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Traditionally, crowdfunding platforms are considered a place to attract investment in newly created and yet unknown companies. This is their original purpose and most natural intention. However, some big brands, such as Lego and Honda, decided to be creative and use these platforms to market their new products. To some extent, a new product planned by a well-known company is also a startup, and, accordingly, a risk. Crowdfunding platforms help reduce the level of risk, and also provide the following opportunities.
Validate an Idea
Regardless of whether the brand is famous or newly created, any idea needs to be validated. Yes, a big name increases the chances of success, but if the market does not need a specific product or solution, then this idea will be doomed to failure.
For this reason, the launch of a new product begins with the validation of the idea – the company checks whether the idea makes sense. This usually means a series of costly market, competitors, and target audiences research. This implies time and money mixed in one bottle. However, a non-standard approach to crowdfunding changes the situation.
This is what is called reconnaissance during the battle – the publication of the project on the crowdfunding platform makes it possible to assess the real reaction of the market.
Estimate Potential Demand
Logically continuing the previous paragraph, it becomes possible to assess the real demand for the product under test. Usually, publishing a project on a crowdfunding platform is almost the final stage. After validation of the idea, start-up companies proceed to more thorough research using economic methodologies such as SWOT, PEST, The Five Forces Model, Design Thinking and so on.
These approaches allow us to assess the economic and political situation in the market, as well as to establish the potential demand for a new product or service. However, it is also worth remembering that the data obtained during the study are predictable. That is, it is possible to analyze the data and make a hypothetical assumption of possible demand, which may or may not be justified.
In turn, crowdfunding gives a definite answer – either yes or no. And if yes, then we can talk about real demand volume and indicators.
Contact the Target Audience
Market research before launching a new product also always means a very thorough study of the target audience. Marketers and researchers are doing everything possible to draw the most accurate portrait of the user, to predict his needs, problems, and behaviour, and to understand how the created product or service will fit into his lifestyle.
Again, this data is hypothetical. The only way to get the most accurate information is through research within the focus group, but even in this case, there may still be certain errors.
Crowdfunding gives direct access to the target audience. This is a first-hand source of information, and therefore it becomes possible to market the product more accurately. And also, draw a portrait of your target customer, having met him personally, which in turn means cost savings.
Moreover, such a direct connection with the target audience gives new insights for developing a content strategy, since it becomes possible to find out what interests potential users firsthand and give them the correct answers. The quality of content based on real needs will not be in doubt, especially if you choose the freelance author on the Online Writers Rating review website.
As soon as you get direct access to the target audience through crowdfunding platforms, this automatically means that you can get pre-orders for a product that has not yet been created. And also plan your development or production more competently. Plus, this once again indicates the amount of demand for your offer. In other words, most risks are leveled automatically – you can observe the situation in real-time and respond even faster.
And yes, it really works. The marketing campaign launched by Lego gave them the opportunity to receive many pre-orders for a product not yet released.
Increase Brand Awareness
Obviously, brand awareness is also growing through crowdfunding marketing. Increasing brand awareness is an additional bonus that you get using an unconventional marketing approach. Moreover, you are no longer geographically limited – which means you can begin to probe the ground for access to foreign markets as well. If foreign users find out about you as well, this means that the threshold for entering a foreign market automatically becomes lower. And when deciding to expand your business, you will conduct additional research already taking into account the fact that users from a certain country have already heard about you and are familiar with the idea of ??your product or service.
In addition to the fact that recognition among potential clients is increasing, it is also increasing among potential investors. Yes, probably, attracting investment in a sufficiently developed business is not a top priority, but if crowdfunding gives this opportunity, then why not take advantage of it?
All the previous reasons to use crowdfunding for marketing lead to the fact that you save money at each stage of promotion and development. This approach saves money in a very substantial way – and is even more effective than LEAN Startup development. Creating a project using this methodology, you still invest and take risks anyway, even though each new stage is tested and verified. Of course, the need for a reasonable approach remains relevant, but using crowdfunding for marketing you risk nothing.
Conclusion – Should You Use Crowdfunding For Marketing?
Crowdfunding is one of the most rational ways to test hypotheses and theories regarding the launch of some new products. Any organization, no matter small or large business, sooner or later understands that it is necessary to launch new brands, ideas, concepts.
You can, of course, spend thousands of dollars from the budget on checking demand through focus group research, but it will be much more effective to launch a pilot project on a small audience through crowdfunding. So you can really check whether people are willing to pay for your idea or brand, and the theory fades into the background. The history of business has seen a huge number of examples when marketers, having calculated everything, having done the research, launched a new product, and everything turned into a collapse.
Therefore, of course, you should validate the idea before launching a project on a crowdfunding platform. Of course, you should explore the market, potential users and the current situation. Of course, you should confirm or refute your hypothesis – and crowdfunding is the easiest, fastest, most economical and effective way to do this.
About the Guest Author
Ana Mayer is a freelance writer who is a qualified specialist in the field of digital marketing.
She writes for different news portals and thematic blogs that helps her stay at the heart of
the programming and technology news. Such work gives her the opportunity to write articles
on the most relevant topics of today.