Test, launch, scale.
That’s the foundation on which the development of a successful product idea is built – in that order!
Too often, entrepreneurs develop a product they think everyone will love, only to see it nosedive during launch because they’ve skipped the all-important test phase.
During the test phase, you determine if there is a need for or an interest in your product.
No market means no future. While that might be a hard pill to swallow, it’s better to find out before wasting time and energy on a big idea destined to fail.
The main objective of the test phase is to validate demand for your product. Validating a product idea involves testing product positioning and audience targeting before crowdfunding.
Thankfully, there are ways to test your product ideas accurately, quickly, and affordably, significantly reducing risk by ensuring the market wants your product.
- Product idea validation is a process that determines market interest in your product.
- The Consumer-Based Brand Equity (CBBE) Pyramid helps you answer important questions regarding your product idea and is an integral part of the validation process.
- LaunchBoom can help validate a product idea and launch a successful crowdfunding campaign seamlessly without all the headaches.
What is Product Idea Validation?
Product idea validation is a process that determines market interest in your product and reduces risk when launching your idea. It involves identifying your target market and testing your product ideas with your target market before investing significantly in that idea.
While some start-ups spend lots of money on the process, hiring experts to help them get their new product ideas validated and off the ground, the truth is that most people don’t need to hire a crowdfunding agency.
The steps involved consist of answering the following questions:
Which Product Positioning Resonates the Most With the Market?
The fact that 59.8% of all crowdfunding campaigns fail has everything to do with product positioning.
Product positioning involves identifying your target audience and communicating the value of your product idea as follows:
- First, identify who experiences a problem that your product idea can solve.
- Then, communicate to them how your product idea solves their problem.
You’ve had this big idea swirling around in your head for a long time now, and you know who your target audience is and how your product idea will solve their problem. Now it’s time to launch!
Not so fast.
That’s the kind of approach that causes entrepreneurs to rush through or completely abandon the product idea validation process, setting themselves up for failure. This is definitely the boring part of launching a product, but it’s totally worth it.
Product positioning requires letting go of preconceived notions, having an open mind, and being willing to test different product positioning methods.
Trust that the market will tell you which one is best.
Which Audience is Most Interested in My Product?
How do you validate a product idea without a target audience?
Knowing your target audience is the first step when asking how to validate a product or a service’s marketability. It is, after all, the determining factor in whether or not a market even exists for your product idea.
The only way to accurately identify your target audience is to find what problem your product solves and then find the people searching for a solution to that problem.
Some of the most effective ways to identify that target audience are through the following methods:
- Surveying your existing customers
- Targeted ads
- Arranging focus groups
- Monitoring your competitors
- Enlisting the help of influencers
With this data, you can develop a framework for real-world analysis while still in the test phase.
What Questions/Concerns Does the Market Have About Your Product?
Through proper research, the people you engage with will have questions about your product idea. They may even have some concerns about its ability to solve their problem.
That’s alright because that feedback helps validate your product idea and maximize your launch efforts.
While you’ll identify these issues through direct engagement, you can stay one step ahead with competitor monitoring.
Frequently asked questions, customer reviews, and complaints found on competitors’ blogs, support forums, and social media channels can yield a treasure trove of helpful information you can use during this phase.
What is the Cost to Acquire a Customer Through Digital Advertising?
Your customer acquisition cost (CAC) is critical to this process. After all, how do you validate a product without considering the costs associated with reaching your target audience?
Calculating CAC is pretty straightforward. You divide the cost of all your digital marketing efforts by your total number of customers. For example, if you spend $1,500 monthly on digital advertising yielding 12,000 customers yearly, you’re paying $1.50 per customer.
What price is the market willing to pay?
When identifying how much people are willing to pay for your product, you will rely heavily on direct engagement. That includes polling your potential target audience through focus groups, surveys, pre-launch advertising campaigns, and crowdfunding efforts.
You’ll also learn about your target audience’s willingness to spend money on your product idea based on how others spend their money on competitor products.
Determining a customer’s willingness to pay (WTP) is a longstanding business strategy determining the maximum price the customer will pay for a product or service.
Sometimes the WTP calculation is a single dollar figure, and in some cases, it’s by a price range. Either way, you can maximize your profit and the value offered to the customer by trying to determine the sweet spot.
The Consumer-Based Brand Equity (CBBE) Pyramid
When you’re at the point of figuring out how to validate a product, you’re likely somewhere between your big idea and your functional product prototype. So, your thoughts regarding your target audience and how to solve their problem are purely hypothetical.
That doesn’t mean those thoughts don’t have value. They do, and you will want to write it all down.
That’s where the CBBE Pyramid comes in handy. CBBE stands for Customer-Based Brand Equity Model and was developed by Kevin Lane Keller, a marketing professor at the Tuck School of Business at Dartmouth College.
The underlying principle assumes that your customers own your brand rather than you. Since your brand lives in your customer’s minds, you must approach your branding and messaging as if you were them. The CBBE pyramid has four levels, each containing an important question about your product.
From the bottom up, the levels are as follows:
- Level 1: Who are you?
- Level 2: What are you?
