Find and study the market opportunity for a software solution
The development of a software business requires several requirements that must be met, at least if you want to do it well. The first of them is to identify an opportunity, which starts from the ideal environment, the generation of ideas, and then an innovation process that leads to an initial proposal. A project considered an opportunity, but that that will have relevance and space when found a space in the market.
Because when we talk about an opportunity to develop a software product, this opportunity is in the market.
That is why we will try to show you in this post practical pieces of advice from our experience finding the ideal space in the market. The goal is you can develop your product successfully.
1. First, understand your Market Segment
A market, in essence, is a place or a fictitious entity in which there is a population of people and in which there are supply and demand of products and services. This is a clear sense.
Now, the key point of this post is that the market you want to be in is where you can deploy your software product, but this data is very generic to find an excellent opportunity. We must define this market by adding qualities to it that will give us a segment: a specific group of people that share one or more characteristics.
In this time is where the term segmentation comes handy.
What you should know about segmentation is that it is a marketing strategy used to get better sales results. How does this happen? Because the market you are going to target is divided and made much more specific based on certain qualities, behaviors, everyday thoughts, needs, location and even social status of the public to whom you want to target your software product.
In this way, your product more effectively satisfies the needs, desires or problems of the segment you chose from the market and that you considered as potential customers.
What is a Customer Segment?
Segmentation is the practice that is done to make even more specific the audience to which you are going to direct a product, a strategy, an ad campaign, and the truth is a term that begins to be useful from the beginning of your business idea and never stops being so. You will continuously do it with different purposes.
On the other hand, the market segment as such, are all the people or entities that fall in the specific and detailed classification that you carried out, we mean, that have qualities in common, but not necessarily all of them are related.
Why do we make this differentiation? Because the business you want to start may have segmentation and within it, there may be one or more market segments.
How? Let’s suppose you want to develop software to manage tasks, a workflow. Your segmentation could contain characters such as people who have a trade that requires more than 8 hours of work a day and who have many assignments and responsibilities, within an age range of 20 to 30 years. But it happens that this segmentation has different market segments, such as freelance software development, managers, entrepreneurs, etc. These three segments fall within the description you made generically, but for communication purposes, solutions, plans, and even software functionality, these are three different market segments and you must find a way to consider them and offer them a solution that fits their profile and demand.
Of course, all this will depend on the type of market segment, because some sectors are radically different, but that could be treated without making significant distinctions.
If it’s a mass-market, even if you have many segments involved in your segmentation, the public doesn’t have too many distinctions from each other so that they can be treated the same way.
It happens different if we are in the presence of a diversified market, in which the segments that converge are very different from each other. For example, returning to the same instance of workflow tools, it would not be the same to make this type of software as a new software product than to develop it for an enterprise. In that case, the issue of market segments would be relevant for the software solution you want to offer.
How to make a market segmentation?
To make a market segmentation, you must choose a list of criteria or characters to decrease the market you are going to attack.
Which is the most used? Here is a list of some of them:
- The demographic or location factor
- The sex of the person
- An age range
- What places you frequent or interact with your daily life
- Psychographics factors
- Marital Status
- Profession or occupation
- Economic income
- Behaviors and even general interests
In the market, you want to cover, fill in these items, and at the end, you will get a much more detailed description of the audience you are going to study, to which you are going to direct your software product and all the strategies to position your brand.
2. Study your buyer persona, and in his or her environment
Buyer Persona, Branding Persona, all of these are different terms to refer to the same concept. This is the next step in the search for a business opportunity in the software market and any market.
Today’s markets are so competitive that market segmentation has to be specific enough to differentiate your message.
That is why these concepts have come to light that refers to one, two or more fictitious people that you must create and give them life as if they were a character of a movie, taking into account the information of the segmentation and adding much more specific data.
- What are their characteristics? (age, sex, where they live, work, and if possible give them a name)
- What tastes, interests, and hobbies do you have?
- What are your needs?
- What are your problems?
- What platforms do you use to communicate?
- If possible, make a list of the apps or software you use for it, which we tell you beforehand, are your competition.
- What do you like or dislike?
- What hobbies do you have?
- What goals can you set for yourself?
The more specific the better. It is a person that we design and define as our ideal client.
3. Think a software that solves the problem
In the previous phases, you had to think about the whole environment, the situations, and even the complaints that your ideal client may have. This will help you to know the problems he may have in his life. Try to think like him. And you don’t necessarily have to do it yourself. You can form a team that complements your effort.
Thinking about their problems will give you the chance to propose solutions, solutions that you will later translate into software or a software idea that you will then develop.
Think about how you would like the problem or desire to be solved if you were that person. This exercise is essential and can even be fun.
4. You would look for an expert team in software and business
If at this point, you incorporated marketing experts into your team, congratulations. But as we said before, the desire to find a business opportunity is limited to the software market, and for that, you need to develop a product. For this, you will need to ally with a software development company, or you will have to form a technology and development team, or even find a CTO, to carry out your idea successfully.
5. Find your competition
Finding your competition is almost as important as getting to know your ideal customer deeply, finding a solution and putting together the right team to develop and market it.
When you look for and know what your competitors offer and are doing, you know what works and what doesn’t, you can find a value proposition that makes you different, you can improve what they are already offering, or you can know the market in which you are going to develop. This is very important. That’s why we decided to add it as a separate step for you to find the opportunity you have always wanted in the market. Think about it this way: if you don’t know what’s happening in the market, how are you going to find an opportunity?
6. Innovate and think about your value proposition
Your value proposition is the distinctive feature, the seal that makes you different from the competition and that you use to capture your potential customers.
It is fair and necessary that you stop to think why people might choose the software solution you are offering and not your competition.
What makes you unique and different is your value proposition.
And most importantly, be consistent with the product and what you offer.
7. You must validate the market you found
This is the moment when you do some activities to confirm if the software idea you found is the best. If the design fits your segmentation and buyer person, if it has a clear value proposition if it is innovative and different from the rest, and most importantly if the final consumer or at least a significant sample of people would be willing to consume your software product so the opportunity it will be ok. All of that is possible with market validation.
Market Validation activities
Determine the first customer Archetype
Determine which is the best way to found them
How we can expose them to the product
Execute all methods planned in as many experiments as necessary
Interviews are the most common.
Evaluate the results and the market
Determine the total addressable market
After all this.