Wednesday, May 14, 2014

Evaluating Market Demand for a New Product

Once upon a time, product evaluation was something that only big companies with humongous marketing budgets could undertake. Now, as a result of the tools available online, small startups (and those aspiring to be) can dig into trending products online and determine with a high degree of precision if their potential cash cow is really that or merely a cash piglet. To illustrate how a company or inventor can evaluate the market for its product(s), we offer the following tips.

Product Evaluation or Market/Demand Evaluation?

Evaluating a product can reveal who is selling it, the leading companies selling it, and how they are marketing it, among other things. But what if you want to establish the market for the product, specifically how much there is and how profitable it would be to enter it? These different approaches are two sides of one coin, yielding insights that can be invaluable and complimentary. Market/demand research or evaluation can be done online and can help determine the current (and possible) demand for a product (Source: Doba’s Effective Product Promotion).

Example: Market/Demand for Coconut Oil

Oils that are low or have no trans fats or polyunsaturated fats are in; Crisco is out. The latest health craze is pushing “healthy” fats and oils high in them to the front of store shelves from Pittsburg to Peoria. Coconut oil, which boasts to be one such healthy-fat rich oil, is riding a gravy train of consumer interest. So, how might one evaluate the actual market for this product? Using Google Trends allows you to track/compare up to five products at once.

Where to Start?

Doing a search on Pinterest revealed 30 ways to use coconut oil. All told there were 105 likes and 934 re-pins, which are definite indicators of the product’s popularity, but more research is needed to validate this assumption. Looking at Google Trends, reveals that this product has been increasing in popularity steadily since 2011. Going one step further, one can look at product reviews. In this case, the site MakeupAlley reviews skin and hair care products and based on 834 reviews, 90% would purchase coconut oil again. To see the backside of a product’s consumer perception, check out negative comments which can reveal the deficiencies you may be able to capitalize on (Source: The Amazon Whisperer). Looking at Amazon is another valuable way to assess a product’s marketability. Topsy (which shows how much action it’s getting on Twitter) is another site that can be useful for product research.

Keyword Evaluation

The next step is to look at your product in Google’s Keyword Planner Tool. This tool shows how many searches per month are being made for a product’s keywords, as well as the competition for a given keyword and related search terms. To use this tool you’ll need to sign up for Google Adwords, which is free. To begin, select Tools, then select Keyword Planner, then click Search for new keyword and ad group ideas. The next screen takes you to where you enter your product; make sure to check that your settings under Targeting are set to the specific locations you want to target. The next screen will default to the tab to “ad group ideas”, set it to “keyword ideas”. The results will show you all the search queries related to yours, the number of monthly searches for it in the geographic area specified, and the competition for each keyword. By filtering out those keywords that are highly competed for, you can identify those that are less competitive where you might be able to exploit a niche.

In Google searching a product, if you see only a bunch of one-off articles and notice a lack of dominance by a person or company (or domain) for a product keyword, there’s a greater chance that you can rank higher than if you were going against more established brands competing in the space.

Source: B2C_Business

Evaluating Market Demand for a New Product

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