Successful market entry thanks to early market testing



The majority of all start-ups fail - this is no longer a secret. Many start-ups develop products or services that eventually no one buys or books. The reason for this is very often the lack of the product-market fit. To avoid this, early market tests are absolutely essential. The goal of a market test is to quickly evaluate ideas with potential users and to find out early on whether there is interest in a new product and its purchase. In this article, you will learn why market tests should not be dispensed with and what such a market test can look like in concrete terms.

Start-ups differ from classic foundations in particular in the high degree of innovation of the business idea. For example, if you open a furniture shop, an Italian restaurant or an online shop for hair care products, you can assume that there is basically interest from a large target group and that the business model works, since the customer solution fit has already been provided by numerous other established companies. Success here is more dependent on factors such as the implementation, product design, service quality and marketing, as well as location and other environmental factors. Start-ups, by contrast, try to convince with innovative ideas that have not yet been tested on the market. The situation is similar for innovation departments of large companies that want to develop new, innovative products or services and bring them to market in addition to their regular business. Then questions such as "Does our idea really have potential?", "Is the market big enough?", "Who would be the target group?" or "What would this product be worth to customers?” arise.

The means to success are market tests in an early phase. These help to find answers to such questions and should be part of every well thought-out market entry strategy. We tell you why you should definitely rely on early market tests and what they can look like.

5 Reasons why a market test is essential

1 Time is money

A lot of time and resources are often invested in the development of new products before it is even clear whether the idea has any potential. Testing an idea on the market early on can save a lot of misinvested time and money by determining whether there is a basic interest in a product and whether the development is going in the right direction or you are in a one-way street and have to revise the idea from scratch.  

2 Certainty through real data

Although people are oftentimes interviewed relatively early on about a new product idea to gather initial feedback, this (usually qualitative) data is only of limited value. Popular methods are individual interviews or focus group interviews in which potential customers are introduced to a new product and then get asked questions about it. Unfortunately, there are many influences that distort the validity of this data - e.g. the influence of the interviewer or the tendency of interviewees to give answers that they believe are desired. In addition, interviewees often lack imagination and express interest while they would not buy the product under real conditions. By means of a market test, in which, for example, a landing page is used to convey that a product actually already exists and is for sale, the interest and willingness to buy can be concretely checked and proven by means of KPIs such as click-through rates (CTR) or conversions.

3 An orientation for marketing from customer and market insights

A market test provides a good basis for orientation on how a product should be marketed through customer and market insights. If the interest in a product is tested via a social media or Google Ads campaign, for example, different advertising messages can be played out to different target groups and the performance can be analyzed via KPIs such as the click-through rate. These results provide good indications of which advertising messages work well with the target group and which sales arguments are not convincing. Visual components such as colors or the visual language can also be tested. All of this will be a clear advantage in terms of developing a marketing strategy. In addition, the suitability of different channels for the product or brand can be tested.

4 Narrowing down the target groups

The results mentioned in point 3 can of course also provide valuable information about the target group itself - in terms of age, gender or interests, for example. After an initial market test, it is usually easier to narrow down the target group and new hypotheses or new considerations about channels and advertising messages appropriate to the target group can be made.

5 Fact-based arguments for decision-makers

The real data generated by market tests and validated or rejected hypotheses often serve as a basis for convincing decision-makers of an idea or making their decision easier. Based on real market feedback, they can better assess the potential of a business idea and whether it should be further developed, implemented or discarded.

It is always important that the goal of the market test is clear from the beginning. Therefore hypotheses, i.e. assumptions - e.g. about the problem or solution, value proposition, target groups, price, distribution channels, etc. - are first developed. These hypotheses must then be validated or discarded through the market test. They must therefore be validatable and it must be determined in advance when a hypothesis is validated or when it is disproved.

This is what market tests can look like

While offline market tests such as pop-up stores with real products in an appealing location often require months of preparation, online market tests can usually be implemented within a few days or weeks, depending on the complexity and the extent of the hypotheses to be tested.

An appealing landing page forms the basis

The basis for most online market tests is an attractive landing page on which a fictitious product or service can be realistically explained in detail. For example, by means of social media ads, Google Ads or e-mail campaigns, the product or service can be placed with an appropriate target group and thus bring traffic to the landing page.

Quick testing via social media or Google Ads campaign

Depending on which hypotheses are to be tested or how detailed the results have to be, one must consider how to validate these hypotheses. If, for example, you only want to get an initial feeling for whether a product will appeal to a certain target group in a very early phase of product development, a simple social media campaign with a low budget or a Google Ads campaign and a simple one-page landing page for information purposes can already be sufficient to test the interest by means of click rates on the ad and dwell time on the landing page. The whole thing can be set up within a few days and over a test period of about two weeks, meaningful results can be achieved.

Detailed insights through A/B tests  

If, however, you want to test the willingness to buy and pay for a new product, this requires a little more effort. For example, you can use A/B tests to play out ads with different prices via a Facebook or Instagram campaign. The click rates on the ads already show an initial tendency, while the willingness to buy and pay can be tested even more realistically via different landing page variants with corresponding call-to-actions. Since we usually test fictitious products or services and one can't actually buy them yet, there are various "tricks" that can be used here. Probably the simplest and safest option is to be transparent and openly admit that the product is still in development and that one can register for it with an e-mail address via a waiting list. Another possibility would be to display an error message during the ordering process and thus ensure that the customer cannot complete the process. Another, more elaborate option is to let the customer complete the order and then inform him or her via e-mail that the product is unfortunately not available at the moment and that the customer will be refunded his or her money (which should of course be done as quickly as possible).

Reach existing customers via email campaign

Companies that already have a customer base and, in the best case, newsletter subscribers, can also resort to the option of an email campaign to quickly and easily validate a new product idea. For example, if you want to test a new product in different variants that differ in certain characteristics, you can also carry out an A/B test with different newsletter variants and test tendencies by means of clicks or even a short survey embedded in the newsletter.

There are numerous possibilities for online market tests, which differ considerably in terms of effort and also in the quality of the results. In any case, it is always necessary to first consider exactly which hypotheses are to be tested and which results are expected. Then you can decide which type of market test is most feasible.

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We support our customers in innovation projects - as a company builder or with various innovation services (consulting, coaching, rapid prototyping, IT development). The 17 employees have many years of experience in strategy, online marketing, service design, agile project management and UX design.
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