Ever feel like you're fumbling around in the dark when it comes to launching a new product or feature? You're not alone, and thankfully there’s a solution: market research!
But what is market research? Well, in a nutshell, it’s what you do to understand the competitive environment and overall market that your company operates within. This allows you to position your new product more effectively once it's released to the public.
No wonder most companies depend on market research when gearing up for a new product launch! According to 2023’s State of Market Research report, a whopping 71% of organizations use market research to shed light on that critical Go-to-Market (GTM) moment.
Now, let's dive into the why, what, and how of conducting robust market research that paves the path for your product's success.
Why market research is important
Market research is critical for figuring out what makes customers tick and, ultimately, buy a product. It provides invaluable insights to guide your Go-to-Market process by helping you understand the broader context and see the world through your customer's eyes.
Here’s what you can achieve thanks to thorough market research:
- Identify your target audience: You can pinpoint the right people to market to, rather than wasting time and resources barking up the wrong tree.
- Develop better products: You can create offerings that truly address customer needs and wants. This leads to happy customers who spread positive word of mouth – the best kind of marketing a company could hope for.
- Craft effective marketing: You can tailor messaging to what your audience cares about, improving the relevance of your market and cutting through the noise.
- Reduce risk: A product launch can be a major investment. By scoping the landscape first, you drastically increase the odds of that investment paying off.
- Future-proof your business: You can continuously spot emerging trends and adapt accordingly, gaining a competitive edge.
- Benchmark against competitors: You gain insight into where you stand so you can get ahead. And why is that important? Well, a PWC study found that companies that benchmark achieve 69% faster growth and 45% greater productivity than those that don’t.
And if you skip your market research? We’ll let Stacey Danheiser, Founder and CMO of SHAKE Marketing, explain:
There are four risks associated with skipping market research:
You create products/services that nobody wants: It doesn't matter how brilliant your marketing and advertising campaign is – if you create a product that nobody wants, or that solves a problem nobody has, you will not sell it.
You'll sound like everyone else: Using the exact same phrases as your competitors only confuses your customer, forces them to tune you out, and further commoditizes your product.
You'll communicate the wrong things: What you value internally may not be aligned with what your customers want to hear. If you fail to communicate value/be relevant to customers, you'll lose the sale every time.
You won't get results: No matter how good your execution is, if your marketing content fails to connect with your prospective buyers, you've wasted your time and resources.
You’ve been warned!
Crafting your Go-to-Market strategy using market research
Rolling out a product or feature takes careful planning. You need a comprehensive GTM strategy to pave the way for success. This isn't something you want to cobble together at the last minute!
A thoughtful GTM plan maps out how you'll get your offering into your customers' eager hands. It's kind of like assembling a jigsaw puzzle - you need all the right pieces to complete the picture.
This is where market research comes in. It provides the insights you need to shape a robust data-backed GTM strategy. Specifically, there are four essential elements that quality market research helps you nail down:
- Market segmentation
- Selecting the right distribution channels
- Crafting your positioning
- Pricing for success
Now, let's explore how market research enables you to deliver each piece of the GTM puzzle.
Trying to appeal to one gigantic, generic market is a recipe for failure. Instead, use market research to divide and conquer by identifying specific segments within the broader market.
Take a task management software company, for example. Targeting the entire landscape of people with tasks to manage simply won't cut it. There are totally different needs depending on:
- Industry - Software engineers vs. construction managers
- Company size - Enterprise vs. small business
- Seniority - C-suite execs vs. entry-level contributors
To help you determine how best to address each audience, your market research should answer the following questions:
- What are the pain points of each role? How do they differ?
- Does the importance of features like mobile access vary by seniority?
- How do purchasing decisions differ between company sizes?
These insights will allow you to slice and dice your full market into segments to better address their unique needs. From there, you can hone in on the best segments for your business, and craft tailored messaging and products that resonate.
Selecting the right distribution channels
You cooked up an amazing product - great! But how will you get it into your customers’ hands? Selecting the right distribution channels is key.
Quality market research provides vital clues to inform your distribution strategy by helping you answer the following questions:
- Who are your customers, and how do they like to shop? For example, are they online shoppers or brick-and-mortar loyalists?
- Which distribution networks align with your vision for stellar customer service?
- What's the geographic spread of each distribution option, and how does that line up with your target market?
- How well does each channel meet your customers' expectations for fast, affordable, and convenient access to your product?
- Can a given distribution method provide better product access than competitors, giving you a strategic edge?
- Are there any emerging distribution technologies or trends you should leverage?
In other words, research helps you find distribution pathways that align with your business goals and target audience preferences. That way, your product ends up in the hands of happy customers, rather than gathering dust.
Crafting your positioning
The third vital element of your Go-to-Market strategy is positioning. This is all about carving out a unique space in the minds of customers. This starts with asking:
- Who's our ideal customer? Get specific - name them if you can!
