How to identify the right first market for my innovation

We saw in the previous article the importance of finding the right market sector for your innovation. But how do I select my first market? How do I study the found market? How to validate my choice? You will find the best practices in this article ?

Knowing your market cannot be learned from books

Traditional marketing training teaches us that the structure of a market (its size, its growth rate, its trends...) is essential information for a product improvement project or for the evolution of existing solutions. This data is less relevant for an innovation because it does not allow to determine who will be the customers and users impacted by my new product or service, and how they will be impacted.

By definition, the more disruptive an innovation is, the more likely it is to change usage or even create new ones.

Taking refuge in this sectoral data is the danger of every startup. If classical market research gave an adequate answer, then there would be no Kodak case or more recently Motorola, large companies that, focused on static data, missed a shift in their business.

Focusing on traditional market research takes startups away from the reality of the field.
If the advantages of a startup are its speed of action and mobility, they must be used wisely to be closer to future customers and users.

Innovation means adapting to the reality of the field

To determine if an innovation has potential, the only way is to confront the reality of the field and toquestion the relevant professionals (future customers, development partners, distributors). In short, all the professionals whose daily life will be impacted by the innovation and who will objectively give crucial information on the said solution. This is what we call "market insights".

Picking up the phone to conduct interviews is a long and tedious task. And for that, it is necessary to map out and build a typology of people to contact. You have to be careful about the objectivity of respondents who do not want to offend you, and interview people you do not know personally. Knowing how to communicate in the languages of your clients is also essential. Fortunately, there are now turnkey methods for collecting market insights that are much less costly and time-consuming.

What does it mean to have a market for your innovation?

If the previous method works when the market for my innovation is identified, how can I be sure that I am addressing the right market?
Having a market for my innovation means that :

• a pain point is identified and validated by a population segment
• the value proposition of my innovation solves this pain point
• this population is ready to buy my product or service

A large number of innovations today have a global scope; it is essential tostudy the market potential of your innovation in all the targeted regions and not to reproduce a French or Western model in the rest of the world. Not detecting a foreign player who could also attack your region is also a risk that should not be overlooked.

Identify relevant markets

100% of startupers have validated their project with their family and friends (customers, network, friends...). However, 90% of startups fail to reach their market within 3 years. One of the reasons is the difficulty encountered by a startup to identify its first market or "springboard market".

1. The startup and its historical market

The reasoning of the startup is often oriented towards a historical market, generally the one for which his offer was conceived when he had the initial idea. Most of the time it corresponds to the entrepreneur's dream or long-term target.
Seeming the easiest to access, it has been identified by the entrepreneur's personal experiences, instinct and upstream work. However, the interest and need of this market for the startup's innovation is often based on presuppositions or on sectoral data as defined above.
100% of successful startups have pivoted at least once.

2. The historical market is not the springboard market!

The "springboard market" is not necessarily the long-term market! It represents the pool of first customers that will allow a rapid growth at lower cost of the company, so that it will be cash generative as soon as possible, allowing it to survive the famous 3 years.

Find and choose my stepping stone market

Several criteria can help identify it:

• Criticality of pain point expressed targets for my innovation
• Ease of market access to my technology
• Cost of modifying my initial offer to meet this contract
• Short term profitability
• Quick conversion of first customers

Here is a general method for finding your stepping stone market:

• Deconstructing your preconceptions
• Ask the market itself about possible uses
  - Is there a need?
  - Is this a real issue?
• Build value propositions dedicated to each use
• Confront them with the field to validate and refine these value propositions

- Does the solution I present meet this need?
- Am I differentiating / innovative?
- How is this market organized? Barriers?
- What are the weaknesses / strengths of my innovation?
- Who are my competitors or what are the substitutes for my solution?
- Who are my development partners / customers / players in the field?

By applying these methods, startups increase their chances of success considerably by selecting the best market for the right reasons and with the right players.

Based on the results of the various studies, startups can now select the best market to launch their innovation, based on concrete, on-the-ground data.