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How to Do a Market Research for a New Product

According to Professor Clayton Christensen of Harvard Business School, over 30,000 new products are developed every year. You are probably looking to join this massive league of innovators and make a name for yourself in the industry. Of course, it is commendable that you are taking this giant leap. Nevertheless, you should be aware that many modern innovations are dead on arrival. Specifically, not less than 95% of every 30,000 new products fail every year. And the reason is simple. When entrepreneurs develop new products, they are more likely to focus on profiteering rather than investing in research. Effective spadework leads to greater business success.    

Indeed, there’s more to product development than merely being innovative. Entrepreneurs ought to be armed with facts and figures. You should know what opportunities to exploit in the market. 

Imagine you are an investor. A young entrepreneur approaches you for funding. He sends his proposal, and you finally agree on a date for the pitch. Innovators are known to be quite good with their oration, and this young person is no exception. But you need assurances that your money won’t vanish into the market.

You ask questions on market trends and dynamics, which the potential beneficiary cannot answer satisfactorily. At this moment, you would likely pull out of the deal and save yourself from a pending misfortune. More so, can you sell an idea without a prototype? Definitely yes! But investors and customers flow better with your presentation when you’ve developed a product prototype. 

The above scenario is exactly how the business world works. When entrepreneurs develop new products, market trends and figures may not be conclusive proof of a successful product. Still, you can be confident that you’ve got a chance to be the next big thing in the industry. 

To give your product a fighting chance, we’ve come up with a guide on how you can gain market insights. But first, what exactly is market research, and how does it work?

What Is Market Research?

Market research refers to the totality of activities relating to market feasibility studies. This process involves reaching out to potential customers and getting to know their needs. After noting the most-sought after solutions, you can come up with a product design prototype. Then you can go deeper by costing a product unit. Marketing strategy comes last, and it must be structured in such a way as to attract loyal customers. 

You can conduct market research with your team if you’ve got the time. Similarly, there are business research firms that offer such services. So you might need to spare some resources if you decide to outsource. 

Irrespective of the market research technique you opt for, you will get to understand customers’ needs and learn how to minimize risks. 

Now that you are aware of what market research is about let’s delve into the process of researching when entrepreneurs develop new products.

Do Proper Research on the Market Research Approach for New Products

Market research truly helps set your business on track, but there’s one dangerous thing to be wary of. You should not be caught up in the web of multiple research tools. Otherwise, you might have to grapple with the devastating effects of not having credible insights into market trends.

When entrepreneurs develop new products, a crucial step is to learn the most efficient research method for your innovation. Yet, you should remember that not every research method is suitable for new products. For instance, a company looking to update its product will probably research what its rivals are doing better. Sometimes, they may resort to digging up their rival’s special components. All the same, such research might waste time and resources when entrepreneurs develop new products.

Generally, there are two ways of sourcing reliable market data. Entrepreneurs are fond of quantitative and qualitative market research methods.

Quantitative Market Research

Making data-driven decisions help to optimize the product development process. Before setting out on production, you ought to consider the interests of your target market. For example, what is the number of people interested in your solution? Is there a similar product in the market, and how many people subscribe to such products? Are people desperate for the product so much that they can pay a higher price? Or are your potential customers looking for a cheaper alternative? When entrepreneurs develop new products, you should conduct surveys like this. Such surveys let you determine the cost of production and, ultimately, the product price.

Qualitative Market Research

Unlike quantitative research, which gives you more understanding of “How many?” qualitative market research answers the question “Why?” 

It is common for product developers to shift their attention to focus groups for qualitative market research. By trusting the opinion of a selected group, you get to understand why consumers’ behavior swings in a particular direction.

Utilize Trusted Sources

Market research can be futile or unproductive when you’ve got inaccurate data. And to access reliable information, you should use only trusted platforms. 

Here are some tested and trusted market tools and resources.

Amazon

Amazon is arguably one of the biggest online marketplaces. On this platform, you can research the latest product in your niche. This platform can help you with product design prototypes.

