The whole world of business is based on one thing: a problem that needs a solution. If you look closely, everything that is being sold is actually a solution.
There are millions of products out there, and even though all of them are solutions more or less, a few of them actually end up being a success.
And the ones that do, are either a lucky accident or a product of a serious, detailed market research.
Market research will provide you with so many valuable inputs, such as:
pain points of your audience
most profitable strategies
current trends in the industry
factors that play a role in consumer decision-making
and so much more
This article emphasizes why you should put market research as a prior task on your to-do list and gives clear guidelines on how it should be done. Let’s dive in.
Table of Contents
The importance of market research
Basically, every business is risky in the infancy stage, and starting a business without any market research could be described as gambling without even knowing the rules of the game.
So, since we in DECODE are, first of all, engineers, we’ll do market research even if we know the rules and feel lucky. And here is why you should do it too:
1. It’s easy to get carried away
Especially when you are excited, it’s easy to get carried away at all times.
When we are making something ourselves, we are not objective. We are usually heavily subjective and don’t see the weak spots of the project because we are focusing on the great, exciting aspects. And then, when we finally see the weak spots, it’s too late.
2. Friends & family are not a good source of feedback
If you are creating something new, there is a 95% chance you told somebody about it.
And a 90% chance that they loved the idea. Beep! Wrong! Let me stop you right there.
There is a good reason why questionnaires are mostly anonymous. When there is a personal connection, people are either not going to say what they truly mean because they like you, or they are going to like the product for the same reason.
That is why “I asked my friends” is not a valid answer to “have you done market research?” For accurate & valuable feedback, you will need different kinds of people, and lots of them.
3. We’re egoistic
As psychologists would say, our experiences and opinions shape our behaviour.
And building a project is no different. If you consider something to be a problem, there is no guarantee that an average citizen considers that a problem as well.
When Johnson&Johnson first launched the famous Febreze (the odor-eliminating air freshener), it didn’t sell.
Why? Because people living in smelly conditions got so used to the smell that they weren’t even aware of it.
So, before doing anything, make sure that your solution really has a problem to solve.
The essence of quality market research is to provide valuable inputs that you can implement in your project’s roadmap. Having these “signs on the way” at the very start can save you a ton of money, or even save the whole project.
The 6 steps market research process
So, for all of those that aren’t really comfortable with gambling, here is how you can conduct proper market research, the one that will help you fine-tune your direction and keep you safe along the way.
1. Ask yourself questions
This is a kind of pre-step but starting a list at zero is scientifically questionable, so here we are.
If you find a strong answer for every one of these questions, congratulations, you are clear to continue. And remember to keep the answers real & accurate.
For start, we’ll open up with – What is the problem your app is solving?
As we mentioned earlier, you have to be sure that the problem your app is solving really exists and that it’s also frustrating for a lot of people. Your happy future customers.
Best way to find out the size of the problem? For a common problem – Google it. For a more niche one – search on social media. Somebody is probably hating on it on Reddit or Instagram.
Secondly, – Who will the app help?
Now that you are sure that the problem is there, look at the people who complained about it. What is their connection? Are they matching your buyer persona that you have in your head, or is something off?
You want to be sure that there are enough people who will be willing to (hopefully) pay to use your app. And no, 270 knitting enthusiasts won’t do.
Why would they want to use your app?
What will be in your app that they don’t already have? Or, if it is the first of its kind, will there be enough benefits for them to decide to install it?
Keep in mind that benefits can be a lot of different things: a time-saver, entertainment, great design, etc.
Ideally, your app should be better than the competitor’s in all fields, even though it doesn’t have to be in order to become successful.
Let’s put it this way, it’s better if you invest time to be the absolute No. 1 in a single category, than to spend the same amount of time for it to be a little better in 5 of them.
So, you will want to find your competitive advantage and see if it will be strong enough.
How and when will they use it?
Now we’re talking.
Imagine the situation that triggers your user to unlock their phone and enter your app. Will it happen a few times a day or a few times a year? And again, be realistic.
An average American checks their phone every 5 and half minutes, which adds up to a shocking number of 262 times a day. If your app is the reason for a portion of those clicks, you are in for a win.
And the final & biggest question – Will it be profitable?
Even though the reason for business failure is usually a series of unfortunate events, product pricing mistakes are one of the most common causes.
People behind the project believe that it’s worth how much they think it’s worth, and keep forgetting that the market is the bad guy that will correct their prices.
If the initial margin is planned at 15%, and the price ends up being 20% lower than planned, well, you do the math…
That’s why a rough calculation is needed at the very beginning, to see if it’s worth further time investment. If it doesn’t hold up at the beginning, it probably won’t hold when you do a target audience examination & competitor analysis either.
If a journey of a thousand miles begins with a single step, then an app of a million downloads begins with defining the target audience.
When you know who you are addressing, it’s way easier to come up with a set of questions.
Your target audience is a specified group of people that are of a certain demographic or share a common interest. You don’t need to define the hair color of your target audience, but some basics are needed.
