Market Research: A Vital Spice in Product Development
Market research is the process by which product managers accumulate and interpret information about market drivers, products or services to be offered, and about customer needs.
To enable decision making, it is crucial to conduct research and maintain in-depth understanding of your competition and the industry as a whole, as well as the attributes, spending habits and existing pains of your target market.
“If we knew what were doing, it wouldn’t be called research.” — Albert Einstein
Very often, I find myself getting caught up in this game in my day-to-day routine. I come across products and think either: “Wow, the product manager behind this product must have spent a great deal of time understanding the customer gaps,” or most frequently, thinking, “Those guys clearly did not do any research, because it is impossible to use this product.”
Why it matters
There are countless reasons why every product manager has to invest in market research if they wish to successfully perform product development.
Below are four of the most important benefits:
- Reduces business risk: Around 50% of companies don’t survive past the fifth year, according to data from the Bureau of Labor Statistics.
- Enables effective marketing: Segmentation, market penetration, customer journeys, new market evaluation, mapping out your customer needs, etc.
- Ensures staying ahead of competition: Nokia still struggles to get back in the mobile game after they failed in their market predictions.
- Helps launch the right products: New product concept testing, prioritization of key features, etc.
Research in the product development stages
Throughout product development, there are certain stages you typically go through until you reach the glorifying moment of launching. In each of those stages, market research comes to play a crucial role and assists in the decision making every step of the way.
The illustration below, borrowed from Caroline Harrison, will guide us through the next section.
Product idea generation
This is the most exciting part and an all-time favorite, where everyone from the company usually wants to contribute: coming up with new ideas. The main goal of the exploratory research here is to understand the market demands and determine either entirely new product opportunities or whether there is room for optimizing currently existing offerings.
Top objectives: Awareness of products available on the market, customer delight with the products available, product gap identification.
Product concept creation
Reaching this stage means that, from the million ideas generated, you managed to diagnose a need out there, and you are now on a mission to develop a new product customers will love to use.
The main goal of research here is to give your end users a taste of the new product early and guarantee product/market fit. Your aim is to generate insights on necessary adjustments before product launch.
There may be a need of back and forth with your users at this stage, spanning from early in the process when you only have a basic idea you wish to quickly validate, to showing various product mock-ups, to eventually presenting a working prototype with which users can interact.
Top objectives: Concept/product likes and improvements, most crucial product features, likelihood of purchase or usage.
Product case
The product case stage is all about diving deeper into crafting the details, such as technical specs, definition of targets, breakdown of the project planning, etc. Here, additional research may prove beneficial in order to evaluate the opportunity in regard to sizing the market and the overall potential for the product, as well as spotting any major flaws.
Product development
In the product development stage, research is focused on a quick and small-scale customer review of the product prototype.
Test and validate
When it comes to testing and validating, it is all about testing the concept in the field using product trials. A deeper understanding of the product’s prospects for success will be generated, including the likelihood of users purchasing the product.
Launch and monitor
It is recommended to invest in further research following the launch of the new product to judge the initial victory and monitor its position in the market over time.
Common product development research methods
The most fundamental classification of market research is primary and secondary. Primary, or field, research is when you are taking a direct approach to obtaining your data in the “field.” Secondary, or desk, research is when you are on the lookout for existing data that can be applicable to your ongoing project.
Depending on the type of data for which you are hunting and your budget, there are diverse techniques you will eventually end up picking for your products.
Below are five of the most common research methods used in product development:
1. Focus groups
A scripted series of questions are used by a moderator to lead the discussion among a group of people. It typically lasts 1–2 hours and takes at least three groups to get balanced results.
2. Surveys
Surveys can be conducted in person, via email, online or via phone, with concise and straightforward questionnaires. The larger the sample, the more reliable your results will be.
The key differentiator between the survey and the focus group is the information you are seeking to get out of both. For instance, a satisfaction survey may expose “staff behavior” to be a tremendous matter. The focus group will dive deeper with the aim to unravel what the underlying issue with the behavior is.
3. Personal Interviews
Personal interviews include unstructured, open-ended questions. They typically last for about an hour and are recorded.
This method yields valuable insights into user attitudes, exposing their pain points while understanding psychological motivations. It exceptionally aids new product development.
Potential drawbacks are that the results are subjective and frequently are not statistically reliable, as they usually don’t represent a large enough segment of the population.
4. Observation
This method draws a more precise picture of customers’ usage habits and shopping patterns, as you are observing them in action by videotaping them in stores, at work or at home, which helps you draw conclusions about how they use a product.
The greatest benefit is that you measure actual behavior instead of user-reported behavior, which is much more reliable, as users will often report differently on a survey from the way they behave in real life.
Approaches include usability testing through a prototype device, eye tracking with the use of heat maps, and contextual inquiry by interviewing users as they work in their natural environment to unravel pain points.
5. Experiments and field trials
Experiments and field trials contain scientific testing, where specific variables and hypotheses can be proved. This research form is always quantitative in nature.
The simplest example can be conducting an A/B test to optimize the performance of your website by changing the wording of the most important CTA on your page. For example, some website visitors would see “View deal” and others “Book now.” You are able to measure which version results in more clicks and less confusion, and quickly use the more favorable one for all users.
I very much tend to agree with Richard Slade, when he posed the question of how can a product manager be expected to market things to users if they are blind in understanding what motivates them, what they’re actually looking for in a product, what kind of purchase decisions they’re likely to make, or how much they’re willing to pay.
The simple answer is: You can’t! So don’t fool yourself, and work on getting your data straight. Because …
“Without data, you’re just another person with an opinion.” — W. Edwards Deming
