Product Management Skills: Market Research

Market research forms the foundation of any successful product strategy. Much of the time, you’ll find that your company has already outsourced your market research to a firm. But if you’re working on your own project or at a smaller startup, you might find this responsibility falling into your lap.

That’s why you need us! And we’re here to help.

Here, we’ll go over the different types of market research, whether or not you should outsource, and 4 methods for lean market research.

Different Types of Market Research

1. Exploratory research

If you’re a startup founder, or rather a wannabe startup founder, you at least have an inkling of the problem you want to solve. But rarely will you have a properly defined problem statement right off the bat, even if the problem is something you’ve experienced personally.

This is where exploratory research comes in. What you’re essentially doing here is finding out the nature of the problem, whilst also asking yourself if it’s extensive enough to be worth solving.

If the problem exists, but the pool of potential customers attached to it is incredibly small, it may not be worth pursuing a full-blown product development cycle to solve it!

2. Competitive Analysis

This stage is absolutely key before you decide how you’re going to approach development.

For example, let’s say you’re passionate about podcasts, but you haven’t found a podcast app that you really like. You have some great ideas and so you decide to build your own. Once you’ve spent a lot of time, money, and resources on getting an MVP of your app built…you realize that most of your target market listen to podcasts on Spotify, which also has music. You’ve got no way to compete, because you didn’t do enough competitive analysis to be able to come up with your USP (unique selling point.)

Not performing competitive analysis is like going to war with no understanding of enemy territory.

Find out what happens when products don’t achieve product-market fit.

3. User Insights

Before you can being to build for your customers, you need to know who they are. For established products, this is also a useful tool for understanding the current state of your user base.

User insights influence every part of product development, from engineering, to UX, to marketing. So it’s not a type of research that you get to perform once and then forget about, it’s an iterative process. You need to constantly be aware of what your users are thinking and feeling, what their problems are, and where their loyalties are.

4. Beta testing

If you follow the agile methodology, the first thing you manage to get into user’s hands is an MVP or a beta version of your product. User insights might have told you that customers are interesting in a product like yours, but an MVP will make sure that you’re building it in the right way.

It’s not only useful for whole products, as you can also use it to test out new features on established products, or to A/B test your homepage.

5. Segmentation

Once you have your user base, or at least a potential user base, you can begin segmentation research. The act of separating your users into specific segments isn’t only useful for marketing. It’s also an extra step into properly understanding your users.

They could be separated in a number of different ways, for example by geography, demographic, or behavior.

It allows you to test more effectively, and communicate with your users in more personalized ways. It’s another way of understanding why your users take certain actions. For example, people in Europe may use feature A more than feature B, whereas the reverse is true for users in Africa.

To Outsource, or Not to Outsource…

Outsourcing to a market research firm can take the pressure off of you and your teams. If you need insights but you lack the time, resources, or personnel to complete it, outsourcing is a fantastic option.

But does every single company need to outsource their research efforts?

No.

If you work with experienced individuals who are adept at conducting research, and they can spare enough of their time to do it right, there’s no reason why you’d need to outsource. A firm doesn’t automatically produce more accurate research reports just because they’re outsourced.

So if you have money but a lack of time, outsourcing is an option.

If you have the resources and the time, you’re at no disadvantage if you conduct your own research.

4 Steps to Lean Market Research

If you’ve decided to conduct your own market research, chances are that you don’t have a bottomless budget to spend on your data collection methods. That’s where lean market research comes in, because it’s simple, cost-effective, and easy to replicate.

Most of the methods you’ll use are a form of primary market research, meaning that you’re conducting specific research for your product or target market.

User personas

User personas help you to put a face to your customers. It helps you to understand their motivations, their problems, what they enjoy, what their economic situations are, and basically what kind of product they want you to build for them.

They’re useful across all parts of development. The design team use them to inform important UX decisions, the marketing team use them to drive campaigns, and the sales team use them to strategize.

To find out more, check out our guide to user personas.

User surveys

Online surveys are one of the most popular ways of gathering information. There are a vast number of tools to suit all budgets, and they’re very easy to set up. So they’re a great choice for any stage of development, but especially in the beginning when your operations are more bootstrapped.

They’re not the best thing to use if you’re looking for a more in depth interview, but when you’re looking for a broad understanding of your users from as wide a pool as possible, surveys are a great option.

The main tip is to balance qualitative and quantitative data. There’s going to be some information that you want which requires a yes/no answer, but remember to also include some more open ended questions.

User interviews

Face to face interviews allow you to conduct more in depth research, and help you to understand on a more personal level the buying habits of your customers. It’ll also be helpful to put a face to your user personas.

The main downside of user interviews is that the information you get from them is deep, but not broad. This makes them time consuming to conduct, and not an efficient way of gathering information at scale.

Focus groups

Focus groups are especially useful when you have something for people to test. You get to observe your potential customer’s reaction to your product in real time, which will help you to find your product-market fit and give you an opportunity to pivot if it doesn’t get the reaction you were expecting.

Focus groups are more time-consuming and resource-heavy than surveys, but they shouldn’t be underestimated. There’s nothing quite as informative as being able to see your product in user’s hands, and get their authentic in-the-moment feedback.

What to Do With the Data

Qualitative vs Quantitative: Use these different types of data to complement each other, as this will lead you from data to insights. You need to know the difference between these two types of data in order to better know how to use it.

Democratize your data: Not everyone needs every kind of data, but almost everyone working in product development will need access to your market research at some point. Make sure the data is available and accessible to your teams. There’s no glory in hoarding insights!

Market segmentation: Narrowing down the target market for your product or service to a particular corner will help you when launching something new. You can’t be everything to everyone. But you can be everything to someone.

Data visualization: More than just a pretty picture, data visualizations help to break down your data and make it easier to digest. Even if you’re a data expert who can make sense of the messiest of spreadsheets, not everyone in your company will share that skill. Visualizations help you to communicate insights and make data easier to understand for everyone.