Validating your market as part of an innovation process

With 17 years' experience in various innovation methodologies, we offer you a guide to effectively validating your market through testing.

Understanding market testing in innovation

An essential role: validating the market for your project

Market testing is an essential step in the innovation process. It's the improved market study par excellence. Carried out after emergence and before deployment, they validate the market by assessing the attractiveness and/or commercial viability of a new product/service in relation to a target market. It's a solution that answers many questions, and involves sales and marketing trials to determine the financial interest and market potential of an innovative product or service.

What type of company needs this type of study?

Market testing, although typical of startups, is essential for any innovative company. Whether you're a large company, SME, ETI, entrepreneur or B2B or B2C organization, market testing is a critical step in the start-up of any innovative project. In other words, a project that's difficult to predict, because it's too different from your usual business.

Why make them?

_{Are there market demands for my new product? What are these demands? How can I present it to meet these demands?}

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The main aim of market testing is to validate market interest by identifying the desirability and relevance of your offer. This work aims to determine the "product-market fit", or the adequacy between an offer and the market. These tests are decisive in predicting your offer's potential for success, as well as providing valuable information on how to achieve it.

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In particular, they help to :

• Define target audiences: identify target personas (potential users, customers, partners, prospects) and the best strategies for reaching them.‍
• Identify the value proposition: determine your unique value proposition.‍
• Establishing pricing strategies: finding the ideal balance between customer appeal and profitability is necessary in an innovation project.‍
• Focus development efforts: ensure strategic alignment by identifying high value-added benefits or functionalities that meet target expectations.‍
• Secure investments: clearly identify the market to justify development and investments. The cost of a market test is 100 to 1000 times less than the investment involved in development. Validating your market in love saves you from making a considerable investment in the development of a product or service for which no one will ultimately be interested.‍
• Accelerate market entry: Provide the insights needed for a successful launch.

What are the 2 types of market tests?

In recent years, Dynergie has carried out over a hundred different market tests. Here are the two main categories:

Qualitative studies

Qualitative market research surveys specific target groups using interviews or questionnaires. The aim is to gather qualitative data to learn about your future customers' profiles, needs and expectations, as well as the target market, in order to design an attractive offer.

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_{Innovation is centered on exchanges with future or current customers, and it's vital to be in touch with them as early as possible.}

Pre-marketing simulations

These simulations aim to mimic the marketing of an offer. They include the use of different advertising channels, with the aim of gathering quantitative data on the different stages of a sales funnel.

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_{A sales funnel enables companies to visualize the customer's path to purchase.}

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In practice, B2B qualitative surveys and B2B pre-sales simulations are similar, the only difference being the tone of the exchanges (information gathering or sales pitch). B2C qualitative surveys, on the other hand, are often a stage in B2C pre-sales simulations.

What are the 4 stages of these types of market research?

Test preparation

Define all the elements required for testing by: clarifying your concept into an offer that can be presented to a target audience, by defining a clear value proposition. Then draw up a testing strategy (targeting, types of tests, channels), an action plan (iteration, budget, schedule) and hypotheses to be validated.

Test implementation

Create all the elements needed to implement your action plan: interview guide, prospecting e-mails, advertisements, databases, questionnaires, landing pages.

Test execution

Apply your action plans to collect all the information needed to validate or invalidate your hypotheses. Proceed iteratively, so that you can make adjustments based on what you've learned (value proposition, benefits, formatting of test media).

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An iterative plan

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Analysis of results

Once you've collected all the data from your tests, take the time to analyze your results and draw the right conclusions, breaking down each hypothesis one by one. To do this, find references to results in a context similar to your own, so that you can interpret your results correctly.

Weaknesses of market tests

In practice, market tests are not infallible. Their main weakness lies in the fact that the real test takes place when the innovative product or service is actually launched.

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In addition, other blocking points can be highlighted, including :

• Limited representativeness: it is necessary to respect statistical relevance in order to have an exhaustive sample of results. Otherwise, this can lead to biased conclusions about market preferences and behavior.
• Difficulties of interpretation: analyzing market test data often requires expertise in statistics and consumer behavior. Misinterpreting data can lead to incorrect strategic decisions.
• ‍Rapid market transformation: the market can evolve rapidly, rendering test results obsolete. This is particularly true in fast-moving sectors such as technology or fashion.‍
• Respondent and interviewer biases: respondents may not be entirely honest, or may answer in a way that pleases the interviewer, which can distort the results. What's more, the interviewer himself may manipulate the results to his own advantage.

Example: Michelin Inflatable Solutions

Michelin Inflatable Solutions, a Michelin subsidiary, collaborated with Dynergie to carry out a market validation in the events sector. Thanks to the application of this methodology, Michelin Inflatable Solutions was able to overhaul its business model and develop a deployment strategy for two new market segments. Over 40 qualified prospects responded to the survey, a large proportion of whom were ready to buy.

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View Michelin customer case study

Conclusion

In a world of rapid and constant innovation, market testing is more essential than ever to ensure the success of an innovative product or service. They provide an in-depth understanding of market needs and expectations, enabling informed decisions to be made on whether or not to pursue a project, before launching heavy investments. However, they must be carried out with the utmost care and attention to detail, in order to derive maximum value from the results.

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Dynergie is able to assist you in carrying out your market validation.