book.chapter Preparing the concept

Before launching a project, assess its viability by determining the problem it solves, identifying the target market, estimating market size and payment willingness, and evaluating the idea's uniqueness and potential for being replicated. This research prevents investing in non-viable ideas. Originating the thought New ideas can be thrilling, often stemming from our creativity and passions. However, transforming an idea into reality demands incredible commitment of time, money and effort. Therefore, before embarking on this journey, evaluate if your idea is truly viable. Ideas originating from job experience tend to have the most potential. With a decade or more working in an industry, you have progressed far down the learning curve, gaining intimate knowledge of trends, players and forces shaping that market. By building on this expertise rather than venturing into unfamiliar territory, you mitigate risk. In contrast, ideas based on personal consumer frustrations assume falsely that being an expert user equates to being an expert producer. And ideas chasing suspected "huge markets" underestimate the strong existing forces controlling those markets. As one expert cautions, many enthusiastically share ideas to solve work problems and then optimistically extrapolate major market potential from minimal data points. When pressed about validating the market, they admit discussing only with like-minded colleagues, friends and family—people inclined to encourage pursuing dreams no matter the viability. Evaluating market scale Determining the current size of the market and whether it is expanding or contracting is crucial. This indicates if the market can sustain a new entrant. The market's growth rate shows if there is room for your new offering to flourish. Targeting a sizable market with faster than average growth provides advantages. Calculate market size using industry-specific methods first to establish a baseline. Document assumptions made in this estimate. Determine what market share percentage you require to be viable. Critically evaluate if the present market opportunity is sufficient to support additional competition. Favor entering growing rather than shrinking markets. As the well-known phrase states: "a rising tide lifts all boats." expanding markets typically welcome new entrants with different products. Growing markets also allow taking share from incumbents more affordably. Expanding markets can exhibit falling costs from economies of scale. Compare a market's growth to overall economic expansion measured by gross national product to categorize it as "growing" or "contracting." north american gnp growth has averaged approximately 4 percent over the last decade. Markets increasing faster than this benchmark qualify as rapidly expanding. Vigorously rising markets resemble a incoming tide, tending to lift all participants. The optimal way to appear brilliant is being present in the right expanding market at the opportune moment. This indicator signals you are in the appropriate place as conditions improve. Aligning with patterns Products and services typically progress through a lifecycle of adoption, starting with early adopters who are willing to pay premium prices for innovation. As a product becomes more mainstream, the early majority joins in, followed by the late majority as the market nears saturation, and finally, laggards when prices are lowest. Successful launches often occur during the market's growth phase, where there's a high potential to attract new customers. It's crucial to assess whether a new offering will hit the market during this phase or later when decline sets in. Broader economic factors also play a role, influencing overall spending. Aligning with positive market trends can lead to success, while going against them increases risk. Current trends include consumer market growth, china's manufacturing dominance, demand in life sciences due to an aging population, and variable spending due to monetary policy. Understanding market cycles and macroeconomic trends is vital for evaluating new product viability. Researching competition Before launching a new product, analyzing the competition is crucial to identify market opportunities. This involves evaluating competitor products for quality, features, and customer loyalty, and understanding their strategy through their leadership, investors, and company structure. It's also important to consider substitute products, including the option for customers to not purchase anything or to continue using existing solutions. Conducting an economic analysis from the customer's perspective is essential, focusing on the return on investment, potential savings in time and money, changeover costs, and risks. This helps in refining the offering by understanding how customers weigh costs and benefits, leading to the development of better products. Consulting the experts When entering a new market, it's crucial to consider insights from industry analysts and market research firms. Their data on market size, trends, and key players can reveal commercial opportunities. A lack of research reports may suggest a nascent market with limited customer base or early adoption stage. Acquiring a report provides an in-depth understanding of the target market. If budget is tight, seek access through contacts or request summaries from analysts. Engaging with analysts, who often have industry experience, can provide valuable insider perspectives. Building relationships with them by sharing your plans and seeking feedback, possibly under non-disclosure agreements, can lead to them becoming advocates for your business, enhancing market entry and sales efforts.