As a small business owner, you probably have hundreds of product ideas. Olive-flavored ice cream? An app for a pedigreed cat walker business? A line of adult onesies for lounging? Prospective customers might express interest in these products or services, but it’s helpful to get proper market validation before you launch. 

Validating your product ideas can reveal obstacles—such as low market demand—that you overlooked. The product validation process gives you valuable insights into your customer’s needs that can help you go to market successfully. Here’s what you need to know.

What is market validation? 

Market validation is a method used to determine how a product concept might fare in the marketplace among a target demographic. The process is typically done through in-depth interviews, online surveys, or focus groups, and it can reveal how the target consumer may—or may not—like a proposed business idea. 

Most market validation research is conducted early in the product development process to gauge an idea’s potential before time and money are invested in marketing and testing. If prospective customers like the product idea, it is likely the product will succeed once introduced.

Your market research can tell you potential customers’ needs and the problems they’d like to solve, as well as information to determine your product’s price point. Regardless of the product or industry the goal is the same: To get honest feedback from potential users or buyers in your target market. 

How can market validation benefit your business?

Conducting market validation tests can offer valuable feedback, such as whether your product or service offers a unique value proposition or if the pricing strategy aligns with what your target customers will pay. The data can help you gauge future product success, gain access to capital, and assess potential profits or losses. Even lean market validation with feedback from research participants can reveal:

Qualitative data. Potential investors want to know how consumers will react to a business idea and prices. Collecting qualitative data about your target customers’ attitudes and beliefs through interviews and surveys can accomplish this.

Pain points. Pain points, or challenges, illuminate problems the product or service may encounter. These include low demand, high competition, high pricing or not enough awareness. A deeper understanding of what does and doesn’t work for your customers can help you adjust your strategy.

Costs. Product development is expensive. The market validation process can show product teams and product managers why a new endeavor may—or may not—be worth launching.

Market need. The business model or new feature has a better chance of success if it fills a gap in the market or solves a problem. If it doesn’t do either, it’s better to learn early on before investing more resources.

Pricing. The right pricing model meets market demand at the perfect price point for your audience. A prohibitive price structure can limit your sales and keep you from market success. Carefully consider costs, customers, and other elements of your pricing strategy to make the best choice. 

Market fit. Market validation helps you assess if there is enough demand to launch and sustain your product or service idea. It can also tell if the product-market fit needs improvement.

5 methods for market validation

Surveys
Interviews
Focus groups
A/B testing
Prototype testing

1. Surveys 

Surveys are an inexpensive and easy way to get idea validation feedback. They reach a large number of people through email. The downside is that participants might not give detailed thoughts on product ideas without being prompted. Surveys are sent via mail or text, or accessed through a landing page on your website. 

2. Interviews

Interviews are one of the best ways to get deep knowledge to validate product ideas. Interviews can take place one-on-one or within a roundtable group discussion—either in person, or remotely via platforms like Zoom. Participant sample sizes typically depend on scale, launch schedule, and type of product. It may be easier to find participants to interview about a new energy drink versus people able to test a new electric car charger. 

3. Focus groups

Focus groups are a popular market validation method. They are done in a controlled environment with a leader guiding roundtable discussions or online surveys. You can hire a market research company to put together a focus group, or do it yourself by recruiting friends, family, or colleagues. Although official focus groups can be costly, their efficiency and reliability can make them worthwhile. 

4. A/B testing 

A/B testing is a simple yet effective method of market validation that asks participants to choose between two options. You can see if one is picked over the other, and then ask why. 

5. Prototype testing 

Prototyping a product involves creating early versions of the final product—it can be a visual representation or a functioning model—that are tested to work out the kinks. Edible or beverage prototypes have market validation tests via in-store tastings, farmers’ markets, and pop-up events for immediate customer feedback. You can conduct market validation of technology prototypes with usability testing. You can watch target consumers interact and navigate a new app or platform to see how to improve the user experience (UX) design. 

Favorable feedback can help you move forward with launching a minimum viable product (MVP), which has just enough features to satisfy your early customers.

7 steps to determine market validation

Assess business goals
Research search engine popularity
Create test questions
Find participants
Conduct interviews or surveys
Analyze data
Proceed, discontinue, or rework

1. Assess business goals 

Be clear about your mission, the problem you’re trying to solve, and the ideal price point for your new product or service. A good exercise is to perfect your elevator pitch, a type of business pitch, to make sure you are focused, understand your audience, and have the knowledge to be persuasive. If your pitch doesn’t land, maybe you made an incorrect assumption about the target consumers’ needs. This is the time to evaluate and make adjustments.

2. Research search engine popularity 

A quick, easy, and free method to determine how popular a possible business or endeavor could be is searching on Google and Google Trends. Use relevant keywords and study search volumes or average monthly searches. For example, if you’re considering creating a specific type of bluefish fishing lure, try searching “fishing lure,” “bluefish fishing lure,” and “best bluefish lure.” Rankings on the search engine results page (SERP) can help you see the popularity of that product or service, market competitors, and similar items.

3. Create test questions

Start with broad questions to understand a potential customer’s thoughts on your product category and how it fits into their lives. You can get more specific in the later stages of the market validation process when a prototype is available. 

All participants should be asked the same questions to avoid skewing the data. Sample questions might be: 

What type of online businesses or physical stores would you expect to sell this product? 
How much would you pay and would free cancellation sway your decision? 
Would you use this product or service once, or regularly? Why and how often?
Does this product or service solve a problem you have?

4. Find participants

Finding test participants that match your customer demographic. Those in the same age range, gender, ethnicity, location, and income level, among other attributes, will give the most useful results. To find participants, send out an email blast to friends, colleagues, or an email list, post on social media, or hire a market research company.

Keep in mind: If you have a personal relationship with participants, it could skew results due to biased feedback.

5. Conduct interviews or surveys

Use interviews and surveys to collect data on where participants are having problems, or pain points, if any, with your product. Is it the business idea itself? The price? The presentation? 

Ask the questions you prepared. Encourage honest, detailed responses and reassure participants that their feedback is valuable.

For tech products, feedback could help fix bugs or glitches. Participants testing edible products could offer critiques on taste, smell, texture, and product packaging. 

6. Analyze data

Market validation is designed to get clear data about your business. Analyze your interviews and survey answers to find patterns and trends. 

For example, what percentage of participants are willing to pay for the product or service? How many think the product or service is useless, regardless of price? What percentage of the target consumer believes the product solves a pressing problem? 

7. Proceed, discontinue, or rework

After processing the feedback and data, you’re now ready for next steps. You might choose to proceed as planned, scrap the idea and start fresh, or rework the idea based on feedback. 

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Market validation FAQ

How do you identify your target audience for market validation?

The target audience for market validation should be the same demographic as your target consumer. You can find participants by asking friends, family, and colleagues, or posting on social media, sending out email blasts, or hiring a professional research marketing team.

Is there any downside to market validation?

Yes, if products are cheap and easy to produce, going through the steps of market validation can slow down your launch. Real customer data and feedback may be more useful.

Why is market validation important to products?

Market validation can tell business owners whether their new product or service resonates with target consumers, is in demand, fulfills a market need, and might be profitable.