Market Validation: How To Validate Your Idea in 8 Steps

Before launching Waterboy, cofounder Mike Xhaxho had a hunch that something was missing in the hydration-packet space. But he needed market validation to confirm that there was an audience for his idea—different formulations for exercise, hangovers, and daily use, each with its own concentration of electrolytes and vitamins.

So Mike set up a TikTok account to gauge whether there was any interest. The account led to a landing page for lead generation.

“With the right messaging in place, we wanted to see if people would care. If yes, then, we know we’re onto something,” he says on an episode of Shopify Masters.

When that first video received more than 100,000 views and his follower count grew to 7,000, he knew he was on the right track.

Market validation can confirm a product idea and reveal overlooked obstacles, like low market demand. The market validation process gives you valuable insights into your customer’s needs that can help you go to market successfully. Here’s what you need to know.

What is market validation? 

Market validation is a method used to determine how a solution might fare in the marketplace among a target demographic. The process is typically done through in-depth interviews, online surveys, or focus groups, and it can reveal how the target consumer may—or may not—like a proposed business idea. 

Most market validation research is conducted early, before the product development process begins, to gauge an idea’s potential before investing time and money in marketing and testing. 

Your market research can tell you potential customers’ needs and the problems they’d like to solve. 

The goal of market validation is to get honest feedback from potential users or buyers in your target market. 

Market validation vs. product validation

Market validation and product validation are related concepts, but they are not the same thing. Market validation verifies that there’s a need for your solution in the market. 

Product validation, on the other hand, is the process of determining whether your product can fulfill that need. This research can help you determine your product’s price point. 

Sometimes, businesses conduct market validation and product validation simultaneously. For example, founder Tom Aulet launched Ergatta, a rowing machine that gamifies working out, hoping to come up with a way to turn fitness into a habit. There were several ideas he wanted to explore, so he talked to industry experts, studied brands in the fitness space, and spoke to would-be customers to learn about the needs in the market. This ended up helping him pinpoint exactly what product could help them reach their goals. 

“We ended up finding a part of the market that was not addressed by the current solution,” he says on an episode of Shopify Masters. “That was a gaming experience that is attached to a cardio machine. That cardio machine is designed to entertain you, motivate you to get through the workout, and help you have a real workout program and structure underneath it.”

How can market validation benefit your business? 

Conducting market validation tests can offer valuable feedback, such as whether your product or service offers a unique value proposition or if the pricing strategy aligns with what your target customers will pay. 

The data can help you gauge future success, gain access to capital, and assess potential profits or losses. Even lean market validation with feedback from research participants can reveal: 

• Qualitative data. Potential investors want to know how consumers will react to a business idea and prices. You can accomplish this by collecting qualitative data about your target customers’ attitudes and beliefs through interviews and surveys.

• Pain points.Pain points, or challenges, illuminate problems the product or service may encounter. These include low demand, high competition, high pricing, or not enough awareness. A deeper understanding of what does and doesn’t work for your customers can help you adjust your market strategy.

• Costs. Product development is expensive. The market validation process can show product teams and product managers why a new endeavor may—or may not—be worth launching.

• Market need. The business model or new feature has a better chance of success if it fills a gap in the market or solves a problem. If it doesn’t do either, it’s better to learn early on before investing more resources.

• Pricing. The right pricing model meets market demand at the perfect price point for your audience. A prohibitive price structure can limit your sales and keep you from market success. Carefully consider costs, customers, and other elements of your pricing strategy to make the best choice. 

• Market fit. Market validation helps you assess if there is enough demand to launch and sustain your product or service idea. It can also tell if the product-market fit needs improvement.

8 steps to determine market validation

1. Define your concept
2. Research popularity and industry trends
3. Choose a market validation method
4. Prepare materials
5. Find participants
6. Conduct interviews, surveys, or tests
7. Organize and analyze data
8. Proceed, discontinue, or rework

Follow these steps to determine if your idea is viable: 

1. Define your concept

Start by defining your concept. Include information about the problem you’re trying to solve, the target audience, and its place in the market. A good exercise is to perfect your elevator pitch (a type of business pitch) to make sure you are focused, understand your audience, and have the knowledge to be persuasive. 

