Market validation is the process where you determine if people (outside of your friends and family) will pay money for the product or service that you want to develop. This process is typically done after you have the idea but prior to spending any time building the actual product.
The are the first steps to market validation:
Define your product and market
Determine exactly what your product is and what market you are in. If you are developing athletic shoes are you in the apparel market or the sports equipment market? Do you want your shoes to be sold at Nordstrom or Foot Locker? The athletic shoes at Nordstrom might be more stylish and worn everyday while the shoes at Foot Locker might be more functional and worn only while playing sports.
Determine your market size
Figure out how big your total market is to determine if there are enough potential customers there to build a successful business. If there are not enough customers then you need to revisit your idea or position it for a different (and larger) market.
You also need to make some predictions about the future of your market. Is it going to grow in the future or shrink? You might be able to get away with a smaller market today if it is going to grow in the future.
There is a famous example of buggy whip manufacturers when cars were introduced. Once people started buying cars they no longer needed whips as they no longer used horses for transportation. So, even if you predict a growing market be aware that outside disruption can hurt your business.
Talk to potential customers
Write down the characteristics of your <ideal customer>. Reach out to them and interview them as part of your customer research. Find out their thoughts on your product and determine if they are willing to pay for your product or service.
Define your sales channel(s)
How are you going to sell your product to customers? Via a retail store? An online store? Your own website? If you are going to sell through somebody else’s store how are you going to convince them to carry your product? How many stores are there that might want to carry your product?
After completing this process you have validated that a market either exists for your product or does not. This is no guarantee of a successful business however as there are still a lot of challenges you will face in product development, launching, marketing, and sales.