Market Research Any New Product Company Should Perform
Market research is an essential process for any new product company looking to launch a successful product. It involves collecting and analyzing data to gain insights into the target market, potential demand for the product, and competition. By conducting thorough market research, new product companies can increase their chances of success and avoid costly mistakes that could lead to product failure.
Let’s explore the benefits new product companies enjoy when they perform market research, and then we’ll look at the specific types of research they should perform.
Why New Product Companies Should Perform Market Research
Conducting market research can help a new product company make informed decisions, reduce risk, and increase the chances of success in the marketplace in a wide variety of ways:
- Identifying customer needs: Market research helps companies understand the needs and preferences of their target customers, allowing them to develop products that meet those needs more effectively.
- Assessing market size and potential: Market research enables companies to estimate the size of their target market, evaluate the potential demand for their products, and identify potential growth opportunities.
- Evaluating competition: Market research helps companies understand the competitive landscape and identify potential competitors, allowing them to develop strategies to differentiate themselves and gain a competitive advantage.
- Testing product concepts: Market research can be used to test product concepts and determine whether they are viable before investing significant resources in product development.
- Developing effective marketing strategies: Market research helps companies understand how their target customers perceive their products and how best to communicate their value proposition, leading to more effective marketing strategies.
What Market Research Should A New Product Company Perform
New product companies should perform several types of research to gain a comprehensive understanding of the market and their potential customers. These include:
Customer Behavior Research
Customer behavior research is a type of market research that focuses on understanding how customers interact with products and services. This research helps companies gain insights into customers’ buying habits, decision-making processes, preferences, and needs.
One example of customer behavior research is conducting surveys to understand why customers choose one product over another, what features they find most important, and how they use the product. For example, a new company selling fitness equipment may want to understand what motivates customers to purchase exercise equipment, such as whether they prefer cardio or strength training, what specific features they look for, and how they use the equipment in their daily routines. This information can be used to develop products that meet customers’ needs and preferences more effectively.
Another example of customer behavior research is analyzing customer purchase history and data to identify trends and patterns. For example, an e-commerce company may use data analytics to determine which products are most frequently purchased together, which products are frequently abandoned in online shopping carts, and which products have the highest return rates. This information can be used to optimize the company’s product offerings, marketing strategies, and customer service.
Competitive Research
Competitive research is a type of market research that involves analyzing and gathering information about competitors in the marketplace. The purpose of competitive research is to understand the strengths and weaknesses of competitors, their market share, and their overall strategy.
One example of competitive research is analyzing competitors’ product offerings, including their features, price points, and quality. For example, if a new company is developing a new type of smartphone, they would want to analyze the product offerings of established competitors in the market, such as Apple, Samsung, and Google. By analyzing their products’ features and pricing strategies, the new company can determine how to differentiate its product from competitors.
Another example of competitive research is analyzing the marketing and advertising strategies of competitors. By understanding how competitors communicate their product’s value proposition to customers, a new product company can develop a more effective marketing strategy. For example, a new company selling eco-friendly cleaning products may analyze the marketing strategies of established competitors in the market to understand how they appeal to customers who value sustainable products.
In addition, competitive research can also involve analyzing industry reports and market trends to understand the competitive landscape and the overall demand for the product. By understanding industry trends, a new product company can develop a product that meets the evolving needs of customers to stay one step ahead of the competition.
Product Testing Research
Product testing involves testing a product with potential customers to gather feedback on its usability, functionality, and overall appeal. The purpose of product testing is to identify any issues with the product and gather insights that can inform improvements before the product is launched. By doing so, new product companies can improve the chances of product success and avoid costly mistakes.
One example of product testing is conducting focus groups with potential customers to gain insights on the product’s appeal, features, and usability. For example, a new company selling a smartwatch may hold a focus group with potential customers to test the watch’s features and functions, gather feedback on its design, and evaluate where they need to make improvements.
Another example of product testing is conducting surveys with potential customers to gather feedback on the product’s pricing, features, and overall appeal. For example, a new company selling a mobile app may conduct a survey to understand what features customers find most valuable and what they are willing to pay for the app.
Product testing can also involve beta testing, which is when a product is released to a limited number of customers before it is officially launched. Beta testing allows new product companies to gather real-world feedback on the product’s performance and usability before a full-scale launch.
How To Execute Research For A Successful New Product Launch
While a new product company may try executing this work by themselves, they will find far more success when partnering with a market research firm. Research firms have the expertise to design and execute research studies that deliver reliable and actionable insights. They have access to a range of research methodologies, tools, and techniques, and can tailor their approach to the specific needs of the new product company. By partnering with a market research firm, a new product company can be confident that the research will be conducted professionally, and the insights gathered will be reliable, valid, and actionable.
Secondly, partnering with a market research firm can be cost-effective for new product companies. Conducting research in-house can be expensive, particularly if the company needs to purchase specialized software, equipment, or hire additional staff to execute the research. Market research firms, on the other hand, have access to the latest technology and equipment, and have trained staff who can conduct research efficiently and cost-effectively. By outsourcing their research to a market research firm, new product companies can save time and money, allowing them to focus on other critical aspects of their business, such as product development and marketing.