Product market research is the process of systematically collecting, recording and analyzing data about customers, competitors and the overall market. Using market research is a critical factor in the success of any system. It can help you:
o Create a business plan
\"Natural Diet Pills\"
o Launch a new product or service
o Improve existing products or services
o Expand into new markets
Before you even think about creating a product to sell online, you need to ensure there is a demand for it. Here's how to conduct effective product market research:
Find a Niche Market
The internet has been around for a lot longer than most people realize, and many markets have already become saturated. Starting out, your best strategy is to focus on a niche market -a small specialized market within a larger market. For example, if you are interested in books, don't focus on the overall book market, focus on 18th century English poetry, self-help with alcoholism, SAT prep texts, etc. Don't be a little fish in a big pond... be the one of few fish in a small pond.
Solutions Sell
My husband and I have developed numerous systems, each contributing a modest income stream. Some are mere trickles, others a steady flow. The main difference is that while all provide information to the visitor, our biggest earners provide solutions. Rather than brainstorming ideas for a product, find a common problem and offer a solution. For example, you can create a website that sells products for left-handed people (like Ned Flanders' Leftatorium).
Here's a list of where to find common markets, problems and ailments:
o AquariumFish lists their most popular articles.
o Golf Online is the place to check out if you're thinking about selling golf equipment.
o National Center for Infectious Diseases for people looking for a cure.
o Consumer Reports Webwatch is a goldmine for reviewing the top products that sell.
o The Motley Fool discusses finances and investing; they also list their most popular articles.
o Stockpickr! Is another investment site that lists their most popular pages.
o CureZone for more health related information.
o Wedding Wisdom for weddings and relationship information.
o Big Boards lists all the big online forums, showing both the number of posts and members.
Researched a Hungry Market? Criteria for a Good Online Products
Keep in mind some products sell better online than others. Here are the criteria I use for creating a solid product.
Your product...
o has a low start-up cost. You don't want to break the bank creating 10,000 copies of a product no one wants. My advice: stick to information based products; they have the lowest start up due to a limited production cost.
o can be automated and downloadable: In order to automate your system, you have to entirely remove yourself from the process. The more automated your system is, the more scalable it becomes, allowing you to make more money while doing less work. While it is possible to automate any business- from creating a product to selling a service- selling a downloadable product is the fastest route.
o is digital. From my experience, the best option for selling a product online is a digital product. A digital product is anything that can be sold as a download such as online books, music files, videos, information, etc.
o provides a solution, rather than just information. Contrary to popular belief, most people don't buy eBooks for information; they buy it because they need a solution. This applies to the size of the product as well; if you write a five page eBook that includes step-by-step instructions on how to solve a common problem, trust me, someone will buy it.
o can be expanded for up-selling and repeat business. If your core product sells well, you'll make even more by offering your customers a platinum version, and/or paid a subscription to your members' only newsletter.
o can be advertised on other sites and vice versa (affiliates). There are probably several other websites in your niche; build solid business relationships where you promote each others products and services that are complimentary- not competitive- to your market.
Market Trends
There's an old saying "A rising tide lifts all ships." The opposite is also true: if you create your system based on a topic with decreasing interest (such as VCR maintenance, ABBA songbooks or Polaroid cameras) your profits will be washed out with the tide.
As you conduct product market research, you should ensure its long term trend. A market trend shows historically how a market performed in the past, giving you an idea of its likely trend for the future. You should focus on long-term markets with a positive (increased interest over time) or level trend as they are more stable and will have a longer life span, rather than flavor of the month topics. I can't imagine many authors of VCR manuals are still making royalties, though investment books pay dividends for decades. Stick with perennial topics and you'll receive many more paychecks in the future.
Product Market Research Tools: The Trend
To determine the trending of your market, check out the following tools:
o Google Trends presents the latest searches happening now and allows you to analyze market stability and saturation.
o Lycos 50 offers a weekly list of the top pop culture searches on the web.
o Yahoo Buzz provides information on the top searches, commentary and context.
o Nielsen NetRatings delivers comprehensive, independent measurement and analysis of online audiences.
o TrendWatching is an independent and opinionated trend firm, scanning the globe for the most promising consumer trends, insights and related hands-on business ideas.
