Analyzing Market Potential: 10 Vital FactorsExplore the essential checklist for evaluating market potential and make informed decisions when entering new markets with insights from seasoned entrepreneur Josh Kaufman.
When venturing into a new market, thorough research is essential. To assess the potential of a market, it's crucial to consider the “10 Ways to Evaluate a Market” checklist. Josh Kaufman, an experienced entrepreneur, provides valuable insights into this framework for evaluating market attractiveness:
1. Urgency: Consider the immediate need or desire for your offering. For instance, streaming a new blockbuster film on its opening night versus renting an old classic film.
2. Market Size: Examine the size of the potential customer base. Think of the difference between niche markets like underwater basket weaving courses and vast markets like healthcare.
3. Pricing Potential: Evaluate the highest price consumers are willing to pay for your solution. Compare lollipop prices to the cost of aircraft carriers.
4. Cost of Customer Acquisition: Analyze the ease and expense of acquiring new customers. A roadside diner may spend less on customer acquisition than a government contractor.
5. Cost of Value Delivery: Calculate the expenses and effort required to create and deliver your offering. Compare digital file delivery to building a manufacturing facility.
6. Uniqueness of Offer: Assess how distinctive your product or service is and its susceptibility to competition. Think of the difference between hair salons and private space travel providers.
7. Speed to Market: Determine how quickly you can bring your product or service to market. Selling a service like lawn mowing is quicker than establishing a bank.
10. Evergreen Potential: Consider the ongoing effort needed to sustain your business after the initial launch. Business consulting demands continuous work, while a book can generate sales indefinitely.
After assessing each factor, assign a score between 0 and 10 for each, with 0 being unattractive and 10 highly attractive. Sum the scores. If your total is 50 or less, it's advisable to explore other opportunities. A score of 75 or above indicates a promising idea worth pursuing vigorously. Scores between 50 and 75 signify potential with adequate resource allocation.
Remember, diligent market evaluation is a pivotal step in your entrepreneurial journey, guiding your allocation of energy and resources effectively.