Will your product SELL? Will it generate profit?
The answers to these questions should NOT be a matter of wishful thinking. There is a world of difference between a traditional market overview discussed in our "Where is the REAL market?" segment and knowing if your product will sell. There is also a difference between "first-step" information gathering from the professors at the university down the street and a concrete, trend-defining primary user survey.
We do understand that your engineers are brilliant . . . we've had the pleasure of working with the engineering teams within each of our client companies. We know they are capable of building elegant and cutting-edge technology. But the sobering business truth is, just because Engineering built it, there is no guarantee that your prospective audience will perceive a need and buy it, especially at a price with a profitable margin.
Doesn't it make sense to put all that engineering muscle and creativity into something that you know will generate revenue? To save hundreds of thousands of dollars and man-years of work, a better approach is to conduct market research BEFORE your engineers head for CadCam.
The MIP has been conducting front-end primary market research with end users since 1991. With over 100 client surveys to our credit, we've defined the real answer to the question, "Will it sell?". Our customized, web-based surveys will tell your company precisely
* What the real purchasing interest is for your product.
* What features and capabilities it should have.
* At what price.
* Which market segments are best to target first.
Not only will you get those answers, our surveys also produce a list of potential early-adopters with which to begin your sales process and, if you need it, which web outlets, publications, and trade shows this customer audience prefers. Click on the Our Process link to see how it works.
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Your M/E ratio: A financial monitor and prediction for success
Just how important is this up-front, primary market research? Our colleague and long-time VP marketing consultant, Ralph Grabowski, has been collecting real data from real companies for over 20 years. From all that data, he developed a simple ratio which you can use to predict whether to proceed with a given product. The ratio is M/E where "M" refers to your investment in upstream market intelligence... just the sort of primary research we've been discussing. "E" refers to $ spent on pre-commercialization RD&E. Ralph plotted the M/E ratios for over 100 companies across a wide range of technologies and time [click here for his chart]. The results are astonishing. If your M/E ratio is not >1, don't proceed with the project. You will fail.
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Re-thinking upstream investments & the Golden M/E Ratio
Investing in early stage market research is a challenge. It typically is not in the business plan. If it is, it has been lumped in with the "Marketing" budget, which comes AFTER commercialization.
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Concept & Development |
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Commercialization & Sales |
| Investors: |
F&F, Angel |
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VC |
| Engineering: |
Concept/R&DE
("E") |
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Real Product/
Manufacturing |
| Marketing: |
a. Mkt Overview
b. Primary Research
( "M") |
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Promotion [Website, Press
releases, Tradeshows, ads,
Lead Generation, Sales] |
Interesting things happen when a company invests in "M":
> Risk drops dramatically.
> Execs in the C Suite know exactly where to drive the company to maximize profit.
> Engineering knows just what to build, reducing $ needed for "E" and, ironically, improving the M/E ratio!
> Marketing knows exactly what to target.
> Sales knows exactly where to go.
The end result: Your product comes to market much more rapidly (sometimes years early), at much lower cost, and revenue is fast-tracked.
The take-home message: Companies, especially technology-driven companies, need to weigh the advantages. For success: Finance the "M", not just the "E". Finance early. And at a level equal to or greater than "E".
Ralph has a number of intriguing case studies from many companies you will recognize. Download his full article.
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| Put away the wishbone.
Instead, build your business on hard, actionable data. Dozens of The MIP's clients have, cutting months off their race to market, using staff and dollars to much better advantage, and getting to revenue earlier. Call or email us today. Let's discuss the impact of primary market research on YOUR next product.
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