How to Identify the Right Initial Market for My Innovation

In the previous article, we discussed the importance of finding the right market segment for your innovation. But how do I choose my first market? How do I research the market I’ve identified? How do I validate my choice? You’ll find best practices in this article.

You can't learn about your market from books

Traditional marketing courses teach us that market structure (its size, growth rate, trends, etc.) is essential information for a project aimed at improving a product or evolving existing solutions. This data is less relevant for innovation because it does not allow us to determine who the customers and users affected by my new product or service will be, or how they will be affected.

By definition, the more disruptive an innovation is, the more likely it is to change existing practices—or even create new ones.

Relying too heavily on sector-specific data is a danger for any startup. If traditional market research provided adequate answers, there would be no “Kodak” or, more recently, “Motorola”—large companies that, by focusing on static data, failed to adapt to a major shift in their business.

Focusing on traditional market research distances startup founders from the realities on the ground.
While a startup’s strengths lie in its agility and flexibility, these must be used wisely to stay as close as possible to future customers and users.

Innovation means adapting to the realities on the ground

The only way to determine whether an innovation has potential isto test it in the real world andconsult with relevant professionals (future customers, development partners, distributors). In short, this includes all professionals whose daily lives will be affected by the innovation and who can provide objective, crucial feedback on the solution. This is what is known as gathering“market insights.”

Picking up the phone to conduct interviews is a time-consuming and tedious task. And to do so, you need to do some preliminary work, such as mapping out and creating a typology of people to contact. You have to be mindful of the objectivity of respondents who don’t want to offend you, and interview people you don’t know personally. Being able to communicate in your clients’ languages is also essential. Fortunately, there are now ready-made methods for gathering market insights that are much less expensive and time-consuming.

What does it mean to have a market for your innovation?

If the previous method works once the market for my innovation has been identified, how can I be sure I’m targeting the right market?
Having a market for my innovation means that:

• A pain point is identified and validated by a segment of the population
• The value proposition of my innovation addresses this pain point
• This demographic is ready to buy my product or service

Today, many innovations have a global reach; it is essentialto assess the market potential of your innovation across all targeted regions and avoid simply replicating a French or Western model in the rest of the world. Failing to identify a foreign competitor that could itself target your region is also a risk that should not be overlooked.

Identify the relevant markets

100% of startup founders have validated their business ideas with their close circle (customers, network, friends, etc.). Yet 90% of startups fail within three years of entering the market. One reason for this is the difficulty startups face in identifying their initial market, or “springboard market.”

1. The startup founder and their traditional market

A startup founder’s thinking is often shaped by a historical market—typically the one for which their product or service was designed when they first conceived the idea. Most of the time, this market corresponds to the entrepreneur’s ideal or long-term target.
Seeming the easiest to access, it has been identified through the entrepreneur’s personal experiences, instincts, and preliminary work. However, the interest in and need for this market regarding the startup founder’s innovation often rest on assumptions or on sector-specific data as defined above.
100% of successful startups have pivoted at least once.

2. The historical market is not a springboard market!

The “springboard market” isn’t necessarily the long-term market! It serves as a pool of early customers who will enable the company to grow rapidly at a lower cost, so that it can generate cash as quickly as possible and thus survive the infamous first three years.

Find and choose my springboard market

Several criteria can help identify it:

• Severity of the pain points expressed by the target audience regarding my innovation
• Ease of market access for my technology
• Cost of modifying my initial proposal to meet the requirements of this contract
• Short-term profitability
• Speed of conversion for early customers

Here is a general method for finding your springboard market:

• Challenging one's preconceptions
• Ask the market itself what the possible uses are
  – Is there a need?
  – Is this a real issue?
• Developing value propositions tailored to each use case
• Test them in the field to validate and refine these value propositions

– Does the solution I’m presenting meet this need?
– Am I setting myself apart / being innovative?
– How is this market structured? What are the barriers?
– What are the strengths and weaknesses of my innovation?
– Who are my competitors, or what are the common substitutes for my solution?
– Who are my development partners, customers, and key players in the field?

By applying these methods, startups significantly increase their chances of success by selecting the best market for the right reasons and working with the right partners.

Based on the results of various studies, startups can now use concrete, real-world data to select the best market in which to launch their innovation.