Market research involves a process of collecting, analyzing, and interpreting data about a target market. This market may include consumers, products, competitors, or an industry at large. The reason that companies conduct market research is to optimize the time, money, and resources they invest in product development efforts. They may also conduct research to find their product-market fit or expand their target audience.
Not only can market research help you figure out your product-market fit, but market research can help identify areas where you can grow. When enacting a strategy, you need to consider how your product will address the market demand or your existing customers’ needs. Let’s take a look at four different ways you can conduct market research and how you can leverage it in shaping your product strategy.
Background Research to Understand Your Market
Exploratory research will give you insight as to whether you should launch a new product or rethink your original idea. This type of research is beneficial when you’re first finding product-market fit, but also when you want to further understand the gaps in your market as you plan new product feature releases. The main objective of this type of research is to understand the needs of your target demographic and the market at large. Once you identify the needs, then you also identify opportunities for you to introduce new products into the market.
Key insights you gain from this type of research include:
- Awareness of the product or need for the product
- The current level of satisfaction with existing products
- Improvements that can be made in the current products
- New features or products that customers would be interested in
- Needs that are not being met by current offerings
- The buyer persona: who is interested in this product?
You can also gain valuable insights into your customer's decision making process and buying habits. Why do they choose particular products, and why/how do they use it? What are their pain points that cause them to use this type of product? By conducting a base-level of market research, you will be able to answer these very important questions.
Beta Testing Research and Analysis
If you’ve already conducted your basic market research, and started developing your product, you should beta test your product with your target audience. You have enough information to identify customer needs and product development opportunities within the market. The main objective here is to allow select users in your target market to test the new product.
Testing research gives you insights into adjustments that you need to make before mass-producing the product into the broader market. Testing research gives you a measurable assessment of how to develop your product, market it, and address the real pain-points of customers.
Key insights you gain from beta testing research include:
- Likes/dislikes about the product or concept
- What you need to do to improve the product
- Actual vs. perceived use of the product
- Favorite features or specification of the product
Testing research gives you a greater understanding of whether customers would actually purchase the product and if it would meet their needs. Keep in mind that testing research is an ongoing process. You may need to reassess your customer's relationship with the product at multiple points, as you further develop your product.
Competitive Intelligence Research
Using competitive research or competitive intelligence (CI), you can collect and analyze data about your competition. Every market has competitors, and you should know what your competition is doing. You should keep a pulse on their product strategy, how your product compares, and what type of threat they present for your company.
You can conduct a competitive analysis during any phase of your market research, as it’s an ongoing process. You can see what your competitors are doing before you launch a product, how your product is performing against your competitor's product, and you can see what new competitors are entering the market after your product.
Key insights you gain from competitive analysis research include
- Pricing and packaging information
- Marketing and content strategies that competitors are using
- How competitors are connecting with their customers
- Areas where you can fill a gap in the market
- Competitor’s strengths and weaknesses
- How to gain a competitive advantage over your competition
Competitive research is an ongoing process, so you should constantly be tracking your competition and iterating on your strategy accordingly. Keeping up with your competition’s product updates can empower you and help shape how you manage your marketing efforts. You can make quick changes in your positioning or messaging while providing actionable insights for your team. Knowing what the competition is doing and where they are headed gives you the opportunity to develop a competitive product strategy.
Conducting Interviews to Find Your Product-Market Fit
Through market research, you can gain an in-depth and tangible understanding of your buyer persona and how they perceive what you have to offer. Once you’ve outlined your ideal buyer persona and identified the gaps in your market, you should be able to identify where and how your product fits into the market.
In a practical sense, if half of your product users would be disappointed if your product suddenly disappeared, then you have achieved product-market fit. While this is admittedly a simplistic view on the subject, it can act as a good starting point.
There are several different strategies you can employ to find product-market fit. The best way to identify your market, find solutions to problems, generate ideas, and improve your product is to reach out to your current or potential customer base. There are several ways that you can connect with your customers: phone calls, chats, one-on-one interviews, or email.
When conducting customer interviews, you will want to gather the following information:
- Background Information – Who they are, where they work, where they hang out, what their daily routine looks like.
- What are they looking for – What is your customer trying to accomplish? What needs do they have? How are they trying to solve these needs? What are the barriers that hinder them?
- How your product solves the problem – What key issues is your product solving? Why are they choosing your product over your competitor’s? How does your product work in their everyday life? How do they integrate it with other products they use?
- Disappointment in the loss of your product – A baseline question is to ask your customers how they would feel if your product suddenly disappeared. Include definitive answers to ensure you’re getting an accurate response.
As a product manager, you want to conduct as much of these interviews in-house as possible. Having direct contact with your customers creates a stronger relationship and gives you a clearer understanding of your buyer’s needs.
When developing a product strategy, market research can help you get a better understanding of your consumer, your competition, and the market as a whole. Gaining valuable insights allows you to develop a better product and a strategy for promoting it in the market.
Market research gives you the tools you need to develop and define a successful product strategy while meeting or exceeding your business goals. By conducting and leveraging market research, you and your team will be able to create a product strategy that will help you gain a competitive advantage.