Market Research for New Product Development

Do you want to get a high success rate in your business and new launches? Are you keen on getting better growth of your business with less investment?

Market research plays a pivotal role in product development, acting as the guiding compass for businesses navigating the intricate landscape of consumer demands and preferences. By intertwining market research and product development strategies, companies gain invaluable insights into emerging trends, customer needs, and competitive landscapes. Through meticulous analysis and application of market research techniques for new product endeavors, organizations can refine their concepts, enhance product features, and craft compelling marketing strategies tailored to their target audience. From exploring market research for new product examples to orchestrating comprehensive plans for successful new product launches, the synergy between market research and product development serves as the cornerstone of innovation and market success.

So, market research plays a very important role in achieving your business goals. I have worked with many companies and businesses and have analyzed their growth. According to the research done by our team at VESTA BUSINESS STUDIO, we have found that 36% of companies have done marketing research before even building their products. And they have gained the maximum success in achieving their goals. But market research is a very crucial step to enter the market.

Market research is the collection and analysis of data linked with the target market and interpreting them to help businesses discover the needs of customers, their preferences, and their behavior. Products must meet the evolving demands of customers and that’s why knowing customers’ liking and pain points is really very important.

In this blog, we will look at all aspects of marketing research through some of my interviews and my experience stories. We will talk about various aspects of market research and methods used for market research in product development.

Role of market research for product development

In my blog on product management in pharmaceutical industry, I have told about the process we followed in market research. Every product is related to any specific industry. And for each industry, we have typical target customers. We need to tap the right audience for our research. It serves as the base on which successful product development strategies are built.

Market research helps in:

• Knowing the needs of the customers.
• Identifying the gaps in the market
• Validating the product concepts
• Deciding product positioning
• Minimizing the business risk.

By leveraging market research promptly, companies can make products that sync with target customers, ensures growth, and achieve long-term success.

Types of Marketing Research

There are many ways to conduct market research. When the product is at the ideation stage, we have to do certain testing to verify the features of the product. In product management in fintech, I have talked about sequential monadic testing. Let’s look into detail about these important tests. There are 4 types of testing out of which two are very important.

1. Monadic testing: We divide the sample population into three or more groups. To each group, we present one idea for our business and ask questions related to that idea. Then these groups can be compared with one another.

2. Sequential monadic testing: This is a kind of iterative testing. Again, the sample is divided into groups and then we provide each group with one idea. After their feedback, we present the next idea to each group. This way each group is asked for every idea in different iterations. Then their feedback is collected and analyzed.

3. Discrete choice testing

4. Protomonadic testing

After confirming the idea, we need to fix how many features to be included in the product that we will build. We might have a requirement for many features to be included in our product. But the selection of the optimum number of features to enter the market is important to reduce our investment. In product management in fintech, I have told my experience in choosing the right features to develop my MINIMUM VIABLE PRODUCT.

We can use two important tools to test the most likable features to be included in our products. These two tools are:

1. KANO MODEL
2. CONJOINT ANALYSIS

During the testing phase of market research for product development, we can use different ways to get our answers. Some of the ways are:

• Surveys
• Interviews
• Discussions
• Observation of consumer behavior
• Data analysis

Steps in market research for product development

Once I was working with a company that used to make their own orange juice. Before even starting manufacturing the product, I made a road map for market research.

1. I clearly defined my objectives and prepared the list of questions that I wanted to ask the sample population. I made questions on market positioning and ads, concept testing, name testing, and product packaging testing.

2. I made a research plan that outlines the methodology, sample size, and timeline for the research.

3. After that our research team started collecting data from the sequential monadic testing that we conducted.

4. Then we uncovered the pattern, trends, and insights. Regression analysis or statistical analysis can play a great role.

5. Once we analyzed the data, we interpreted the findings in the context of the research objectives and larger market dynamics.

Market analysis:

Market analysis is a very important step in market research for product development. It provides very valuable insights into competitor strategies and target demographics. As I did a project on product management in the pharmaceutical industry, my co-workers in the project asked me about different aspects of market analysis.

Vedant: which is the most essential part of market analysis?

