October 10, 2019
Market research should be the foundation of any organization’s product planning and development strategy. It is Mission Control for all product development efforts, from launch until the product lands on the market. It sends critical information to the crew to help them determine, monitor, and adjust a new product’s trajectory, and it could ultimately decide the fate of the mission. In some cases, market research outcomes indicate that the product should be scrubbed altogether, preventing catastrophic failure and loss of investment.
Product development failure is real. According to Harvard Business School professor Clayton Christensen, 95 percent of new products fail. Yet in the product design and development process, many organizations forego research and rely simply on a hunch or past experiences—risking product failure. It’s easy to understand why some organizations are tempted to skip market research: they may lack the research skills or capabilities, be unclear about the benefits or ROI, or feel as if they do not have the time or budget to invest.
This white paper provides clarification to help companies understand why it is critical to include research in product design and development. It also explains different market research methodologies, benefits, and key considerations for successfully conducting and applying market research to product development decisions. While market research is often deployed throughout the entire product development life cycle, including in usability testing and UX refinement, this white paper focuses on conducting research in the early planning stages of product development, where the risks and uncertainties are often greatest.
Organizations can easily begin their examination of customer needs and market potential by conducting secondary research, which is the collection of existing data and analysis from external sources such as the government, industry trade organizations, analyst reports, media, or other businesses. Relying solely on secondary research for product development decisions is likely to be inadequate, however. While it can save time and money, secondary research may also be dated, have information gaps, or be irrelevant to an organization’s specific needs, leaving an organization with incomplete or incorrect information that could result in misguided product development decisions.
Primary research—the collection and analysis of new data—provides original and targeted insights that are more relevant, comprehensive, and specific to a company’s objectives. It is thus the most effective method to guide strategic product decisions such as adding, enhancing, or sunsetting a product, as well as understanding the potential market and use cases for new products.
High-performing companies have a customer-centric approach to product development. They rely on building product features and functionality through the lens of their customers’ needs. This enables companies to differentiate based on customer experience—a key competitive advantage. In Business-to-Business (B2B) markets, primary research among customers and prospects can provide critical insights such as:
A typical stumbling block for organizations contemplating primary market research for early product development decisions is confusion around which methodologies to use: quantitative or qualitative. Companies may be familiar with only one methodology or uncomfortable deciding which one to use. Each has inherent differences, and their use should be decided according to an organization’s objectives, budget, and time frames. They can be conducted separately, or they can be combined as a mixed-methods approach for the most robust outcomes.
The key attributes of the two types of primary research are:
Before leaping into product design and development, organizations should first, at a minimum, conduct two primary market research activities: market analysis and a proof-of-concept study. A market analysis study informs companies who their potential customers are, how large their target market is, and who their competition is. A proof-of-concept study then validates ideas, helps determine whether a new product or feature is viable, and explores key issues regarding usage, features, and messaging.
A market analysis study helps organizations develop their strategies for entering new markets, making investments, and evaluating other opportunities. The information collected during a market analysis study enables organizations to identify and analyze key market trends, market sizing and growth rates, sales/ distribution channels, and the competitive environment. Typical market analysis studies include:
A proof-of-concept study for new products and product modifications helps companies estimate the demand and understand the potential success of their products. These types of studies may investigate usability, pricing, and other value perceptions for new or existing markets. Understanding how customers make choices about competing products and services is a critical element in product design and positioning, and choice modeling analytics can help identify which potential product features and attributes (including pricing) offer the greatest market potential or resonate the most within specific market segments. Types of product development studies include:
Below are six important considerations that can help guide organizations conduct successful primary market research for early-stage product development.
Market research is integral to the entire product development process, and it is particularly important in the early stages, at the height of strategic decision- making and risk management. By skipping this crucial step, organizations risk proceeding blindly on a product development course without the guidance from Mission Control to help ensure their success. The ROI is clear: high quality primary market research drives informed decisions about customers, markets, and products and reduces the risks of poor product development decisions. If your organization lacks expert market research experience and expertise, seek a qualified market research partner with applicable domain expertise that can help launch, navigate, and successfully complete your next product development mission.
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Research Senior Manager
Anna Barnett is a Research Senior Manager for Levvel Research. She manages Levvel's team of analysts and all research content delivery, and helps lead research development strategy for the firm's many technology focus areas. Anna joined Levvel through the acquisition of PayStream Advisors, and for the past several years has served as an expert in several facets of business process automation software. She also covers digital transformation trends and technology, including around DevOps strategy, design systems, application development, and cloud migration. Anna has extensive experience in research-based analytical writing and editing, as well as sales and marketing content creation.
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