Age range is important, location and language are essential, and for some apps gender is too.
As we all know, statistical data ages like milk.
2 years old research is not a good base layer for a decent 5-to-6-figure investment. That’s why we are grateful to the smart people out there who recognized the problem.
Today there are several services that will help you with this step.
Statista is a platform with a lot of up-to-date data and you can get a free 7-day trial.
AppAnnie is probably the leading intelligence provider and also the most expensive, but even from the free version and their blogs you can extract a lot of useful information.
You can also find a lot of interesting and relevant app market data on BusinessofApps.
After all, even an easy free tool likeGoogle Trendscan be very helpful, because it shows you the regional change in interest in a subject over time.
3. Detect customer needs & pain points
Everybody knows the old chinese saying, ”in order to win, you need to understand the enemy.”
We wouldn’t take it that far, but you get the point.
When you understand your user, their needs, wishes and things they are excited about, you’ll be able to custom-tailor the solution.
It will also highlight what is important to them and which parts of the app will need your special attention. This is a great hack to make your prioritization easier.
At this stage, the only thing that will do the trick are surveys & questionnaires.
At this step, the questions and their quality play the most important role, so make sure that you come up with great ones.
The rest is easier, you’ll need to put the questions in something like Google Form (free) or in Typeform/SurveyMonkey (not free, but visually more interesting).
If you don’t like these, you can get creative and ask people through different channels, like social media stories or forums, the ones that still exist.
4. Analyze the competition
So, we’re clear about you having a great idea. If you are one of the creative side, it could be a first of its kind. If you are more on the practical side, it’s probably an existing solution, but made better. But is it really better?
Maybe your design and UX are significantly better, but if the login form is complicated, most people will never come far enough to see the design.
Let’s put it this way. Would you bother yourself with downloading, installing, logging in and everything else if you think the app is around 20% better than what you currently have? Probably not.
Every aspect of the app has to be better than the competition. That is why you need to analyze your competitors.
Aside from going through the competitors’ app, you will need to get data about their performance, and the tools mentioned in the previous steps will help you with that too.
There is a tool called Apptopia that is more competitor-analysis oriented. It is pretty expensive, but there is a “request a demo” button that could do the job.
When you get your hands on the data, we would recommend using a good-ol’ Excel spreadsheet with various competitors and categories.
You can easily see who is better in a certain category and detect a common weakness that can be your competitive advantage.
Also, it could help you determine the faults in their model and opportunities for additional monetization.
While analyzing the apps themselves, if you are not the target audience yourself, you will require help from the core demographic of the app. Especially for those parts of the app that are more psychological than technical.
5. Keep the future in mind
This sounds questionable, but let us explain.
If you are building an app, you probably want it to live a long and happy life. So, if there is a storm coming, and you didn’t anticipate it, it’s your fault. Frameworks, trends or even legal regulations can all pose a threat.
We know clairvoyance is a rare skill, and if you had it you would probably be buying stocks and not building apps.
But, when you are already learning about your market, it’s smart to pay some attention to possible future scenarios.
Analyze the trends in the industry, read the news and explore the blogs.
To gain a view from as many different angles as possible, you can also read the interviews with the competitors’ leaders, or people within your target market.
For business oriented topics, we like blogs such as Udonis.
When it comes to technology, keep in mind that a high quality product will always be a strong foundation for future upgrades.
6. Put findings into action
Once you know everything about the market and the consumer, you can implement that knowledge into an action-plan.
The feedback you get will help you put your app on the train to success. With it, you’ll know which features you’ll need to invest extra effort in, and which to dismiss.
You’ll be able to forecast the growth, gross margin and cash flow, all based on real data from the competitors.
It will help you save nerves, since you’ll know what to expect at a certain point along the way, helping you to direct your work into the other aspects of the process and not lose your mind worrying.
You will split your market research into different fields. Forming of the product based on customer feedback, the road map of the process that is ahead of you and the finances & risk-planning based on competition and industry analysis.
Believe us, it’s way easier to kick-off when you have tangible insights.
Also, update or expand your market research along the way, if your app requires it.
The research never stops, even when your app is out.
So, if you have a way to continuously track feedback, do so. We all know that users are lazy, so if somebody takes the time to write a suggestion, it’s highly likely that there are 50 more that thought the same. Additionally, the greatest idea for improvement will very likely come directly from the users.
A little plus at the end
One thing that has proven to be very valuable, again and again, is to nurture relationships with people in the business.
Even though everybody is constantly busy, taking care of people is a must. If you have a genuinely good relationship with fellow industry people, you can be sure that they will take time to give you proper answers to your questions.
And since the IT industry can be very specific, having somebody “from the inside” assisting you will be priceless.
To wrap this story up, there is a long list of benefits of good market research.
It will help you better understand the entire industry, it’s technologies, the competition’s software products, and most importantly, the customers.
Conducting market research is like healthy eating. Not fun, most of the time. But it will make all the difference in the future. And you’ll be so grateful you made the effort to do it.