Evaluate the Demand
Now that you have found a niche market with a positive or level trend over the past few years, the next step is to determine the market size. Keep in mind that bigger is not necessarily better, but you still need a sizable pool of prospects if you intend to make money.
To determine the size of a market online, you need to discover what people searching for, as well as the terms they use. These terms are known as keywords, and keyword research is the foundation of market research.
Keyword Research Tools
o Word Tracker helps you find what key words and terms your market is searching for. This will help you with Pay-Per-Click advertising and is ESSENTIAL for Search Engine Optimization (SEO).
o Trellian is another tool similar to WordTracker, and helps you view filtered or non-filtered searches to see what other people are looking for.
You should also ask yourself whether people in this market are "hunters" or "gatherers." Where gatherers are seeking information- such as "how to tie a tie"- they aren't likely to purchase anything. Hunters, on the other hand, are looking to buy a solution to their problem- "teach me how to sing" or "natural acne treatment" are two great examples of a buyer mentality.
Product Market Research: The Law of Demand and Supply
Everyone knows the law of supply and demand: when supply exceeds demand, prices drop; when demand exceeds supply, prices rise. Unfortunately, many misinterpret this when creating their systems. They focus on supplying a product, then look for a demand.
This is backwards thinking that will cause years of frustration. To ensure success in your systems, you need to focus on demand, which is why I refer to it as the "Law of Demand and Supply." Find a market that demands a solution, then supply it.
This shift in thinking has changed how I look at keyword research. Now I'll fire up WordTracker and enter keywords related to topics I enjoy reading (and writing) about. After scanning several under served phrases, I'll check for synonyms, keeping an eye out for what I refer to as "buying phrases." These are terms such as "hire copywriter" or "purchase Canon digital camera" as opposed to information gathering terms such as. "online copywriters" or "how a digital camera works." Once a demand has been confirmed, I'll start thinking how to supply a product.
Research the Competition
Once you have determined a demand in your market, you'll need to research the competition. Remember how I said its better to be one of the few fish in a small pond, not the only fish? Chances are, if you're attempting to enter a market that has zero competition, it's not a buying market. On the reverse side, you might not want to enter a market with multiple competitors- at least not until you sharpen your marketing skills.
So what exactly is our competition? Well, it depends on your marketing efforts. If you intend to market your website by paying for advertising, your competition would be those listed under "Sponsored Links" on Google, also known as AdWords.
If you are going to market your product without paying for advertising, also known as Search Engine Marketing, your competition is the number of websites that appear for your keyword in quotes. For example, if you are optimizing your site for the phrase "natural weight loss diet" you would search for that exact phrase in quotes:
"natural weight loss diet" NOT natural weight loss diet
The quotes show results for webpages that have that exact phrase at least once on their page. Any phrase with less than 5,000 competing sites is fair game. In my experience, it is much harder to compete with over 5,000 websites.
For example, there is over 40,000 websites optimized for the phrase "natural weight loss diet," which is well above our 5,000 threshold. If you're serious about this market, you may still be interested.
Once you've established the quantity of your competition, take a look at the first five webpages listed. Let's say the first page says: "Lose Weight With Fruit!" The website is about fruit, with a page dedicated to losing weight with a fruit diet. This is one angle.
Another site offers "2009's Best Diet Pills Fast Weight Loss Pill Buy..." Not exactly a catchy title, which leads me to believe they don't understand search engine optimization. Also, if someone is searching for natural weight loss diets, they probably aren't too interested in taking pills (unless they're all-natural supplements). I'm of the opinion that, even with a high number of competitors, you would be able to capture part of the market by releasing a Natural Weight Loss Diet Plan and Cookbook.
Scrutinize your top competitors and see if there is a place for you to shine. For example, are these sites well known in the diet industry? Do they use the term "natural weight loss diet" in their headlines? Is it used several times throughout the text, or is it just mentioned in passing? Are there several other related pages on these websites (such as "natural diet programs," or "natural diet pills"), or does this one page stray from the website's core topics (as seen in the Fruit website)? These questions will help you determine how strong your competition is for the top spots and whether you can beat them at their own game.
By conducting solid product market research you will know whether your market is a winner or a loser.
Product Market Research - Determine If Your Market is a Profitable One
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