Define the problem, see where your idea fits.
Who cares about your new invention idea besides yourself, family and perhaps a few friends? You need more than these to care about your idea in order to be successful. You want the world to care. You want everyone to say, “That is the greatest thing I have ever seen,” and “I need it and can’t live without it.” In reality, of course, you can’t expect to capture the whole world but maybe a big enough sub-population to make money from your idea. This is why market research and a market analysis are important. You need to know where your product idea fits in the marketplace.
To answer this question, start with the problem that your invention idea solves or addresses. The people who potentially care about your product are the ones who have the problem and seek
a solution. If not enough people have this problem and/or are not willing to buy a solution for it, you don’t have a significant market. Albert Einstein once said that if he was given an hour to
save the planet, “I would spend the first 59 minutes defining the problem” and one minute finding solutions. This is where you need to start.
Once you define the problem, focus on how many people have this problem, how it is being solved (if at all) and current product solutions.
For example, suppose you have an idea for a new widget that is a potential solution to an existing problem and you determine that the market for widgets like this is on the order of $100 billion. You can be assured that if the market for widgets that you plan to produce is this large, there are already many companies fighting over this market with their products. You will have to
determine where your niche is and how big it is.
As simple as blue and red
In their best-selling book “Blue Ocean Strategy,” published by the Harvard Business School Press in 2005, W. Chan Kim and Renée Mauborgne define the business universe as consisting of
two distinct kinds of space: red and blue oceans. According to them, “red oceans represent all the industries in existence today.” They say that “in red oceans, industry boundaries are defined
and accepted, and the competitive rules of the game are well understood. Here, companies try to outperform their rivals in order to grab a greater share of the existing demand. As the space gets more and more crowded, prospects for profits and growth are reduced. Products turn into commodities, and increasing competition turns the water bloody.”
On the other hand, according to Kim and Mauborgne: “Blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.” When you’re in the blue ocean, you are in potentially uncharted territory. Your market ‘niche’ may not necessarily be totally understood and/or well defined. You’re not sure who the potential competitors may be and how these entities might react to the introduction of your
new invention idea. It is, however, a great opportunity for ‘first to market entry.’ In this situation, Ralph Waldo Emerson put things in perspective when he said: ‘Do not follow where the path may
lead. Go instead where there is no path and leave a trail.’”
As you further research the commercialization potential of your product idea, determine where you are with your business idea in the sense of which ocean you are trying to navigate.
This will shape your marketing strategy, as well as your overall marketing plan. If you believe you’re in the blue ocean when in reality you’re in the red ocean, you’re in for a surprise! That’s why market research is so crucial in your invention planning and development process. You need to know the “color of the water” you are trying to navigate and what you need to do in order to be successful, because there is a different set of challenges in each ocean.
Find where you stand
So how do you determine where you are? Here are some basic steps to help you find out:
Step 1: Define what you believe to be the market area that you are addressing in your invention development pursuit— the “problem space” you are addressing. Types of information you will need to gather include the following:
• Facts about your industry (such as how it’s organized), sales trends, products and services involved, growth history, etc.
• Total size of the market you are addressing within this industry sector. In particular, specifically define the market niche you are addressing. If it’s a niche currently ignored by competitors
or ill served by competitors, you may be in the Blue Ocean.
• Description of your target market or focus area, along with an assessment of the growth history and current demand.
• Description of any barriers to entry in your target market and, if any, how these apply to you and what steps you need to take to overcome them.
• Description of your potential customers, such as consumers, businesses or both. For consumer customers, provide demographics such as age, gender, location, income level, social class/occupation, education, etc. For business customers, demographics would include industry or segment of an industry, location, size of firm, demand for products and/or services you
plan to provide, etc.
Step 2: Define the competition in your market area. Never assume that you have no competition for your product or service just because you were unable to identify any direct competitors; there will always be companies that have the capability to move into your market area if they see a significant market for themselves. Here, you need to gather the following types of information:
• A description of the competitive environment in your industry and market area in terms of the names of such companies, a description of what they provide that makes them competitive, annual
sales and pricing information, estimates of their market share, etc. If your target market area is dominated by a few companies that control a major share of the market, you’re in the Red Ocean and should not consider competing directly with them.
• An assessment of the nature of the competition in terms of whether these companies compete with you across the board, just for certain products, certain customers or in certain locations.
• A comparative assessment of your new invention idea (product and/or service) as it relates to your competitors— specifically what is different and/or better about what you are offering (your potential discriminators). You need to provide reasons that customers who may already be buying/using your competitors’ products or services might switch to yours.
Step 3: Based on what you learned in Steps 1 and 2, conduct a summary assessment of where your invention idea fits in the big picture. According to Stephen Lawrence and Frank Moyes at the Deming Center for Entrepreneurship at the University of Colorado at Boulder, you should address the following key points in your summary:
• What is the size of the opportunity? How rapidly is it growing? What trends support the opportunity?
• What is the compelling need? What problem(s) are you solving?
• What evidence do you have that proves there is a market?
• Who is the target market?
• What is unique about your product or service? What are the benefits?
• What is your competitive advantage?
Remember, it’s not enough to say there is a big market for your invention idea. If there is, back it up with facts. You will need this information in order to decide how to move forward with your idea.