- Level 3: What about you?
- Level 4: What about you and me?
Let’s dig a bit deeper into each of these levels.
Who Are You?
Level 1 of the CBBE pyramid establishes salience, and it is the level at which the customer asks the fundamental question, “who are you?”
Customers need to know who you are and what problem your product solves in the simplest terms possible. That’s the most straightforward way to establish salience. You want your target audience to be able to quickly associate your product idea with a category they already understand.
Ask yourself the following questions:
- What product category are you in?
- What problem do you solve?
- What is your product in a sentence or two?
Have you heard the acronym KISS? Keep It Stupid Simple?
That’s what we want to do here. Dumb it down. Use words that your audience will immediately understand.
For example, if you sell a high-tech super-awesome pencil, call it a pencil.
If you sell ultra-warm, dual-insulated riding gloves, call them riding gloves.
Don’t overthink it as you drill down on these questions to determine who you are and establish saliency.
What Product Category Are You In?
A product category is a collection of products or services with similar benefits and features.
For example, brands like Nike, Adidas, and New Balance compete with each other in the sneaker category.
What Problem Do You Solve?
Think about how your product generally solves problems but also specifically addresses needs.
Can it make life better or easier than existing products? Is it cheaper or faster?
A clear understanding of what problem your product can solve is an essential factor in establishing saliency.
What is Your Product in A Sentence or Two?
If you’ve been thinking about your big idea for a while, you have likely already mastered this.
If you’re still having trouble, though, ask yourself:
- What is this?
- What does it do?
What Are You?
At the next level of the Pyramid, the consumer asks, “what are you?” It’s their way of trying to understand what sets your product apart from your competitors.
The answer lies in two concepts:
Let’s start with the imagery.
Ask yourself the following questions:
- What brands would you associate with your product?
- Where is your product used?
- How is your product used?
Think about any famous brand, and you’ll have images flashing in your mind associated with that brand and the products it sells.
Take McDonald’s, for example. When you think about that brand, your mind might see an image of a juicy burger, crisp golden French fries, or those iconic arches.
It doesn’t matter what images pop into your head. They exist because the company spent billions of dollars to plant them in your brain through imagery.
This exercise works with any major brand.
So, now imagine your new product idea.
Right now, when someone hears the name of your product, nothing will come to mind. So there’s a blank slate, allowing you to choose strong imagery that will stick with your customer and help define what you are.
Now let’s look at performance.
At this level of the pyramid, competition monitoring and research plays a significant role.
When researching the competition, seeing how well competitors are doing can sometimes be discouraging and cause you to second-guess your product idea. However, their mere existence is helping you to validate your product idea.
Comparatively, researching the competition against your product idea helps you determine what’s unique about your product and how you can focus on untapped marketing opportunities.
Let’s dive into the questions you’ll need to answer about performance.
What Makes You Different from Your Competition?
Points of difference represent characteristics that make your product idea stand out against similar products from competitors.
However, being “different” isn’t enough to win a target audience.
Consider the following three characteristics that must exist to set your product idea apart from the competition:
- Desirability: Is this product something people genuinely want or would find value in?
- Deliverability: Can I deliver on my promises about this product idea? And will my target audience believe I can deliver on that promise?
- DIfferentiality: Is my product something distinct from others?
What Makes You Similar to Your Competition?
You’re probably thinking, “Hold on, I thought this exercise was about helping my product stand out.”
Yes, that’s true. However, establishing points of parity is equally essential.
Points of parity amount to industry standards that legitimize a brand.
How can you expect to compete if your product doesn’t share industry-specific similarities with others in your product category?
Take, for example, the cup holder.
While auto manufacturers were adding cup holders to cars in the early 1980s, German automakers resisted, opting to appeal to automobile “purists.” However, as cup holders became increasingly popular, German carmakers eventually had to relent and introduce cup holders.
Particular points of parity must exist between you and your competitor for your target audience to accept your new product idea.
Just ask the German carmakers.
What Are the Core Features of Your Product?
Consumers want to know the core features of your product. That’s a no-brainer. But outlining core features will also identify points of difference and parity.
Let’s say, for example, that your product is a jacket with core features like zipper pockets, a hood, and water resistance. These are all points of parity because many other jackets have the same features.
If your jacket has unique core features, like underarm vents or an easy storage option allowing you to pack it away into its own pocket, these features represent points of difference.
Either way, your core features must be stated clearly.
How Valuable is Your Product?
Determining product value lies in determining what benefits your product idea can offer to target customers based on its ability to meet or exceed customer expectations.
This concept involves, again, determining your product’s ability to solve a problem for your target audience. Additionally, as you survey the market through competition research, a reservation funnel, and engaging existing and potential customers, you’ll be better able to hone in on product value.
What About You?
The question, “what about you?” represents the next level of the pyramid, which relies on judgments and feelings.
It is the point at which the customer develops thoughts and feelings about your product. Here, they look at your answer to “What are you?” and form opinions based on your performance and imagery points.
Ultimately, judgment will play a significant role in helping form customer opinions and feelings. Therefore, identifying any possible judgments before launch is crucial to addressing concerns, doubts, or credibility questions.
