Ryan Kristo Muljono: Tips for Conducting Market Validation in Building a Business in the Services Sector

Since the beginning of building a business, especially in the service sector, there has been a business stage called market validation or market validation which need to be passed. This stage needs to be done even before a product is ready to be marketed.

According to the CEO of a service provider company website Development ToffeeDev Ryan Kristo Muljono, market validation provides an opportunity for companies to prepare and evaluate their products.

The following is a complete explanation regarding how to carry out market validation in building: business in service, based on the perspective of practitioners who work in service companies. Read more.

What is Market Validation in a Service Business?

Market validation in business services is the process of presenting the concept of a product in the form of services to its target market, as a determinant of the feasibility of the product before it is launched to the market.

“This market validation stage determines whether the market or market is ready for the products and services we offer. Usually this is done for products that are just being marketed for the first time or businesses that are just starting,” explained Ryan.

Furthermore, market validation carried out at the beginning of the conception stage will also determine whether the business being run will be profitable and receive significant investment to develop services in the future.

Alasan Market Validation Important Do

According to Ryan, market validation is important for companies that just want to start a business and companies that want to develop new products. Both of them need to do this step in order to measure the value of their product.

For Companies Who Just Want To Start A Service Business

Market validation carried out by companies that are just starting their service business will strengthen the company's ambition and enthusiasm to enter the market. In addition, it can anticipate time and resources, before products in the form of services are offered.

“For companies that are just starting out, market validation very important to make from the start. The reason is to find out or validate that the services offered will be needed by the market,” said Ryan.

For Companies Who Want To Develop Their Services

Meanwhile, for companies that have been established and want to develop their services, market validation is important to find venture capitalists and other types of investors, who need proof of market validation before approving company funding.

However, apart from that, Ryan also considered that for a company that has developed, it can even be said to be advanced, the stage of market validation this may be skipped. He gave an example of a large company such as Apple Inc.

“When Apple releases a new product, they create a product category that doesn't exist yet. But on the product that has been there before, the market has received very well until the product becomes popular. That popularity is passed down to the new product, so market validation not really necessary," he said.

Ryan said new companies are not advised to try to do the same with companies such as Apple Inc. or other large companies. "The small company will be difficult later" very to be able to compete,” he added.

Approach Market Validation What to Do

According to Ryan, a simple way to do market validation is to do market research or market research. With market research, companies can find out the patterns and behavior of the target market, in an area or in certain circles.

“Companies can do several ways of market research to the target market or potential customers to be targeted. This can be done by conducting surveys, utilizing data, and offering initial offer, said Ryan.

However, the most common approach to market validation is interviewing the target market, as well as buyers or users. Second, conduct a user survey. The survey can also be in the form of interviews.

The key to this market validation is that the market research carried out must include direct contact and feedback from the targeted target market. So, companies can see their response and enthusiasm for the services that will be offered.

Steps in conducting Market Validation

Each company goes through a market validation process with a varied approach, based on the type of industry and the target market the company is targeting. This different approach will affect the steps taken by the company.

There are also steps that are generally passed by service companies during the market validation process, including the following:

Affirm Service Concept

Before carrying out the basic validation approach, companies need to think in detail about the service concept to be offered to the market. Develop a clear and easy-to-understand description of the service concept.

Find the Ideal Target Market

Next, the company needs to think about the target market to be addressed, along with the problems they have and how services can be a solution. After that, they can find out what kind of subject to target. Thus, the services that the company offers are right on target and effective.

Create Appropriate Questions

At this step, the company needs to focus on the types and forms of questions that will be given to the target market during the market validation process. Companies need to create open-ended questions and leave subjects free to answer in their own words.

According to Ryan, the form of these questions will vary greatly, depending on the services to be offered. He considered that the market validation question could only focus on the interests of the company, the interests of the target market, or both.

“For example, in a manufacturing service company website, then you can interview entrepreneurs, ranging from CEOs or micro, medium, to large or large entrepreneurs multinational company. So, for each target market, there will be different questions, according to their respective needs,” explained Ryan.

Do a Survey or Interview

In the process market validation, the more surveys or interviews and the larger the sample size, the better. That way, companies can see broad patterns, and even find new problems that can be solved through the services that will be offered.

Data Result Analysis

After conducting the survey or interview, gather details of each subject's answers, focusing on a few key answers. After that, look for patterns in the answers, so that they can be summed up into a statement.

ToffeDev's journey did Market Validation

Ryan reveals ToffeDev's journey in the market validation process, when it first launched its solution to the market. The first thing to do is guess at the target market that will require the services of a manufacturing service company website that one.

“We need to know first who the target market is and the questions we will ask them. We also adapt our services to the needs of the market at that time,” he added.

The questions that are asked of the target market itself starts from simple questions, a combination of questions that lead to the interests of the company and the interests of the market.

“Simple questions, like 'how important is it? website for your company?'. Then, 'how interested are you to use website in broadcasting or promoting your business?' like that," said Ryan.

After that, ToffeeDev conducts tests and measures the results of the data, by concluding the market response regarding the offers provided by the company. Ryan admitted that the market validation process carried out by ToffeeDev was slightly longer than the larger companies.

“The reason is simple, that is because in the beginning we were start-up company, where are we boostrap all of our market activities," he added.

The Key to the Success of the Service Market Validation Process

According to Ryan, market validation is said to be successful when the company's service offering is in line with market expectations and is well received by the market. Simply put, with the right target market, the services offered will sell well in the market.

“In addition, in order to be successful, the company must first know who will need the company's services or services. Avoid thinking that your company's services will suit everyone. The target market must be specific and detailed,” he advised.

He also added that the initial amount of marketing budget that the company can spend to conduct market research in the market validation process will determine whether it is successful or not campaign what the company does.