Kickstart your idea with better market research
Market research is not only important to verify if your completely new product idea is worth the work. Founders and their product teams also use it to iterate existing products, scope new features and keep an eye on how the competitor landscape is shifting.
Venture funds, accelerators, incubators and angel investors will also want to see market research if you want to launch a new idea: they want some kind of security that the product will actually sell.
This post outlines the following steps for comprehensive market research:
- Select the correct type of market data to gather
- Choose a type of research — Primary or Secondary
- Exploratory Market Research
- Define research objectives and the scope of the research
- Define research tools and methods
These steps are part one — in part two we’ll look at marketing personas, competitor analysis and how to summarize the findings of your product market research.
Besides helping to validate your product idea, market analysis lets founders:
- Prepare for a winning product launch with lower risks.
- Understand your market and audience in a way that helps create not just the perfect product concept — but also craft your message to fit their needs.
- Get to know competitors and position your idea correctly: understand their strengths and weaknesses.
- Get the pricing right.
- Adjust your startup strategy if market trends change.
- Identify trends and best practices in the market, build frameworks for success.
You might even read online reviews on products similar to yours and see that customers are asking for specific features. This is also market research. Product development is also developing a marketing and sales strategy.
It’s important to understand where data is coming from and how complete it is. How can you supplement it with additional research to get the full picture?
By the numbers — Quantitative Market Research
This is data you can measure, put into a graph or collect in a spreadsheet. This data comes from experiments, surveys with yes/no questions, and any observation quantified with a number.
This research can answer the following questions:
- How many people are interested in your type of product? AKA Total Addressable Market
- What do they spend, on average, on similar products?
- Is that amount growing, staying steady — would they spend more, or less?
- If average spend is decreasing, is the groups size still growing?
And, quite importantly, are they happy with the current solution to this problem? This can indicate whether, and at what percentage, the target audience is willing to absorb the switching costs to move to your product.
But at this point, we’re already getting at the context behind these numbers. And for this, you need…
Understanding motivation — Qualitative Market Research
The numbers show raw amounts, but here we need to dig into the reasons. Qualitative research is gathered in words and shows us what concepts and experiences shape the buying decisions of your market.
These reports come from interviews with open questions, focus group observations or more informal contexts like topical social media discussions, product reviews and peer-group recommendations.
Here’s the context you’re looking for:
- Why are people interested in product X?
- What did they use, or consider, as a solution to this problem before and what factors made them switch?
- Are their decisions influenced by pricing, suggestions from friends or ‘leaders’ in their niche, or a recent news article?
As an example, we asked Nudge founder Julie Landeroin about her approach to qualitative research. Nudge is a B2B2C mobile app that creates more engaged communities among university alumni.
Here’s how Julie set out to better understand the solution Nudge can offer both buyers (the universities) and end-users (the alumni):
Which is right for your product?
The product research method you choose depends on what type of data best answers your research question.
To get concrete measurements or prove hypotheses you’ve already formed about your product, quantitative methods will give those results.
But if you’re still forming a hypothesis, still ideating on possible solutions, or just getting to the bottom of the causes of certain pain points — then qualitative research takes a first priority.
Just like with quantitative and qualitative research, both primary and secondary research are valuable pieces of market research. With different aims and results, both will further inform your journey towards idea validation.
Primary Market Research
These are findings you collect directly via questionnaires or focus groups. It comes from your target user group or market segment — quantitative or qualitative info you’ve sourced directly.
Why is it worth taking the time and effort to gather primary research? Quite simply, you can trust it more completely. Now is not the time to rely on things like third-party trend analysis or year-end market reports.
You just don’t get the full picture — how the data was collected, how it was analysed, what biases are inherent in the findings, etc. We’ll get to the uses of secondary data in a moment.
With your primary research findings, you can quickly move on to segmenting your target market and drafting specific buyer personas.
Secondary Market Research
Okay, so what good are those trend reports and third-party market summaries? First, they give access to a lot more data than you’d feasibly gather on your own. The value here is to select and connect parts of the available info to the hypotheses you’re exploring.
Secondary data can unearth risks that may not show up in your primary finding. Market trends show broad market developments to better validate demand for your product.
And competitor research falls in this category. Clear data on the competition paired with your primary findings is a great starting point to position your idea and differentiate your solution.
With an understanding of data and research types, you need to circle in what exactly you need to find out. You need to know what you don’t know — this is where exploratory research comes in.
By the end, you’ll get a better understanding of your research goal(s) and see what gaps in knowledge you need to fill before creating hypotheses.
Tips for this stage:
- Start with secondary data, across a broad range.
- Look for outliers, note aspects of the industry you hadn’t considered.
- Follow your curiosity towards things you want to understand better.
- Narrow down on info that will inform your product decisions
☝️ Exploration doesn’t mean finding as much data as possible! Keep it organized and related to the problem area you’re targeting.
Now it’s time to nail down what info you need to find to move confidently towards idea validation.
Decide what the objectives of your research are:
- Find out your competitive advantage?
- Focus your market research on demand or pricing?
- Do you need to better understand user habits in this space?
- Are there audience needs that need supporting data to verify?
Define your research objectives clearly so the resulting data can provide a stable foundation for product decisions.
Set a scope for reaching your objectives. This means defining where you can make use of secondary data and which objectives will require primary research to meet.
Let’s wrap up with a quick overview of the most common and useful ways to fulfill product research objectives.
- Interviews: Whether remote or face-to-face, this is your best opportunity to gather a holistic view of your buyer personas. Informs your pricing, brand tone, and messaging to ensure market-message fit upon launch.
- Focus Groups: Need to test a demo, or get feedback on your prototype? Whether you want open-ended qualitative feedback to differentiate your solution or you hone in on specific quantitative answers, focus group sessions can be designed to meet many objectives.
- Product Use Research or Usability Testing: To get valuable feedback on your MVP UX or test out a new feature, this is the best way to better your design — find out more here.
- Observational Research: See how users move through your product or new feature flow. Use it to uncover roadblocks or any friction they have achieving their goals.
- Pricing Strategy: Go to market at the right price or leverage pricing to stand out. Without knowing what your target market expects or would be willing to pay, you’d simply be guessing!
Alright, five is enough for now. Remember not to try and tackle all the research all at once. Depending on the founder’s experience in the industry, some aspects of market info will be well-known already.
Once you’ve gathered the research, get down to testing no-code solutions or apply to a product accelerator like ours and prepare to launch 🚀
Part two: marketing personas, competitor research and presenting research findings — coming soon!