My product management toolkit (17): Assess market viability
Whether you’re a product manager or are in a commercial or strategic role, I’m sure you’ll have to assess market viability at some point in your career. For that reason, I wrote previously about assessing markets, suggesting tools that you can use to decide on whether to enter a market or not.
A few weeks ago, I listened to a podcast interview in which Christophe Gillet, VP of Product Management at Vimeo, gave some great pointers on how to best assess market viability. Christophe shared his thoughts on things to explore when considering market viability. I’ve added my sample questions related to some of the points that Christophe made:
- Is there a market? — This should be the first validation in my opinion; is there a demand for my product or service? Which market void will our product help to fill and why? What are the characteristics of my target market?
- Is there viability within that market? — Once you’ve established that there’s a potential market for your product, this doesn’t automatically mean that the market is viable. For example, regulatory constraints can make it hard to launch or properly establish your product in a market.
- Total addressable market — The total addressable market — or total available market — is all about revenue opportunity available for a particular product or service (see Fig. 1 below). A way to work out the total addressable market is to first define total market space and then look at percentage of the market which has already been served.
- Problem to solve — Similar to some of the questions to ask as part of point 1. above, it’s important to validate early and often whether there’s an actual problem that your product or service is solving.
- Understand prior failures (by competitors) — I’ve found that looking at previous competitor attempts can be an easy thing to overlook. However, understanding who already tried to conquer your market of choice and whether they’ve been successful can help you avoid some pitfalls that others encountered before you.
- Talk to individual users — I feel this is almost a given if you’re looking to validate whether there’s a market and a problem to solve (see points 1. and 4. above). Make sure that you sense check your market and problem assumptions with your target customers.
- Strong mission statement and objectives of what you’re looking to achieve — In my experience, having a clear mission statement helps to articulate and communicate what it is that you’re looking to achieve and why. These mission statements are typically quite aspirational but should offer a good insight into your aspirations for a particular market (see the example of outdoor clothing company Patagonia in Fig. 2 below).
- Business goals — Having clear, measurable objectives in place to achieve in relation to a new market that you’re considering is absolutely critical. In my view, there’s nothing worse than looking at new markets without a clear definition of what market success looks like and why.
- How to get people to use your product — I really liked how Christophe spoke about the need to think about a promotion and an adoption strategy. Too often, I encounter a ‘build it and they will come’ kind of mentality which I believe can be deadly if you’re looking to enter new markets. Having a clear go-to-market strategy is almost just as important as developing a great product or service. What’s the point of an awesome product that no one knows about or doesn’t know where to get!?
Main learning point: Listening to the interview with Christophe Gillet reinforced for me the importance of being able to assess market viability. Being able to ask and explore some critical questions when considering new markets will help avoid failed launches or at least gain a shared understanding of what market success will look like.
Fig. 1 — Total available market — Taken from: https://en.wikipedia.org/wiki/Total_addressable_market
Fig. 2 — Patagonia’s mission statement — Taken from: http://www.patagonia.com/company-info.html
Related links for further learning: