One of the big mistakes when you have a new business or product idea is that you jump into it right away. It's not wrong. You may worry that there will be competitors who have the same idea or product and they will start making a profit before you. Being the first is indeed quite important in a business because it means you can have a bigger share of customers, and people, of course, remember the brand of the business that first sold a particular product. However, make sure you are not the first to go bankrupt.
How do you make sure you don't become the first to go bankrupt when you start selling a new product?
One way is that you can research the market demand for your product. Understanding market demand is one of the main foundations for your business. Market demand will determine whether the business or product you want to sell will be able to produce for you. Market demand also determines other things like pricing, the number of products you have to prepare in advance, and where you should start selling your products.
This article will guide you to understand what market demand is. You will also find suggestions on how to find market demand. Finally, you will find examples of market demand research that you can apply to your product.
What is Market Demand
Market demand is how much demand from customers, or the market, for your product at any one time. The amount of demand is influenced by several things such as the number of customers who are looking for and wanting the product, how much money they are willing to spend, and how many items are available, whether provided by your company or competitors.
The above factors can cause market demand to fluctuate over time. This is especially evident in seasonal items, such as Christmas decorations that people look for on Christmas day. There are also factors out of season or variety, which are things you can still control that are beyond your control, such as natural disasters that leave people with no interest or need to buy your products.
How Does Market Demand Work?
You may have seen or heard it when you were in school. The more people want an item, the price of that item will increase because businesses naturally want to take advantage while they can. Conversely, when not many people want an item, the price of the item will go down, because of course, one customer or two is better than none.
This is what makes you have to research market demand before you start a new business or sell a new product. What is the position of your new product or business in? Is your product or business wanted or sought after by many people or not?
The more accurately you know the market demand for your product, the better your new business preparation will be. For example, you can get the initial stock for your product correctly. Overstocking or understocking can sometimes be overwhelming for your business in the early days where you either have to sell more products to make a return on investment or you run out of items to sell and lose lots of potential customers.
How to Find Market Demand
Observation can be your most powerful weapon in researching market demand. But with more and more running a business online, you need to do some research on the internet to be able to get a bigger picture of the market demand for your product.
Here are the tools you can use to research market demand:
As the largest search engine people use, Google is the right tool for you to research market demand. One of the tools from Google that you can use is Google Trends.
Google Trends can help you find out how many people are looking for a particular keyword. For example, suppose you want to find out how many people searched for water bottles on Google. You just need to enter these keywords, and you will get the results immediately. You can also be more specific by specifying the area and time of the search. Suppose you wanted to find out how many people searched for the keyword ‘water bottle’ in America over the past 12 months. Here is an example of search results via Google Trends.
In addition, you can also find searches related to the keywords you enter. For example, from the keyword water bottles, you can find ‘cirkul water bottle with flavor starter kit’, ‘tiktok water bottles’, ‘owala water bottles’, ‘the best bicycle water bottles’, and others. To find out the statistics of these keywords, all you have to do is click on the keywords you want.
Google Keyword Planner
Apart from Google Trends, you can also use Google Keyword Planner. This one tool can help you to get more information regarding the keywords you enter. Here's an example of a water bottle keyword search from Google Keyword Planner:
Image taken from Google Keyword Planner
From the Google Keyword Planner, you can get some important information for a keyword. First, you can get long-tail keywords, keywords that are three or four words long. You can use long-tail keywords to search for products related to your product. For example, from a search for 'bottled water', you can find the keyword 'bts bottled water'. Secondly, you can find the search volume. This can help you understand how many people are looking for a particular keyword. However, this does not mean that they are looking for these keywords with the intention of buying the item. So make sure to be careful about accepting search volume figures. Lastly is competition. This shows how tight the competition is to appear on the first page of that keyword. The higher the number, the tighter it is. Ideally, you want to use keywords that have a large number of searches but with relatively little competition.
After you've finished researching the market demand for these two tools, now you need to set a price for the product you want to sell. You can set the price by looking at the prices in the market. You can use an eCommerce platform, such as Amazon or eBay, or Google Shopping to find out the prices in the market.
Market Demand Examples
After you have an idea of the market demand and the average price of goods for your product, it is time to start testing the market demand for your products. There are several ways you can do to find out the actual market demand of your products:
Testing Local Market Demand
You can try testing market demand locally. You can sell your own product or contact an outlet in your area and supply them with your product.
Testing market demand locally also has advantages for your business. You can look forward to getting more support from your own area. In addition, a small scale can also help you reduce costs in the early days of your business.
Testing Market Demand on eCommerce
Selling on eCommerce is also one of the ways you can test the market demand for your products. With eCommerce, you will get a wider market and can reach more potential customers. You can also see trends that are happening in eCommerce and learn about them. Testing market demand on eCommerce platforms also offers various types of convenience, such as payment and shipping processes, that can make you focus on developing your products.
How to Calculate Market Demand
Finally, you are ready to use all the information you have to calculate the market demand for your product. Calculating the market demand for your product is not as difficult as you think. Sure, you will need to understand some supply and demand principles and math, but you can easily find a guide to do it.
Let's look at an example of calculating market demand with some hypothetical data.
We return to our Cirkul Water Bottles. From Google Shopping, we find that, on average, Cirkul water bottles sell for between $ 10 and $ 20.
Now, let's create data about individual requests. Oakley, for example, changes its drinking bottles every 3 months. That means Oakley can buy four water bottles from us each year. Hannah, meanwhile, kept her drinking bottle longer and only bought 1 bottle of water for six months. That means Hanna can buy 2 water bottles from us each year.
Let's look at Oakley and Hannah's readiness to buy our products in terms of price. Prices can influence buyer behavior, and paying attention to how buyers are affected by price is important for your business.
At $10, Oakley will buy four bottles, and Hannah will buy two bottles totaling six bottles a year with a possible total sales of $60
At $15, Oakley is a little reluctant to buy, but she is still willing to buy three bottles while Hannah doesn't mind because she only buys two bottles a year which brings the market demand for our water bottles to five with a possible total sales of $75.
Finally, at $20, Oakley feels that our product is too expensive and is only willing to buy two products a year from us and Hannah feels the same and only buys one bottle of water from us which makes the total market demand for your product at this price is three with a possible total sales of $60.
Ideally, you want to set a price that keeps buyers like Oakley and Hannah from changing their decisions. But, of course it is very difficult to do. You have to find a balance point where you can sell a certain amount at a certain price to start making a profit.
Start Your Business Strikingly
After you calculate market demand for your product properly, you already have a good business foundation. Now is the time to start building your business on that foundation with Strikingly.
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Strikingly can help you build a website for your business using ready-to-use templates. Strikingly also offers the freedom and convenience for you to edit existing templates to shape the website of your dreams.
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Apart from that, Strikingly also comes with features that can help you grow your business.
You can start selling your goods at Strikingly with the online store feature. You can add products, arrange payments, and track shipments from your online store right from your website at Strikingly.
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You can also provide extra services to your customers with your website. You can use the Live Chat feature which allows you to serve your customers who are visiting your website directly. You can also use the newsletter feature to share the latest news about your business. With Strikingly, you can easily collect contact details of your subscribers and send them newsletters directly from the Strikingly website.
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So what are you waiting for? Start building your business now by creating a website with Strikingly!