To be effective in today’s evolving landscape, you need to know your customers and competition ahead of time before you enter a new product. Market research helps you establish what customers are asking for and what others are providing. This article provides you with a systematic method for doing market research on your new product. It contains the most recent approaches and information available to ensure your research is effective and your product achieves success.
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What Is Market Research for a New Product Launch?
Market research is your flashlight! It can help you uncover whether there is a target (customer need), what style of arrowhead (features) will work best, and how far to aim (pricing). By engaging with real customers and identifying trends, you will greatly reduce the chances of launching a product that no one wants or mispricing it.
Market research is similar to a puzzle; the more pieces you collect (surveys and interviews), the bigger the picture gets. With a solid plan in front of you, you can sell your product idea as a terrific opportunity to your investors and staff.
Why Is Market Research Important?
Launching a product without market research is akin to trekking through a thick jungle while blindfolded. You may just find something of value, but you will likely lose your way, run into unexpected hazards, or not be able to take advantage of key opportunities. You would need a map and a compass to have even a chance of navigating a successful product launch. Market research is your map and compass, showing you the way. Here’s how:
Reduces Risk
When you understand the needs of the market, as well as the competitive landscape—strengths and weaknesses, potential pricing options, etc.—you can reduce the risks associated with launching a product that fails.
Validates your Idea
Experiencing market research to affirm there is a real need for your product will help you avoid wasting time and money on developing something consumers do not want or already have a better option for.
Informs Product Development
The insights gained from research will help guide the features, design, and functionality of the product to ensure there is continuity among the brand, customer expectations, customer needs, etc.
Shapes Your Marketing Strategy
Understanding your target audience’s preferences, media consumption habits, and pain points allows you to craft targeted marketing messages and choose the most effective channels to reach them.
Sets Competitive Pricing
Market research provides the pricing models of competitors and the price sensitivity of customer segments, allowing you to set a price that is competitive and maximize sales and profits.
Identifies Potential Issues
Research can highlight potential issues with your product concept, usability, or messaging before you spend a lot of time and resources to make it, saving time and investment.
Boosts Investor Confidence
Good market research provides a solid, data-supported basis to increase an investor’s confidence your product will be successful.
In conclusion, on the whole, market research is an investment that can give you great insight into the complexities of the market to develop a successful product. By skipping out on market research, you’re placing a bet on the success of your product.
What Are the Best Practices for Doing Market Research
Here are the key steps of doing market research for a new product:
Market research allows you to transform your suspicions into facts! When you ask questions like “Will people pay my price?” or, “Does my product solve the problems they really have?”, your suspicions become predictions, called hypotheses.
Hypotheses are educated guesses that drive your research process. The better your questions, the better your hypotheses, and the closer to the bullseye you have painted for your product’s success.
Define Your Research Objectives and Questions
Bear in mind that before you can begin collecting data, you really need to first define your research objectives and questions. Defining focused research objectives and questions will get you a much more relevant set of research information, and for your own focus.
Here is what you need to consider:
Market Need
What issue is your product addressing? Is there sufficient demand for your solution in the market? Conduct secondary research using industry reports, market analysis tools, competitor examinations to size the market and understand trends and gaps.
Target Audience
Who is your ideal customer? What traits define the target market? Understand your customers’ demographics, psychographics, buying behaviors, and their pain points. Utilize social media listening tools and online surveys. For example, doing so will inform your customers’ online habits and online discussions.
Product Value Proposition
What do you provide that other businesses for your product do not provide? How does your product create additional value compared to competitors? Understand competitor offerings and pricing, and look at customer reviews to find information that companies can improve upon.
Pricing and Positioning
How are you going to competitively price the product? What messaging will resonate with your target audience? Review competitor pricing, their pricing structure, and consumer responses toward similar products.
Choosing Your Research Methods
With clear objectives in mind, you can select the most suitable research methods. Here’s an overview of popular approaches:
Primary Research
Primary research refers to market research methods companies conduct themselves. These require planning, resources, and logistical considerations.
Surveys
Online surveys are a cost-effective way to gather data from a large sample of your target audience. Utilize tools like SurveyMonkey or Google Forms to create surveys that capture demographics, product preferences, and purchase intent.
Interviews
Use in-depth interviews with prospective customers to gain a deeper understanding of their needs, drivers, and decision-making process. Use online interview services or schedule in-person interview times.
Focus Groups
Facilitate discussions with a small group of target customers to explore their opinions, perceptions, and reactions to your product concept or prototype.
