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Friday, April 27, 2007

Answering the "how does your Idea address a need"

How does your idea address a need?
This is one of the most important answers you can give to your prospective investors, you need to be able to enthuse them with answer, and if you Idea doesn't stir them then pack up and move on to the next targets. How does your idea address a need? This is where you get to explore the true potential of your new idea. There are two basic types of demand in the marketplace—a “want” and a “need.” A business that addresses a need is always more promising than one that addresses a want. In the case of a market need, there’s pre-existing “pent-up” demand, and creating awareness is all that’s required to catalyze the sales of your offering. A market need creates “pull” in the marketplace, and the end user literally pulls your product or service through the system to satisfy his or her need. In the case of a market want, you’ll be required to “push” your product onto consumers, and this usually requires expensive advertising and marketing campaigns in order to encourage and influence the sale. There are varying degrees of “want” in the marketplace so try to get a sense of the degree to which the market wants your product or service. Obviously the more the “want” approaches “need,” the better. Basic food and shelter are examples of market needs while goods like jewelry, video games, and even gourmet food products are examples of market wants.
What want or need does your product or service address, and how? Why is it the best solution for addressing that need? Figure out if your idea is revolutionary, evolutionary, or simply a copycat. A revolutionary idea, something that really is different, often means you have far greater chance for upside—more potential revenue and profits. But revolutions typically come with a lot of risk. Don’t underestimate how challenging it is to educate consumers and change their behavior before they see the need for your product. It’s often said among seasoned entrepreneurs that you can easily spot pioneers. They’re the ones with all the arrows in their backs. Be clear in your business plan about how much pioneering you’ll have to do before people understand how and why your product is a winner. An evolutionary idea typically has less upside than a revolutionary one, but your odds are better of getting the business up and running and into a stable mode relatively fast. With an evolutionary idea, the bigger burden is making clear to your customers that which distinguishes you from the rest of the competition.

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