It’s vital that you research necessary information before launching or expanding a business. For example, you may have heard that “Market A” will be fruitful for your business, only to discover later that you should have gone with “Market B.” Your business could throw away plenty of money and time if you dive into new markets only with little knowledge about it or worse, just out of whim.
Caterina Fake, the founder of Flickr, puts it best when she says, “So often people are working hard at the wrong thing. Working on the right thing is probably more important than working hard.” And if you work hard on the right thing, it will certainly earn you good results!
To find out the right thing in business is to evaluate market trends. Doing some meticulous analysis can go a long way, but it’s best to read between the lines one all reports and figures that you find while researching.
Analyze the Details
You’ll find a plethora of online research studies across all industry sectors, and it’s always not enough to just take the figures at face value. The following variables are what you should look for to determine if a set of data is useful for your research:
1. Size of Sample:
If you come across a survey that indicates an X amount of people are interested in a product, but the researchers only asked 100 people, you have to check whether the findings are substantial enough to represent a certain market. A more telling stat would be getting 100,000 online responses for a survey.
It’s better to get a more localized data of a specific region for your intended market. This will help you understand which customers you can reach and what can be your marketing strategy.
Pay close attention to the time when the survey or study was conducted. It’s always good to use data that is recent, fresh and relevant like something from 12 months ago. The latest market news can assist you in making a better judgment of which industry trends to follow.
4. Media Coverage:
Engaging and informative articles about current industry trends may not always be reliable. Sometimes, articles are written as “column-filling” pieces that may speak highly of a certain trend or fad just to “sell.” They don’t necessarily reflect the stability of a specific market or a product’s future.
When looking at articles or blogs, you must question where the story came from and from whom. It may simply be a marketing ploy where the publication has a relationship with the service they’re promoting. If the content doesn’t give you enough information to make a sound judgement on market trends, keep searching!
Examining the above variables can give you a good indication of a potential market’s accessibility and “worthiness.” After getting a specific idea about a target market and product or service, you can now proceed to market testing that will reveal whether you and the market you chose can have a perfect marriage.
Perform Market Testing
A good way to find out about the latest trends is to look into social media platforms. You’ll often find trending topics on Twitter that reflect the current likes and tastes of a certain demographic. That could be your catalyst to finally determine a market for your product or service and if it’s serviceable for you.
Shopify Inc. showed a great example of how to monitor market trends for a business idea. They used “coconut oil” after learning its popularity on social media.
They discovered that a Pinterest pin entitled “30 Ways to Use Coconut Oil” had received 105 likes and 934 re-pins, deeming it a popular product amongst health and beauty enthusiasts.
If you find out that a product idea is well received by a lot of people, you need to continue evaluating market trends to know if it has a great investment potential. The following tools and techniques are what Shopify used which you can apply for a successful market testing:
1. Google Trends
Google Trends is a great platform for evaluating market trends, hence the name. However, you can’t solely rely on it to give you a full picture of a specific market. One user might have searched a product 12 months ago, and 10 people looked it up today. This tells us that there’s an increasing trend, but the market’s not quite worthy from a business perspective.
Looking at the coconut oil example, it’s quite evident that its popularity increased quite immensely since 2011.
Again, it’s important to support any data you find with further research and study. Think of it as a crime case: you need to acquire enough evidence to convict a suspect.
2. Product Reviews
After seeing a steady rise in a particular search on Google Trends, you should now scour the Internet and look for product reviews.
Shopify went to MakeupAlley, a skin and hair care product review site, to examine the feedback on coconut oil products. Based on 834 reviews, 90% said that they would purchase the raw ingredient again showing that the raw ingredient is highly favored, and has potential.
While applying the same method for your product or service, you should also take into consideration any negative reviews to tweak and improve it so you can provide a better experience for your customers.
3. Keyword Mapping
Although coconut oil was evidently trending and many consumers were buying the product, it remained unclear exactly how many consumers were purchasing it.
To gain more information, Shopify evaluated keywords associated with coconut oil by using Google’s Keyword Planner Tool, which lets you see the number of searches that are made per month for a particular term.
To use the platform, you’ll need a Google Adwords account which is free to sign up for. When you log into your account, follow these steps:
- Select Tools from the top menu
- Choose Keyword Planner
- On the following screen, select Search for new keyword and group ideas.
Next, you can enter the keywords related to your product idea and choose the correct settings to ensure that the search is focused on your desired details.
After sifting through the results, Shopify found that coconut oil was associated with a lot of things including “hair,” “dogs,” “recipes,” “skin,” etc. The term “coconut oil” alone garnered significant interest with 246,000 monthly searches in North America. However, this also indicates that it’s a competitive market.
What you would need to do, at this point, is to search for alternatives within a popular “broader term” to seize any potential opportunity within that market.
Shopify found that there were many keywords with a high search volume which were not as competitive as “coconut oil.” Having learned that some of the associated words had the word “hair” in them, they decided to search “coconut oil” plus “hair.” The phrase “coconut oil for hair” returned the most favorable results with 49,500 average monthly searches.
4. Google Ranking
Exploring Google search rankings can help you identify the competition you will be up against.
Shopify found that almost all of the top 10 results on Google for “coconut oil for hair” were articles and blogs, which means that there are no leading individuals or companies specific to the term.
If your potential product rendered similar results, there’s a greater chance for you to rank high in Google searches compared to trying to fight off a bigger competition that is already established in the market.
5. Region Validation
It’s crucial to find out the location where the searches for your keywords are coming from. This can heavily impact your choice of market, and it will determine whether you can do business in those areas.
Shopify took to Google Trends again and found that South Africa and the US were searching for these terms more than any other regions. They then researched further to see which US cities returned the highest search results for “coconut oil for hair.”
Upon analyzing social media platforms and examining the existing competition, for hair products specifically, Shopify learned that “coconut oil for hair” has been trending since 2011, which indicates business longevity—a plus point for launching any product.
Knowing that a lot of people from Charlotte and New York searched “coconut oil for hair” provided extra scope for setting up a business closer to these areas. So, for example, if you’re based in Japan, you could take a similar approach to learning what’s the best market for your business locally.
Use every single tool at your disposal to get the most accurate results in determining a suitable market for your product or service. There are plenty of free online tools you could use similar to the ones Shopify used above.
If you bear in mind the audience, location and the validity of the results you get, you’ll have a fine understanding of whether or not you could launch a product or business idea for a particular market and if your company can handle it.
Before you implement anything for your business, just always remember to look before you leap!