Here are some questions you’ll want to answer regarding judgments:
What Positive Judgments Will People Have About Your Product?
Although getting ahead of any adverse opinions that may come up regarding your product is the primary concern during this phase, favorable judgments also play a critical role.
Because many factors influence whether a person buys a product, the more you can tap into favorable judgments, the better you can state the case for your product.
What Concerns or Doubts May People Have About Your Product?
Answering this question is super important.
Think about it; if you were to skip the step of validating your product idea, run with it, and launch, only to find that your target market had many concerns about your product, where would you be?
You’d be working backward to address problems you should have seen coming.
Take, for example, LaunchBoom’s client, The Neck Hammock, who raised $1,642,934 through crowdfunding.
We claimed it offered neck pain relief in ten minutes or less, knowing full well that it would bring up concern and doubt, such as:
- Is there scientific evidence of why it works?
- Are there testimonials from people that have used it?
- What credibility does the person have that created it?
So, we addressed these concerns in our messaging as follows:
- Is there scientific evidence of why it works? We got ahead of the issue by explaining the science of Cervical Traction and how it works.
- What credibility does the person have that created it? We ensured the target audience knew that the company’s founder is a doctor and licensed physical therapist who used the device on his patients.
- Are there testimonials from people that have used it? We included written and video testimonials from the founder’s clients.
When you take the time to identify possible judgments before launch, you can preemptively address any concerns, doubts, or questions of credibility through messaging.
What Credibility Do You Have in The Space?
Consider The Neck Hammock. What if the company’s founder wasn’t a doctor and licensed physical therapist but a chef?
It sounds ridiculous, right?
Exactly. The founder would have no apparent credibility in the space.
Credibility is everything when it comes to selling a new product. So make sure that you can establish yours.
A common way to build credibility as a newcomer is establishing just how long you’ve been working on the product and researching the problem. Tell your own story of struggling with the exact problem, trying all the solutions and finding nothing that worked.
These are ways to establish credibility not by your title, but by your experience.
Another way is to borrow the credibility of others. Reach out to major influencers, send them your product in exchange for a positive review. Their credibility can go a long way to establishing yours.
What About You (the Product) and Me (the Customer)?
At the top of our pyramid, we find resonance. It is the point at which we identify all of the reasons why the consumer will have a loyal, active relationship with your product which, after all, is the ultimate goal.
Read on for some of the questions you must answer at this stage.
Why Would You Be Missed?
Consumers will stay loyal to a product they can integrate meaningfully into their life.
If there is value in your product if it solves a problem and becomes helpful in your customers’ lives, chances are they’ll miss it if it goes away. But, on the other hand, if another product can easily replace it, you have a potential issue.
Validating your product idea relies on determining if and why customers would miss it.
How is Your Mission Aligned With Your Customer’s Mission?
Our client, etee, is a membership club for people searching for plastic-free alternatives to everyday items. Their mission is to remove plastic from the world, a goal their audience can get behind. It is a prime example of mission alignment between consumer and corporation.
Depending on your product idea, identifying and aligning your mission may be more difficult. Not all products are going to have a focused and easily defined niche, like etee.
Still, with enough work, you can establish a mission to build a loyal and active customer base by remaining focused on fulfilling that mission.
Let’s use McDonald’s as an example again. The company’s mission is “to make delicious feel-good moments easy for everyone.”
In one way or another, the company is doing this and has garnered great success.
If you are stuck on establishing your mission, list your core values.
What Are Your Core Values?
The backbone of any brand will be its commitment to core values that define who YOU are and how that relates to ME (the customer).
Keeping with the McDonald’s brand, the company states that its core values are as follows:
- Service: putting customers first
- Inclusion: opening its doors to everyone
- Integrity: doing the right thing
- Community: being good neighbors
- Family: doing better, together
You can see how these core values tie into the company’s stated mission. But remember, establishing values also means living up to them. Core values mean nothing if you don’t actually act on them.
So, the question is, what are your core values and how can you implement them?
Why Will Your Customers Only Choose You?
The answer to this question ties together all other concepts found throughout the CBBE method.
If you can offer the target audience the answers to those previous pressing questions, you are well on your way to determining what sets your product apart. That will ensure that there is a solid reason why customers will only choose you moving forward.
So, How Do You Validate a Product Idea?
There are many ways to validate a product idea by implementing the concepts outlined in this article.
From conducting a competitive analysis and researching existing demand to creating feedback surveys and gauging interest on social media, how to validate a product marketability requires thoughtful action.
Sometimes, it can take time and several product ideas, which may be frustrating, but it’s worth it in the long run. Without accurate product idea validation, you run the risk of losing everything.
Our reservation funnel system is built to validate product ideas without spending a fortune and it’s significantly more accurate than focus groups or most other outdated tactics out there.
Contact LaunchBoom to Learn More About Crowdfunding
LaunchBoom helps entrepreneurs launch successful crowdfunding campaigns seamlessly and without all the headaches. With LaunchBoom, we help you validate your product idea before you launch so you can get funded in less than 24 hours using a proven system that has raised over $100M for our customers.