Whether you're brainstorming for an innovative start-up or are part of a well-established company, market research will bring tremendous value and insights to develop your product. Knowing your consumers' needs and trends in the marketplace is crucial. This information will help you make more effective and informed decisions.
This article will focus on running an initial market research survey to validate a new product idea. However, your company can also benefit hugely from conducting market research at a later stage, for example, after you've projected your MVP to collect first impressions. 🏁
Now, let's dive into more detail. ⬇️
What is market research?
Market research is a systematic process of collecting and analyzing information.
This can consist of data about consumers, target market, competitors, and the industry as a whole.
Using this data, you can evaluate the feasibility and demand for a new product or service with your target consumers.
There are two types of market research you can conduct, primary and secondary:
Data collected by
Researching data that already exists offline or online and is available publicly (journals, reports, websites, etc.)
Specific to your needs
You control the quality
More time consuming
Data can be old and not specific to your needs
As part of the primary research, surveys provide you with first-hand data gathered from your chosen source. This type of market research is the most applicable as you can narrow down your audience and focus on investigating the features that interest you the most 🔎.
Why do you need market research?
First and foremost, by using market research, you will be able to make key decisions based on actual data. Research beats assumptions and guesses.
Secondly, to thoroughly investigate the viability of your product and get a better idea of the current market trends.
Collecting first-hand data will help you:
➡️ demonstrate the value of your product to potential investors
➡️ evaluate the market competition
➡️ adjust your product roadmap
➡️ identify market gaps
How to conduct a market research survey?
A basic market research survey should answer three questions:
1️⃣ Who is your target audience?
2️⃣ Is your product in demand?
3️⃣ What's the price consumers are willing to pay?
1️⃣ Identifying your audience
You can start your survey by asking demographic and behavioral questions. 📊
They will help you see how different people react to your product and build a database for developing consumer personas.
Primary demographic data
Secondary demographic data
It's also a good idea to learn more about your audience's habits and lifestyles. You can ask questions such as:
2️⃣ Gauging the demand
First, pitch your product to the user. Give people a good feeling of what your service will be like; be accurate and concise.
Subsequently, ask for the first impressions:
It's always a good idea to follow up with open-ended questions like these:
💡Open-ended questions might seem less efficient and harder to analyze, but their value should not be underestimated. It provides space where users can talk about their pains and desires in their own words - and you can better understand their needs.
You might also want to probe the market competition a little. Ask your respondents about the similar products they use and the features they like 👍 and dislike 👎.
Getting these details will help you better understand how your product compares against competitors.
3️⃣ Willingness to pay
The price you charge your customers will have a direct impact on the success of your business. While there are multiple, complex strategies out there that you can use to price your product, a good starting point is to check what price your potential customer will be ready to pay.
This is a “direct question” method:
You can also use The Van Westendorp Model to determine the optimal pricing point. This method is based on asking four questions:
❗ Bear in mind that this model works best with data from a large group and assumes that your respondents are already buying a similar product, which can be used as a price reference point.
Finding your customers' precise willingness to pay is considered one of the driving reasons for market research. Getting such insights will help in determining the potential pricing model to use for your product or service.
When to run market research surveys?
Businesses carry out market research at different stages of growth. While not being a time-sensitive activity set out to be performed yearly, it’s still a crucial part of the business. The frequency in which you could conduct it will vary according to your business needs.
When launching a new product, market research is the first step for turning an idea into a viable business plan.
This is the time when most businesses will conduct the most comprehensive research. Information gathered can help shape the final product and convince potential investors to back you up financially.
🔢 Expanding your product
Before launching a new feature or a new product line, market research will let you identify how it fits into your users’ additional needs.
This includes research undertaken repeatedly and continually as opposed to surveys carried out at specific times. Many businesses would focus on research mainly while on their growth curve. However, with the rapidly changing market, as well as users’ needs and desires constantly evolving, continuous research is vital to stay on top of things.
Running periodical research will keep you ahead of the competitors and enable you to spot new business opportunities.
📚 Good market research is the foundation of any successful product.
Investing time and effort into comprehensive market research will pay off. You will be able to make more data-driven decisions and more accurate predictions on whether your product can succeed in its marketplace.