Also, the best-selling products are easy to identify. Compare product pricing and note how to gain a competitive advantage. 

Amazon is a goldmine if you know your way around the platform. You can research similar products and check their reviews. Then replicate some ideas and make improvements where and when necessary. 

Facebook Audience Insights

Facebook Audience Insights is particularly useful to ascertain the interests of your target audience. Everyone has a peculiar behavior. What matters most to you might seem weird to your buddy. But that is not to say his needs are invalid. Therefore, Facebook Audience Insights lets you learn about what product people in a particular location desire. 

Proved 

You are probably walking your dog in the neighborhood someday. Suddenly, an idea pops up in your mind. It’s a fantastic project, but you want to be sure that it is viable. Furthermore, you want to share your idea with a target group and know their opinions. Proved comes to the fore here. This platform is a paid questionnaire tool starting at about $150. As soon as you enter your product idea, Proved generates a corresponding questionnaire. The target audience can therefore rate your idea and give actionable comments. 

Government Reports

Stay up-to-date with government economic reports. Although such documents contain generic information, government reports contain accurate data for critical business decisions. For example, you could learn about a country’s age distribution. You wouldn’t want to develop a product for the aged ones in an area with a youthful population. 

Research Interview from Developers and Provide Examples

You are not the first product developer, and you won’t be the last either. Therefore, one helpful way to develop viable products is to learn from the experiences of past developers. It would be best if you researched applicable interviews. From these interviews, you can highlight their successes and note their pain points. 

Share the researched interviews with your team and provide practical examples.

Research Three To Five Valuable Actionable Items

There are a thousand and one ways to get a single thing done. Therefore, the mere fact that you’ve got the inspiration for a product idea doesn’t mean you should take immediate action on the item. Successful entrepreneurs weigh their options. At no time should you be limited to just one option. At least 3 to 5 actionable items ought to be on the table. So, when you weigh these items against another, you would have a clue on the most profitable product to invest in. 

You can check out posts and ideas on Pinterest and virtual stores for inspiration on your product design prototype.

Further, you can review previous products similar to your product idea. More options give you more understanding of the product and the most suitable customer demographics. 

Examples of Companies That Successfully Leverage Market Research to Stay Relevant

APPLE

Perhaps the most innovative company today, Apple continues to dominate the tech space. What makes apple stand out is simple but strategic. The company places a premium on customer research. And this is reflected in their product updates over the years. 

The “Apple Customer Pulse” structure is dedicated to getting customers’ feedback. Upon collating the results, Apple’s engineers develop regular updates and designs. 

Apple has leveraged market research to such an extent that they were announced in 2022 as the first US company to be valued at $2 trillion.

McDonald’s

When McDonald’s started in 1940, it was a typical sit-down table restaurant. But the company soon realized that it could only be a world giant if it paid more attention to customer demands. 

Upon comprehensive market research, fast food came up top as the most profitable venture to invest in. Yet, McDonald’s was not satisfied with this business breakthrough. The company was looking toward global business expansion. 

McDonald’s discovered that franchise was the perfect business strategy to opt for. And right from its first franchise agreement in 1952, McDonald’s franchised 40,031 restaurants worldwide in 2021, with a net worth of $181.22B as of May 13, 2022.

The Bottom Line

Product development is an investment. And every investment is a risk. But what better way can you mitigate business risks than conducting preliminary market surveys. Conceiving an idea is a small percentage of the entire product development process. Take your idea to be mined diamond. It is in its crudest form. Hence, it needs to be refined before you can sell it. 

Product ideas will remain the same unless you find a way to refine them. When you conduct market research, you will know what improvements to make to the products, giving you an edge over competitors. 

Additionally, you might wonder if you could sell an idea without a prototype. While this is possible, it is better to have a prototype because it proves to your investors that you know your onions. And this is also referred to as proof of concept. 

At the end, when entrepreneurs develop new products, you cannot wish away the place of market research. If your research is comprehensive, you could stumble on a cheaper and more efficient production process. So, ensure to be a faithful researcher!

And don’t forget to schedule a consultation with our team to get started with your idea.

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