If your pitch doesn’t land, maybe you made an incorrect assumption about the target consumers’ needs. This is the time to evaluate and make adjustments.

2. Research popularity and industry trends

A quick, easy, and free method to determine how popular a possible business or endeavor could be is searching on Google and Google Trends. With Google Trends, you can search for relevant keywords and look at different periods of time (like the past month, year, five years, or custom years) and learn if a term is popular over time or seasonally. 

You can also find related keywords and rising queries that can give you more insight into how people are trying to problem-solve. For example, with the term “hyperpigmentation,” users are trying to learn more about retinol and amlactin lotion as possible solutions.

Typing these terms on a search engine can also reveal what kind of brands are already leading in those spaces. 

You can also look at industry reports to learn about market trends and to help you assess market size. That’s what Nancy Twine, founder of clean hair care company Briogeo, did. 

“I wanted to make sure that I was launching in an industry that was growing and had a large [total] addressable market so that I had people to sell my products to,” she says on an episode of Shopify Masters. “I did a lot of research to understand if clean beauty was a short-lived trend or if it was here to stay.” Nancy’s findings gave her the confidence to quit her job and pursue Briogeo full-time. 

3. Choose a market validation method

There are different ways to validate your ideas, and you may end up using multiple methods to do so. 

Here are a few of the most popular market validation methods:

Surveys

An easy way to get idea validation feedback, surveys reach a large audience. However, participants might need prompting to give detailed thoughts on product ideas. You can send surveys via email or texts that link to a landing page on your website.

Interviews

Through one-one-one or roundtable customer interviews (remote or in-person), you can gain deep knowledge to validate concepts. That’s what Susie Harrison and her cofounders did when developing Hearth Display, a digital whiteboard for families.

After initially running large-scale surveys, Susie and her cofounders opened up their calendars, allowing hundreds of potential customers to book a 30-minute call through Calendly links distributed via email nurture campaigns and Facebook groups. The survey results revealed that many parents used whiteboards to manage their homes, but they didn’t show exactly what was missing in that space.

“What really provided the validation of that pain point was getting on the phone with these families and having in-depth conversations and saying, ‘Run us through your days. Run us through the pain points that happen all throughout that day,” Susie says on an episode of Shopify Masters. 

Focus groups

This popular market validation method takes place in a controlled environment with a leader guiding roundtable discussions or online surveys. Although official focus groups can be costly, especially if you hire a market research company, their efficiency and reliability can make them worthwhile. 

A/B testing

A/B testing is a simple yet effective method of market validation that asks participants to choose between two options. You can see if one is picked over the other, and then ask why. 

Prototype testing

Prototypes, or early versions of the final product, allow you to work out the kinks. Market validation tests for food receive immediate customer feedback through in-store tastings and pop-up events. Technology prototypes rely on usability testing. 

The way target customers interact and navigate new apps can improve the user experience (UX) design. Favorable feedback can help you move forward with launching a minimum viable product (MVP), with just enough features to satisfy early customers.

4. Prepare materials

After you pick a market validation method, start to prepare your materials. For example, if you’re doing A/B testing, then you can provide two versions of an idea and have customers give their opinions on both. 

If you’re going to conduct surveys or a focus group, start with broad questions to understand a potential customer’s thoughts on your product category and how it fits into their lives. You can get more specific in the later stages of the market validation process if a prototype is available. 

Ask all participants the same questions to avoid skewing the data. Sample questions might include:

• What type of online businesses or physical stores would you expect to sell this product? 

• How much would you pay, and would free cancellation or returns sway your decision? 

• Would you use this product or service once or regularly? Why and how often?

• Does this product or service solve a problem you have?

