Concept Test Your Idea
Early in the idea evaluation phase, you should work diligently to concept test your business idea. This means questioning whether the business idea will make sense conceptually to the intended customer(s). It involves identifying the proposed value proposition of the product or service for the customer. If you product or service (no matter how neat or cool) fails to provide a value proposition for the intended customer segment(s), then the idea will not yield the required or desired financial return to the entrepreneur or investor.
Determining the Value Proposition
Below are some questions designed to help you conceptualize your product in the mind of the intended customer. These questions will also help you to further explore the value or intended value for the customer.
- What does my product or service do?
- Note: Focus. Your produces does a dozen things. Diversity is fine – but are you going to sell it as doing.)
- How does is my product work or how is product carried out?
- Does this make sense to the customer? It does something amazing, but does it do it in a way that consumers will see as logical.
- What consumer need or want does my product meet?
- Note: Determining whether it is a want or a need allows you to assess the level of consumer priority?
- Why does this need or want exist? (This is getting inside the consumers head to cut their thought process off at the pass.)
- How strong is the need or want?
- Note: This question corresponds to, “ how strong is the customer priority?”
- Can the need or want be strengthened?
- Note: Is there room for increased demand through product improvement?
- Could the need or want diminish under certain circumstances?
- Note: What are the threats of other products or services better meeting the need of want of the customer.
- What is the life cycle on this need or want?
- Note: A product that is part of a fad or trend has a limited life cycle.
- What are the Benefits of the Product?
- Note: A product or service provides some benefit to the customers. Even wants provide a benefit through entertainment, self-actualization, status, etc.
- Why are these benefits?
- Note: Where do these benefits show up on the hierarchy of needs? Identifying why a benefit exists will help in identifying the strength and longevity of the benefit.
- Can the benefits be segmented?
- Note: Often a product or service will provide multiple benefits. Each of these benefits will have a higher or more direct value proposition for a customer group or segment. Segmenting benefits will allow you to determine which benefits are most valuable to a given customer segment and should therefor the be the primary focus of marketing or future development.
- Can you exceed the expectations?
- Note: Is there room for improvement in the product or service related to that specific customer benefit? If so, you can raise the value proposition and customer priority by improving upon this benefit.
- Is there value in exceeding the expectations?
- Note: In contrast to the above note, some benefits meet a baseline customer expectation. Improving upon this benefit may not improve or increase the customer’s priority for the product. In such a case, investing more resources in improving this benefit would have diminishing returns.
- Are there additional benefits to using the product/service?
- Note: As noted above, a product or service may provide numerous benefits. Benefits come in a variety of forms (ex., ease of use; speed; durability; attractiveness; ease of storage; etc.). Think outside of the box in identifying potential benefits. Often benefits can be introduced in combination to improve the overall benefit to a customer segment. These combinations may increase the priority of the customer for the product or service.
- Is there a perceived risk to a potential consumer – to change or adopt?
- Note: Focus on the customer’s perspective in purchasing your product or service above a different product or service. If the customer is familiar with an alternative, then there may be a risk in changing to your product or service. For example, there may be a risk that the product or service does not work or that the cost of the product does not return an equal value.
For the reasons indicated above, understanding a product or service’s value proposition for an intended customer is essential to effectively turning the business idea into a viable commercial activity.