How Do You Assess the Potential of a New Market?
Navigating new market territories is a critical challenge for small business owners, so we've gathered insights from ten founders and CEOs to illuminate their strategies. From assessing demand, competition, and scalability to evaluating revenue potential and constraints, these entrepreneurs share their recent explorations and methodologies for tapping into new markets.
- Assess Demand, Competition, and Scalability
- Gauge Engagement and Trends
- Combine Research with Practical Experimentation
- Analyze Competition and Public Sentiment
- Leverage Social Media Sentiment Analysis
- Focus on Ethical Consumerism Trends
- Identify Overlooked Market Inefficiencies
- Conduct In-Depth Market Research
- Review Demographics and Local Insights
- Evaluate Revenue Potential and Constraints
Assess Demand, Competition, and Scalability
When assessing the potential of a new market, I focus on three main factors: demand, competition, and scalability. First, I analyze whether there's a clear need for our services in that market by researching industry trends, customer pain points, and market size. Next, I evaluate the competition to understand how saturated the market is and whether there's room for differentiation. Finally, I assess scalability by considering the resources required to enter and expand within the market.
Recently, we explored expanding Kualitatem's cybersecurity services into the healthcare sector. Our research showed an increasing demand for security solutions due to stricter regulations and rising cyber threats. By analyzing the competitive landscape, we identified gaps where we could offer more specialized services. This exploration validated the market's potential and has led us to actively pursue partnerships and tailor our offerings to meet the specific needs of healthcare organizations.
Gauge Engagement and Trends
When exploring a new market, I start by evaluating the competition. I use tools like Google Trends and social media platforms to gauge engagement levels. This gives me insight into how actively people are interacting with existing companies and what specific trends or interests drive their behavior. I also dive into the search terms and semantics to better understand what potential customers are looking for.
This process typically takes about a week, during which I analyze competitor strengths, identify gaps, and start shaping a business and content plan that positions my company uniquely within that market.
Combine Research with Practical Experimentation
As the founder of a legal process outsourcing company, assessing the potential of a new market involves a combination of thorough research and practical experimentation.
For instance, when we recently explored expanding into the emerging market of legal tech solutions, we began by analyzing industry reports and trends to understand the demand for specific legal technologies. We then conducted surveys and focus groups with potential clients to gauge their needs and preferences.
To validate our findings, we piloted a small-scale project offering legal tech consulting services. The positive feedback and strong interest we received from initial clients confirmed the market's potential and guided our decision to invest further.
This hands-on approach allowed us to refine our offerings and enter the market with a well-informed strategy, ultimately positioning us to capitalize on new opportunities effectively.
Analyze Competition and Public Sentiment
A method we use at our company is competitive analysis combined with sentiment analysis of social media and online forums. This helps us understand not only who we are competing against but also the public perception and satisfaction with current solutions. By identifying gaps in what current providers offer, we can tailor our products to better meet the unfulfilled needs of potential users.
In exploring the German market, we noticed a significant demand for productivity tools that comply with stringent local data privacy laws. Our compliance with the GDPR and additional customization for privacy-conscious businesses gave us a competitive edge. We've successfully introduced Toggl Track and Toggl Hire to this market, where they have been well received due to their adherence to these regulations.
Leverage Social Media Sentiment Analysis
A technique involves analyzing social media sentiment and discussion trends around relevant topics in the prospective market. By employing natural language processing tools, we identify prevailing opinions and needs, which guide our product development and marketing strategies. This insight is crucial for aligning our offerings with market expectations and enhancing user engagement.
An exploration involved tapping into the pet care industry by leveraging Amazon's e-commerce ecosystem to launch a range of pet products. We used Amazon's advertising tools to reach a broad audience and utilized customer feedback to continually improve our offerings. This approach helped us quickly adjust to market demands and achieve a steady growth rate.