Aim to collect a mix of qualitative (Why do you think this solution would help you?) and quantitative data (How many times a week would you use this product?) to get a holistic view of your audience’s opinions. While qualitative data can give you more context about why your target audience feels a particular way, you should also gather quantitative data to help you spot patterns and trends. 

5. Find participants

Find test participants that match your customer demographic. Those in the same age range, gender, ethnicity, location, and income level, among other attributes, will give the most useful results. To find participants, hire a market research company or send an email blast to an email list, friends, or colleagues. 

Susie of Hearth Display suggests asking friends and family to introduce you to people in your target demographic. “We did that in a very scrappy way of reaching out to friends and family and asking who they knew and widening that circle of influence until we were at the point where we were talking to families who had little to no connection to us but fit that core demographic,” Susie says.

6. Conduct interviews, surveys, or tests

Use interviews and surveys to collect data on where participants are having problems, or customer pain points, if any, with your product. Is it the business idea itself? The price? The presentation? 

Ask the questions you prepared. Encourage honest, detailed responses and reassure participants that their feedback is valuable. These sessions don’t necessarily need to be formal. 

Before launching, the founders of Pop & Bottle, a dairy-free, plant-based canned coffee brand, hosted a small product tasting at one of the founders’ apartments. 

“We developed five products that we felt very good about, and we wanted to get wider feedback,” says cofounder Jash Mehta on an episode of the Shopify Masters podcast. 

They invited about 30 close friends and family members over to test giant vats of product. The setup was simple: They had an iPad with a short Google Form where they asked them questions and how they’d rank the products. The questions included: What was your favorite? Why? Which ones would you buy again? How much would you pay?

The results helped them see that people gravitated more toward a few flavors. Though the cofounders felt confident about the five flavors they created, they knew that launching with that many items was not viable. 

“Every additional product that you put out there takes resources, investment, and shelf space,” Jash adds. “It’s very unlikely for a new brand to walk into a grocery store, and they give you five different SKUs that you can put on a shelf tomorrow. We wanted to launch with three, and this simple exercise gave us enough feedback to do that.” 

7. Organize and analyze data

Market validation can lead to a large volume of data, so it’s important you remain organized. Gather all your information in one place. 

For example, you can have users fill out a survey that automatically populates into a spreadsheet. Spreadsheets are especially useful because you can use them to build charts or graphs if you’re collecting quantitative data.

Look through your data and ensure there aren’t any inconsistencies. Then, use a data analysis method (such as descriptive data analysis or diagnostic data analysis) and look for common themes. You can cluster information to find trends across different demographics (like age groups and locations) or by different needs.

8. Proceed, discontinue, or rework

After processing the feedback and data, you should know whether you want to proceed as planned, scrap the idea and start fresh, or rework the idea based on feedback.

For premium coffee concentrate brand Kloo, the validation process consisted of a soft launch for friends, family, and a few others who’d learned about the company early. A post-purchase survey led the team to make changes to its packaging and pricing. 

“We were surprised to learn from the survey that our subscribers didn’t necessarily want to get the nice glass bottles with every order,” cofounder Claudia Snoh says on an episode of Shopify Masters. “Their feedback was that, at the end of the day, they were subscribed because of the flavor of our coffee.”

The survey results helped them introduce low-impact refill pouches that are recyclable and lighter for subscribers. It was more economical, which allowed them to offer subscribers a lower price.

How to present your market validation findings

You might need to present your market validation research to different parties. For example, you could get internal team members on the same page while building out your brand, or loop in investors who may provide funding. 

You can present your findings in a report that includes the following sections:

• Summary. Provide a synopsis of the problem, potential solutions, and any major findings.

• Pain points. Explain the issues that your customers face and why you think your brand can solve these pain points.

• Target audience. Detail your target audience and how you found participants to provide user feedback or carry out prototype testing. 

• Methods. Describe the methods you used—such as: gathering feedback, thorough market research, and beta testing—and clarify how each method helped you with market validation.

• Results. Report your key findings, particularly whether it validated your idea and why.

• Next steps. Provide information on whether you will move forward, refine, or change your idea.