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Last week we discussed the differences between a profitable market and a profitable product. We pointed out that in order to succeed online you need to sell products and services that your market wants and needs. Therefore, the ability to discover those wants and needs is a crucial element in creating profitable products and services.

One source of discovering this information is your existing competition. Popular products and services have already discovered some of the information that you are looking for. And by properly analyzing those products and services you can discover that information too. Once again, we turn to Tim Knox to help us figure out how to best do this:

Tim Knox On Checking Out The Competition (02:20)

I like Tim’s advice - it’s solid and to the point. His point about determining whether or not there is existing competition is a good one. It reminds me of something my brother told me (it’s actually some companies business motto, but I don’t remember whose). You never want to be first to market, but you also don’t want to be third to market.

In other words, let someone else do the work of determining whether or not a market has potential. Then, once that has been determined, build and improve upon their product or service. On the other hand, don’t try and enter a saturated market (unless you really can add a great deal of value to the customers of that market).

It is important to combine competitive analysis with an understanding of what your customers want and/or need. If you already have a sense of what products or services your customers are interested in then it can help direct your competitive analysis - for you are now able to see if those wants or needs are being properly met.

The example of Domino’s Pizza is a case in point. The story I heard is that Tom Monaghan (the founder of Domino’s Pizza) knew that people want a hot Pizza in 30 minutes or less - guaranteed. He knew this from hearing the complaints of customers in a Pizza restaurant that he worked in. With that knowledge in mind it was easy for Tom to analyze his competition and note that no one was providing such a service.

That is the power of combining quality customer and product research with good competitive analysis. It directs your research and helps you to know what you are looking for.

Let’s face it - marketing doesn’t mean squat if you don’t have anything to market. If your product doesn’t satisfy a want or a need of your (potential) customers, then it doesn’t matter how many people visit your site - you simply will not make money!.

Tim Knox makes this very point in this short, 5 minute video:

Tim Know on Market Research & Validation (04:46)

My favorite line of this video is the one about fishing - if you want to fish in a pond, you better know what those fish want to eat. The same goes for marketing a product - if you want to make money online then you must market products that relate to peoples wants and needs.

On the other hand, my least favorite line of the video was his comment that market research is simple. I don’t like calling anything relating to business (or anything else that requires time, energy and skill) simple. It may not be as hard as other elements of creating a successful business, but like anything else it needs to be done properly. And that, by definition, means that it is not simple.

With that said, I think the suggestions he made on how to perform market research are solid ideas - although they need to be delved into and explained in more details (something I hope to do in future posts).

Also, I’d like to differentiate between finding a profitable market and finding a profitable product within that market. A profitable market means that people spend money on various different products within that market. For instance, the pet market (to use his example). People spend a lot of money on their pets - they buy houses, food, toys, clothes, books, etc. for and about their pets. This means that there is money within the market.

But that does not necessarily mean that you can make money in that market. You still need to offer a product or service which satisfies the needs and desires of that market. If you are unable to come up with such a product or service then it does not matter how much money there is in that market, for you will not see any of it.

What’s more, coming up with such a product or service can often times be extremely difficult - and may require more sophisticated research than he hinted to in his video. It usually requires in-depth understanding of the needs of the people within that market - something which you won’t get just by perusing the magazine stand (but that’s another topic for another day).

P.S. I imagine that Tim would agree with the points I made above. I think his advice is right on. I just think it’s important to have the proper mental attitude before starting a new venture - and understanding that creating a product or service is neither easy or simple is part of that attitude.