Usability Testing
Attend and observe potential customers using your product prototype to find usability problems, navigation issues, and areas in need of improvement.
Secondary Research Method
Industry Reports and Market Research
Use available data from reputable sources to measure/track market size, growth trends, and demographic information about consumers.
Government Statistics
Use government statistics on economic measures, consumer spending, and important industry sectors.
Competitive Analysis
A detailed competitor analysis can help companies understand your competitor’s product/service offerings, pricing strategies, marketing practices, and customer reviews. Tools such as Similarweb or SEMrush can help glean website traffic information and marketing strategies.
Emerging Trends
There are several emerging trends in market research. These can really take a company into the next dimension.
Emerging Trends
There are a few emerging trends cropping up in the market research sector. These can really help companies get to the next level.
The act of Social Listening
Use social media’s conversations to analyze consumer sentiment around your industry, competitors, and any traps in the industry. Brandwatch and Sprout Social have provided social listening tools that offer organizations insights about consumers.
Online Communities
Participate in online communities that are interested in your markets, and understand the discussion, the advocacy, and the new ideas.
Concept Testing
Use online concept testing sites to explore potential customers’ quick reactions to an idea for a product, design, or message.
Segment Your Market and Target Your Sample
Market segmentation involves taking the whole market and dividing it up into smaller, specific groups with comparable characteristics and needs. Once you have established your segments, you can build up your research questions and methods specific to each segment for customized insights. Here are some example categories for segmentation:
- Demographics: Age, gender, income, geographic location (e.g., urban vs rural), education
- Psychographics: Values, interests and hobbies, lifestyles, attitudes
- Behavioral: Usage patterns, purchase behavior, media use
- Needs: What specific issue or pain point does your product address?
Once you have exactly segmented your market, establish a sampling method that allows you to choose a sample of individuals that is saturated with members from each segment to participate in your research. A few sampling methods provide random sampling, stratified sampling (which can be based on segments), or quota sampling (which ensures a certain percentage of individuals from each segment).
Collect and Analyze Your Data
It is important to collect different types of data and compile them to create and adjust new products. It includes industry data, competitor data, and more.
Industry Data
You need to identify the other soldiers (competitors), how easy it is for them to recruit new soldiers (new entrants), and if there are any alternative weapons (substitutes) threatening your position.
Do suppliers have you at the mercy of their demand (high power), or do you have the power (low power)? Can buyers negotiate you down to nothing (high buyer power), or do they have a strong loyalty with you (low buyer power)? Porter’s Five Forces will give you insight into this to help you own the battlefield and not get defeated.
Competitor Intelligence
Who are the other players in your game (similar products)? Are they just competitors in your game but different products (Swiss Army knife vs. simple pocket knife)?
The more you spot your competitors, the better you can create a product with features that clearly make you the winner in your customers’ minds! Look at at least 5 competitors to get a real feel for what users really love (and hate).
Customer-Related Data
Who is your product’s perfect match? This is where you become a customer whisperer! You need to understand their hopes and dreams and frustrations (pain points). An Ideal Customer Profile (ICP) is a map of your ideal customer—how old they are, the job they have, the size of the company they work for, and the problems they’re looking to solve. It gets better.
A buyer persona is a fictional character based on your ICP; these characters bring your ideal customers to life. For example, Sarah is a busy marketing manager who struggles to engage with her remote team—that’s a buyer persona.
Concept Testing
Having a great product idea is fantastic, but how do you know if it’s a hit or a flop? Enter: concept testing! Imagine providing your product (MVP) in its draft form to real customers. What do they love? What’s missing?
This feedback gives you valuable insight to make tweaks before the launch. But it’s not just for the product itself. You can also concept test your marketing message. Think of developing some mock ads and giving them to people to see how they connect and respond.
Getting real feedback early, you can help ensure your product idea will resonate with customers.
Market Research is Your Roadmap to Success
Launching a new product in today’s market can be a challenge, especially when many businesses often focus more on the internal data rather than realizing the full potential. This process requires a solid understanding of your target market and the market as a whole. If you follow the tactics presented in this guide and take a holistic approach, you will gather useful information on how to:
1. Validate your product idea while ensuring that you are solving an actual customer need.
2. Create features and functionalities that speak to your audience’s pain points.
3. Build a strong marketing message and determine the best way to distribute your message to your ideal customers.
4. Determine a competitive pricing structure to optimize your profits and customer satisfaction.
When completing your market research, remember it is always an investment, never a cost. Now get your flashlight out and begin your market research. Your path to product success is about to be illuminated!
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