How to Evaluate Market Opportunities?

Learning how to navigate and properly evaluate market opportunities can inform smart investment decisions, and help you diversify your portfolio strategically. 

No two investment opportunities are alike – which is why evaluation is a critical skill to master. 

 In this article, we’ll be discussing product viability determination, target audience and relevant traffic source information, and business profitability potential.

Read on to learn more about the proper evaluation of market opportunities.

What Is Market And Profit Viability (And Why Does It Matter?) 

Market and profit viability considerations are critical elements of your potential success in market evaluations.

Market viability is often used interchangeably with business viability and considers the ability for a business to potentially profit.

This determination comes down to several different factors, some of which include: financial stability and backing, a unique and competitive offer (otherwise known as a selling proposition), and a defined ideal customer to market to. 

While market viability provides a broad overview of the business’ potential to be successful, profit viability narrows the scope into the ability for long-term profitability.

Instead of focusing on the offer and client management, this strictly focuses on the logistical and theoretical elements in place to assist a business through the growth period into profitability – and what helps it maintain profitability.

While market viability considerations do impact overall profit viability, they are not considered in the operational calculation of viability. They are simply the reasons behind a certain outcome – while the profit viability calculation and consideration focus on what is in place to keep a business operating and providing a profit. 

These two measures are helpful for market evaluation for aspiring entrepreneurs and seasoned investors so that they have the information that they need to make an informed decision – allowing them to determine how to proceed with a business or investment opportunity.

How To Evaluate The Market?

This guide is a comprehensive overview of some of the most common (and important) aspects of market evaluation. Read on to learn more about how you can streamline your market evaluation process. 

1. Examine Niche Markets & Assess Demands 

Clients only buy what they feel that they need. In order to determine if a business venture or investment is a good financial decision, you can first evaluate the potential market and clientele that your business would serve.

In this process, you may want to consider asking yourself several questions. 

  • What am I offering? 
  • Will this good or service provide value to my ideal audience? 
  • What niche am I serving? 
  • What pain points do these clients have? 

Using these questions in your evaluation process can help you become more efficient in your evaluation, and determine what next steps look like quickly. 

There are tools to make the evaluation process easier, and that provide a comprehensive overview of your ideal audience and niche. 

  • Google Trends – Categorized & aggregated searches from real users 
  • AHREFS – Comprehensive SEO tool that can provide backlink info and help you speak to your consumers powerfully
  • Answer the Public – Similar to Google Trends but with related searches and broader search function 

2. Identify Your Audience Needs (And How to Serve Them) 

Audience knowledge is one of the most powerful assets you have when forming an offering or preparing to invest.

In order to truly understand what your audience needs (and therefore what they will search for) you should consider identifying pain points. 

This process is easily done by avatar creation, which is the formation of your ideal client profile.

This allows you to list several demographics to build a fictitious client and allows you to step inside their mind and grasp their needs. This also can illuminate new marketing strategies. 

Some choose to interview members of their target audience or use frameworks such as Donald Miller’s Storybrand Framework to go through the customer journey and learn how to speak and market their offering to ideal clientele. 

No matter what method you choose to begin with, this step is perhaps one of the most impactful in the market evaluation process, as it allows for future success and the formation of a client base. 

3. Explore Traffic Channels & Evaluate Profitability by Category 

One of the most efficient methods of success is to simply lean into what other successful people in your niche are doing. Explore different related Instagram, Facebook, and social channels, as well as websites.

You can then look at your product offering and potential audience, evaluate the most efficient way to market and categorize your product, and move on to the second half of profitability estimation: Determining costs. 

There are many costs that you can include in your market evaluation – including the cost of production, cost of hosting, and any related platform fees.

These are simply costs that can be associated with a physical good being sold – other costs may vary depending on your offering. It is also important to account for other hidden costs, such as marketing fees, logistics costs (shipping, returns, etc) and licensing, taxes, and registration fees. 

Sometimes, fee calculations can be overwhelming. While many platforms perform general financial services, there is an increasing need for financial calculators that apply to platform-specific sellers in the market evaluation phase.

Many businesses get their start on Amazon. Amazon is a controlled microcosm of the market, allowing sellers to attain worldwide reach and hone their skills in market study, offer optimization, and product/market fit.

Some tools allow you to calculate FBA fees for free and are designed to assist you through the market evaluation process, such as this one. Evaluating costs ahead of time can provide you valuable insight in the evaluation of your offering or investment. 

Market Evaluation is Critical to Business Success 

Market evaluation provides valuable information to your business and investment success.

Navigating this process allows you to examine markets and clientele needs, identify how best to speak to those pain points, and refine your offering to be channel-specific and provide the most income. 

 

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