Focus on Ethical Consumerism Trends
Whenever we look at a new market for selling humane-certified goat's milk, there are many factors for us to consider. We tend to focus on local consumer trends toward organic products and ethical food sourcing. We need to identify any regulations that apply to our business area to see if our humane-sourcing certification meets or exceeds the local standards. We do social listening and marketing research to see if potential customers are aware of goat's milk as a product, whether they have tried it before, and how open they are to trying goat's milk.
This was evident when we tried moving into a completely new market. This market has been growing fast in the last few years in the segments related to ethically driven consumerism around food products. We thought it was worth checking on this.
So we made an online questionnaire, targeting these specific consumers who are buying organic products, and I asked them about their habits in buying food products, about their perception of the benefits of goat's milk, and about the importance they give to animal welfare in agriculture. It was a really interesting survey because it clearly pointed out the potential in the segment of ethically driven dairy products; it also pointed out quite well what needs to be done on our part in education. So this was something that we could do to position ourselves in the market.
We decided to start small in a few pilot cities, start there, and, at the same time, we started an educational campaign, pushing the fact that we are bringing goat's milk to the market with the longest benefit for the animal, our commitment to doing it in the most humane way, trying to position ourselves.
Identify Overlooked Market Inefficiencies
When I assess a new market, I do something counterintuitive—I look for inefficiencies that aren't obvious.
Instead of focusing on demand or competition, I hunt for areas where systems break down or where people are forced to work around existing solutions.
For example, I recently explored the market for eco-friendly packaging, and while everyone was pushing compostable materials, I noticed small manufacturers struggling with bulk orders because of rigid supply chains.
Instead of launching a new product, I developed a service that helps businesses customize smaller, flexible packaging runs, tapping into that overlooked gap.
The market didn't need more 'eco;’ it needed agility, and that’s where the real potential was hiding.
Conduct In-Depth Market Research
Assessing the potential of a new market involves several key steps that I've honed over my years as a florist. First off, it's essential to conduct thorough market research—this means gathering data on customer demographics, preferences, and purchasing behaviors in the target area. Recently, I considered expanding my floral services into a nearby suburb known for its vibrant community events but wanted to ensure there was sufficient demand before making any commitments.
I started by analyzing local competitors—what services they offered and how they positioned themselves within the market. Additionally, I engaged with potential customers through social media polls, asking about their floral needs for events like weddings or parties in that area. This direct feedback was invaluable; it not only provided insight into what products would resonate but also helped me gauge interest levels.
After gathering this information, I decided to host a pop-up shop at a local fair in that suburb to test the waters further. The response was overwhelmingly positive! We sold out of several arrangements within hours and collected contact information from interested customers for future marketing efforts. This hands-on approach allowed me to assess market potential effectively while building relationships within the community—an essential step for any small business looking to expand successfully.
Review Demographics and Local Insights
When assessing the potential of a new market, we start by reviewing the market demographics to see if the numbers align with our business model, initially. If, on the surface of the review, it does appear that it meets our company expectations, we will physically go to the market and investigate in person by visiting local industry, reviewing proposed county and city legislation and business dealings, and, most importantly, speaking with local residents.
Recently, we explored a rural area where we saw an increase in demand for affordable housing and a growing population of first-time homebuyers due to the recent development of long-term industry. By analyzing data such as income levels, housing supply, and job growth, we identified that this market offered favorable conditions for our real estate strategy. This thorough review helped us confidently move forward, knowing the area had strong potential for growth and profitability.
Evaluate Revenue Potential and Constraints
Owners need to take a two-pronged approach to any new market assessment.
The primary assessment is the revenue opportunity. You begin with a thorough analysis of the area's total addressable market and then calculate the serviceable obtainable market. The serviceable obtainable market version for a new market is how much of the market you can capture in the first year.
The second prong is to evaluate the market considering any constraints, whether physical location, logistics limits, human capital, or digital. The evaluation should then compare the revenue potential that can be obtained with the costs and constraints to result in a well-thought-out analysis.
A recent go-to-market evaluation enabled a client to pivot their messaging to a smaller section of the market and grow sales much more easily.
