The first giant step toward turning your product (or service) idea into a viable business concept, and ultimately finding investors, is basic market research. Below includes the explanation for how to design a basic, first-step market research survey to validate your product idea that works everywhere including Cambodia.
A basic market research survey should answer the following three questions. These are key. Your survey should answer all of them.
- Who is my TARGET MARKET?
- Is my product idea in DEMAND?
- How much are people WILLING TO PAY for my product?
You can answer these questions with your survey.
You have ideas about your target market. Millenials, doctors, college students, app afficionadoes, craft beer drinkers, etc.
In fact, you probably defined your market early on. Maybe even before you defined your product. And you’re probably convinced you know who wants your product.
But at the end of the day, you need data. Investors aren’t going to rely on a guess — even an educated one. Nor should you.
So your survey should begin by asking a few demographic questions. Gender, age, household income, region. These don’t regard your specific product idea, but they paint a picture of your survey audience so you can learn how different types of people respond to later questions about your product.
Behavioral questions should follow. These uncover facts about your audience’s lifestyle that relate to your product idea.
Is your product an app? Ask about phone use. Is it a pet product? Ask about monthly spend on pets. Is it a coffee product? Ask how much coffee they drink.
Pick four or five relevant questions that you think might affect whether someone will be interested in your product. Be smart. Be creative.
You’ll use these demographic and behavioral questions to “cut” your data when your survey is done fielding.
Gauging demand for your product idea is a two-step process. First, ask about competing or similar products. Do people use competing products? What don’t they like about them? How long have they used them? Where did they first learn about them?
These questions are important. While you can (and will) ask your audience to rate their interest in your product, a survey is limited — respondents cannot actually experience your product idea firsthand. They have, however, used competing products firsthand, and you can learn a lot about demand for your product from their experience with competitors.
Next, present your product concept and ask for first impressions. This is the most delicate and most-often failed part of a market research survey.
This presentation can be a sentence, a paragraph, or even a video. The more descriptive, the better. But don’t make it too long. No one should have to spend more than 20 seconds reading your description, or more than 45 seconds watching your video. Otherwise, response quality will suffer.
Spend a lot of time crafting these descriptions. Go heavy on key terms. The description should be as accurate as possible. Remember, when gauging demand, respondents are rating their interest in the product you describe. So the closer your description matches the actual experience of the product, the better.
Here’s a good description for a hypothetical product:
Imagine an app that monitors your home’s energy use, saving you money and helping preserve the environment. Simply plug a small device into your wall, download the app, and watch as it updates you in real-time about your home’s energy use. You can set daily, weekly, or monthly app notifications so it will update you on energy use in your home. You can also tell the app to alert you when energy use is unexpectedly high (maybe you left your oven on after dinner).
This is short and sweet, and gets the point across fast. Yes, there are details left out, but that’s OK. The goal here is simply to validate your idea, not refine the specific features of your product. Just be concise and assume your audience believes the product will actually work as intended.
(If you want to get fancy, make three different versions of your product description. Split your survey audience into three groups, and show each one a different description. Then see how answers change between the groups.)
After you’ve presented the product, ask this question:
Assuming the price was reasonable, how likely would you be to consider buying this product?
Answer options include a five-point scale — 1 (not at all likely) to 5 (extremely likely).
All who select not at all likely should be asked just one more open-ended question, then leave the survey. That question: Why would you not consider buying __?
Everyone else continues to the next section of the survey.
WILLINGNESS TO PAY
Finally, gauge respondents’ willingness to pay for your product. Use a Van Westendorp — a set of four specific, open-ended questions that will give you a holistic perspective on how much your audience is willing to pay. The questions are:
- At what price would you consider the product to be too expensive?
- At what price would you consider the product to be priced so low that you’d question it’s quality?
- At what price would you consider the product starting to get expensive, but you’d still consider buying it?
- At what price would you consider the product to be a bargain — a great buy for the money?
There’s one major exception to using Van Westendorp. If your product isn’t something your audience has experience buying (i.e. there’s nothing remotely similar on the market), they won’t know how to answer these questions. You’ll get huge distributions of answers, and ultimately won’t have enough information to make a decision about price.
In that case, you need to guide your audience a bit. Ask this question:
How likely would you be to consider buying ___ for $___?
…five times, one for each price listed below:
- 25% below break-even cost.
- 10% below break-even cost.
- Break-even cost.
- 10% above break-even cost.
- 25% above break-even cost.
If possible, randomize the order of these questions so they aren’t presented from lowest-to-highest, or highest-to-lowest (this kind of randomization should be a standard feature of any major survey platform).
If you don’t know your break-even cost, that’s fine. Just guess. The point here is to validate your idea — to see whether people want it, and whether they’d be willing to pay for it. You need to know this before you invest any more time on this idea.
If you need help with market research in Cambodia, please contact us: firstname.lastname@example.org