Me: Understanding market trends. Changes within the industry and target market play a key role in the direction of our product development. This includes various factors such as technological advancements, regulatory changes, economic conditions, and changing consumer preferences.

Vedant: How can we provide a unique value to our product so that it shines in the market rush?

Me: SWOT analysis. Knowing the strengths, weaknesses, opportunities, and threats of competitors and ours is very important. Along with this evaluation of the product positioning and knowing about their distribution channel is also important.

Vedant: How to fix our target audience out of the large population?

Me: SEGMENTATION is the key. Segmenting the target market based on demography, geography, and psychography. This way we can identify our distinct customer segments with unique needs, preferences, and buying behavior.

Vedant: What other aspects are considered important in market analysis?

Me: these three aspects are also very important:
1. Estimating the total addressable market
2. Evaluating growth potential
3. Forecasting future demands.

Customer Persona Development:

In market research for product development, building a customer persona is very important. It is the fictional representation of the customers based on market research based on customer demographics, behavior, and requirements. Persona building builds better empathy with the customer.
Persona development can help product managers in the following ways:

1. Understanding the target audience through various surveys and questionnaires.

2. Curtailing the products as per the segmentation. Ex: software companies can make different products for different segments of customers by building different personas for different segments.

3. Personas provide a better view of the functions and features essential for each segment of customers based on their pain points. Ex: one product can be targeted at customers who want cheap products and another product for customers who want durability and ease of use.

4. Personas also help in the market positioning of the product by giving insights into the channels, language, and content preferences of each segment.

5. Making customer-centric innovations.

Product validation:

This is a very important step in product development. It involves testing and verifying the concept of a product or even an idea before the investment of resources for complete product development. It can immensely help us in the following ways:

a. Curtailing risk associated with developing product. This can help us identify potential issues and necessary adjustments.
b. Making a market-fit product.
c. Development can be done iteratively thus reducing financial risks
d. Optimize the allocation of resources with a focus on those ideas that have the highest potential.
e. Development of confidence of stakeholders, investors, and members of the team

Iterative Development:

Continuous development of products for the improvement of their performance through various cycles of planning, implementation, testing, and refinements. In my blog on product development in the pharmaceutical industry, I have already talked about the benefits of iterative development. As I have worked with various products it made me clear that iterations help in the improvement of a product over time.

When I was working with a fintech company, the risk of building the wrong product was very high. But by building the prototype and MVP we reduced the risk significantly and also, we had faster TIME-TO-MARKET. This helped us better concentrate on resources for the product and also optimize the allocation of resources by prioritizing features based on feedback from customers and market demands.

Challenges and Considerations:

There are a set of challenges that businesses need to overcome properly during market research for product development. Here is my interview with a d2c-based company on various challenges during market research.

Q: What is the biggest challenge while doing market research for product development?
A: Data accuracy. The reliability of collected data is the major challenge. Proper validated research instruments must be used for market research for product development.

Q: If budget constraint is also a challenge, then how to overcome it?
A: Companies must prioritize research activities based on expected return on investment. Use cost-effective methods like online surveys for research.

Q: What should be a major consideration while analyzing the survey?
A: Biases in interpretation due to certain preconceived notions must be considered. So always involve all stakeholders or investors for interpretations of the survey.

Q: What other things must be kept in mind before commencing market research?
A: Two most important considerations must be:
a. Research should be conducted ethically and it must be in compliance with all regulations and guidelines and privacy.
b. Changing the dynamics of the market. Always be ready to pivot strategies to gather responses based on market conditions.

Conclusion

Market research in product development is very important to reduce our costs and also focus on the right product. Conducting market research of ideas through monadic testing or sequential monadic testing helps us to finalize any idea for product development. Proper creation of empathy by persona building helps us to deliver better products to different segments of customers.

Following the 4 keys of building a business strategy i.e. segmentation, differentiation, specialization, and concentration can be implemented through market research only. It allows us the iterative development of the product which can help us to stay in ever ever-evolving market and proper allocation of resources to prioritized features of the product. So, the most important thing in product management is market research for product development.