2 Paths for Bringing a New Product to Market

There is a huge debate on the "best" way to decide what product/service to create and a LOT of people including the gurus not eating their own dog food. I know. I've seen it first hand. Basically in comes down to two different models. The first I'll call the reactive model. This is when you poll the market to find out what customers are actually willing to buy at the moment and give it to them, whatever it is. The second is the proactive model. (not to be confused with Jessica Simpson who IS a Proactive model...and her skin has never looked better) In this model you build a product that you "think" the market would want, and then find people to buy it from you.

The current guru wisdom states that you should follow the reactive model. This is by definition, opportunity seeking. After all, that is what people are looking for, so selling it to them becomes much easier. And this does make sense to an extent. Kern's niche marketing is a perfect example of this.

However, most people ..especially those just starting out... instinctively follow the proactive model. They figure out what they are good at, build some information product based on what they know, and then proceed to spend a buttload of money on guru courses that teach them how to bring their masses to their door.

Ok. I admit there are strengths and weaknesses to both models. And there really is a place for each. What I would like to do in this article is dissect each in a little more detail and highlight what is good or bad in each.

The Reactive Model
As I said earlier, this is by definition, opportunity seeking. And even though that term has gotten a bad rap lately, it's not necessarily a bad thing. It's actually a pretty smart strategy. So how does it work? Well, you poll a potential audience. If you don't have your own list you can do this a number of ways. One quick and dirty approach is to use Google Adwords or Hexatrack to find out what people are searching for. Just brainstorm a bunch of niches where there might be hungry buyers and start looking for ones with high traffic. Google Adwords will tell you how often phrases are searched for how much competition for that keyword, Hexatrack will tell you how much you can expect to pay for a click. Even if you aren't spending money yet, these methods will show you how much demand there is for a particular solution you can provide to a particular problem.

Now assuming you build a product to solve a particular need, you are golden from there right? Well not really. Here is the rub. First, by the time people get to a point of searching for a particular solution to a problem, they are pretty far down the buying curve in the "evaluate alternatives" stage. And that's good right? Well not necessarily. It also means that they are actively searching for OPTIONS. The will look at what you have, they will look at what your competition has, and if they are similar, let the price war begin!

Secondly, if you are really trying to build a business, you will soon discover that marketing a product that you are not really into will just about kill you. It usually took me about 2 months to truly hate something. The level of involvement required to build a product, never mind keeping up with current trends, and overcoming daily obstacles will REALY make this feel like WORK really fast.

The good
• built in demand. less time and money to convince audience
The bad
• You will always have competition and margins will be low.
• If you are interested in building a business, doing crap you don't like is not a long term strategy

The proactive model
People follow this model for two reasons. First, because they are brand new and it just comes as instinct. I would guess that the reasoning is that they already know a bit about something, so the easiest way to get productive is to just build what you know.

The second reason is far more interesting to me from a strategic viewpoint. In this case, you know your market exceptionally well, and have a way to educate them early in buying process. Remember how I said that in the reactive model, you are finding the buyers late in the decision making lifecycle? Well in the proactive model, you can grab them right at the begging. Rich Schefren is brilliant at this. He does this by periodically releasing new reports. Rich's unique gift is that he can synthesize a LOT of information and make connections that other people don't make. So what he does is research current trends, puts them together, and creates a report that makes you realize that you have a need or pain point that you never did before. By doing do, he puts you in square one of the decision process ..recognition of need. Because he was the one who made you realize, he is also the one who framed the need. And you can bet that the way that he framed it, he is the ONLY possible solution to that need. In addition, there is no competition at this point. Blamo! Say hello to decreased price sensitivity, and higher margins.

Now there is a HUGE risk associated with this model. It assumes that you know your market better than they know themselves...literally!. You need to know their problems so well that you can determine problems that they don't realize they even have yet. The other caveat is that you need some way to educate the market both of their need and why they should listen to you. You will either need a big list, lots of traffic partners, or be willing to spend some serious time writing articles, posting blogs, and in general building your buzz and credibility.

The good
• better long term strategic fit
• allows you to "create" a need or want, thus no competition and higher margins

The bad
• you really need to know market well
• it will cost a lot more to educate and convince the market