seek feedback: gather feedback from current and potential customers through surveys, interviews, or social media engagement. Ask them to share their experiences, challenges, and suggestions.
  • Read reviews for similar products: look at competitor products. What do real users have to say about their experience with these products? Take note of gaps and opportunities that your company can fill, as well as what positive experiences customers have had. Use these insights to better understand customer experience and inform your own product decisions.

7. Conduct an extensive competitive analysis

 

Competitive analysis is used to identify a company’s main competitors and their products, customers, sales, and marketing strategies. The goal is to understand the competition’s strengths and weaknesses to improve your own product and marketing strategies.


To conduct an extensive competitive analysis, first identify key competitors who are offering comparable products or services in the same target market. Examine their offerings carefully, taking note of features, benefits, pricing, and customer reviews. Key questions to ask of competitors include:

 

  • What are their marketing strategies?
  • How are they engaging with customers?
  • What sales strategies do they use?
  • Where are their products available?
  • What are their strengths and weaknesses?

Gathering this information helps you release an offering that’s a good product-market fit, ultimately leading to greater product success and long-term viability.

The bottom line

It’s hard to predict whether your product will be a success. Running product tests, engaging with customers, conducting a thorough competitive analysis, and gauging buy-in helps you get a better sense of what’s at stake before taking the plunge.
These steps provide valuable metrics that help you release an offering that suits your prospects’ needs. But even after launch, don’t rest on your laurels. Keep conducting market research and regularly step into your customers’ shoes to ensure the long-term viability of your product.

This article contains general information and is not intended to provide information that is specific to American Express, or its products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.

 

The material made available for you on this website is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.

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