- What product category do we belong to? Project management software, athletic shoes, etc.
- What's our unique value-add? What benefit do we offer that competitors don't? Can we back up our claims?
- What’s the perceived value of our product? This goes beyond just features and includes emotional, social, and financial benefits. Understanding this helps position your product in a way that aligns with customer values and expectations.
Quality market research provides the clues to craft your positioning story. Dig into details on your competition - their strengths, weaknesses, and any glaring gaps in their offering.
These insights will help you identify your edge and stand out from the crowd.
Pricing for success
Figuring out what to charge for your prized product is tricky. Price too low, and you leave money on the table. Too high, and customers get sticker shock.
Market research can help you strike the right balance by answering two critical questions:
- How much are customers willing to pay? Look at this on a segment-by-segment basis if you can. No need to leave money on the table!
- What are competitors charging? You don't want to be drastically higher or lower unless there's a strategic reason.
Armed with these insights, you can set an optimal price point – one that delights customers while ensuring a healthy contribution to the bottom line.
Beyond pricing specifics, research also provides useful intel on:
- How your market responds to price changes, a.k.a. price sensitivity.
- The impact different price points have on brand perception, which will in turn inform your marketing.
Primary vs. secondary research: Your GTM intel sources
As we’ve seen, to build a solid GTM strategy, you first need to gather a ton of intel. But where can you find them? Well, there are two main avenues for collecting these valuable insights:
- Primary research, which is all about gathering new data straight from the source – your target audience, and
- Secondary research, which means scouring existing information from helpful third parties.
Now, let's explore some of these research methods and see how they can inform your GTM strategy.
Handy primary research sources
- Surveys are a great way to collect quantifiable data on customers’ demographics, behaviors, needs, and preferences. The statistics gathered from surveys allow you to spot trends and patterns in what your audience cares about. This helps shape product features, pricing, messaging, and more.
- Interviews, while more time-consuming, provide qualitative insights that surveys can't always capture. By probing interviewees' deeper thoughts and motives, you gain a nuanced understanding of perceptions, pain points, and desires.
- Focus groups gather up to a dozen people from your target audience for a group discussion. This reveals how your product is perceived. Watching your audience interact in real time can unearth pain points and opportunities that you can capitalize on in your product development, positioning, and messaging.
- Observational research means directly observing how people interact with your products. This is a great way to uncover your product’s strengths and unique differentiators first-hand, which can then shape your positioning and messaging.
Valuable secondary research sources
- Industry reports from research firms provide a wealth of data on market size, growth trends, competition landscape, and more. This high-level summary equips you with an overview of your industry ecosystem.
- Competitor analysis involves thoroughly researching your competitors' product offerings, pricing, messaging, marketing channels, reviews, and more. This reveals gaps or opportunities where you can swoop in with a differentiated approach. It also helps you realistically benchmark your capabilities.
- Online searches allow you to tap forums, review sites, social media, and other corners of the web for real-time consumer conversations. This provides invaluable direct insights into the needs and wants your audience talks about.
Market research best practices
Robust market research is a crucial part of any GTM, but what does it take to do it right? Follow these best practices to ensure you get the insights you need to make smart, data-driven decisions:
- Use a representative sample: Your survey, focus group, or interview participants should accurately reflect your target audience. Consider including existing customers who can provide invaluable real-world insights.
- Keep your surveys concise and engaging: Shorter surveys have much higher completion rates. Aim to respect people's time while keeping them engaged by using a short list of concise, clearly-worded questions.
- Incentivize participation: Give people gift cards, discounts, entry into a prize draw, or other perks to motivate them to engage with potentially long surveys or interviews. Even a small reward can boost response rates.
- Outsource if needed: Customers may give more honest, constructive feedback to an unbiased third-party researcher rather than directly to your company.
- Analyze data thoroughly: Don't just collect data for the sake of it. Analyze it to identify key trends that will inform business decisions.
- Share insights widely: Synthesize and distribute your findings across departments to actively inform product development, pricing, messaging, competitive strategies, and more.
- Remember, market research is not a one-and-done kind of deal: Keep on top of market trends and be ready to adjust your strategy accordingly
That’s a wrap!
We've covered a lot of ground on the value of market research and how to do it right. Let's recap the key takeaways:
- It pays to invest in research to guide your Go-to-Market efforts. This boosts the odds of success.
- Focus your research on market segmentation, distribution, positioning, and pricing. Together, these elements form the strategic foundation of your GTM.
- Use a balance of primary and secondary research tailored to your goals. Multiple data sources give a 360-degree view.
- Be sure to incentivize participants, analyze data rigorously, and keep researching as markets evolve.
Even the best products in the world can’t succeed without savvy research-backed GTM execution, but do your homework right, and you’ll be able to give your product the GTM it deserves.