Congratulations! You have made it over the first few hurdles in the process of taking your new product idea to the market. Now comes a big and important challenge -- raising the financing for your business.
As outlined in earlier posts, we're highlighting the important ways that market research can inform your strategic business planning and decision-making. Knowing how to skillfully use market intelligence will provide a solid foundation for your product's success.
Figuring out your product's commercial viability involves a complex collection of steps and elements that have to fall into place before that great idea lands in front of consumers and then takes off.
Market research is a key way to begin putting together the pieces of the puzzle that represent your quest to bring your product to market, including:
- Defining your product
- Identifying the market for your product
- Identifying the business sector of the product
- Demonstrating with data why investors should finance your product.
To drill down on the question of how to use market research to obtain funding for your product, it is crucial to understand how to use actionable business intelligence first.
To help place concrete definitions around this process, we've developed a case study -- a new consumer product we call the Dynamic Ingredients Dispenser. This product is based on an industrial device that is known as the Compo 3000. It's used by commercial food producers and manufacturers to automatically measure and dispense dry ingredients such as grains and flour. Our idea is to scale it down for consumers who want to have a way to dispense flour, sugar and other baking goods from their countertop (without spilling them all over the floor every time they try to measure out one cup of flour).
Using Consumer and Market Intelligence to Win Financing
Knowing as much as possible about the market you hope to enter, and about your prospective customers, is how you will win financing for your product. From "meta-data" or big picture intelligence about the existing market for products similar to yours, to your consumers' profile, business intelligence can show you the way to a winning strategic business plan.
Firms such as Frost & Sullivan have analysts who are expert at pinpointing market information to help you understand your sector and your customer-base. Other research firms such as Nielsen can also help you build a realistic profile of your consumer.
In the food and beverage industry, where our Dynamic Ingredients Dispenser will be introduced, this phase of pre-financing research is vitally important, as the culinary products field is crowded and intensely competitive. Domenick Celentano, a food industry executive and entrepreneur, estimates that only 10 percent of new culinary sector products achieve success.
Celentano recommends using market research to dig deeply into how your product will be different from others -- known as defining your differentiator - and buttress the feasibility study you've put together before seeking financing.
Our feasibility research revealed that the Dynamic Ingredients Dispenser can succeed - as long as we can successfully finance a top-drawer product. We also need to market it to the growing audience of American consumers who are keenly interested in improving their cooking and baking skills, as well as using quality culinary devices that are efficient and cost effective.
Position and Differentiate Your Product Using Market Research
Celentano devised a Five Step Positioning process to aid in establishing your product's viability for investors and other potential partners. Foremost, it is key to state clearly and with supporting data the solutions that your product delivers -- in the case of our Dynamic Ingredients Dispenser, a faster, cleaner, more efficient way for the "average home chef" to measure and dispense dried ingredients.
By taking the market research insights data you have earlier obtained and incorporating it into the framework of Celentano's Five Step Positioning process (or one of your own devising), you will effectively build an iron-clad case for why investors should support your product.
Keep in mind, too, that financial investors, often have their own relationships with market research, and will most likely use their own sources to test your data and theories. Having a solid understanding the correct business intelligence methodologies that best apply to your sector (qualitative research versus quantitative, for example) and asking the appropriate questions about potential for risk, for growth and profit-margins before you meet with investors will set you and your product on the path toward success.
Smart investors know that very few new products will succeed. However, they also know a great candidate for success when they see one -- which is why your product pitch needs to be rooted in the highest quality market research data.
To get a more thorough understanding of market research and how to use business intelligence to secure financing, contact us for a free market research assessment. We can walk you through your business strategy and how one of our market research solutions can help you with your business development.
We also have a complimentary white paper which outlines everything you need to know step-by-step. Just click on the button below.
Thanks for reading!
Senior Writer and Content Manager