The Importance of Market Research for Product Managers

5 minutes read

Market research is a process of collecting, analysing and interpreting data to understand a company’s target market. This information is used to improve user experience, provide better design products and improve conversion. It is used at all stages of the product life cycle.

Market can include customers, suppliers, products, competitors or the entire industry. Research saves time, money and resources as it guides the product manager to make informed decisions.

Most of the companies outsource the market research to a third party provider, but nevertheless as a product manager you are responsible to do your ground research so that you can guide the product development with valuable insights.

Research can help find the right product market fit and also areas where the product can further grow. It helps in building the product strategy by giving us insights as to which markets, customers should we target, and how to differentiate the product.

Kinds of Market Research

There are mainly 4 kinds of market research and as a product manager you can use any combination of the below to learn more about your customers' behaviors, product preferences, target segments etc.

  1. Primary Research
    Primary research is one of the most common methods used as you can get data directly from your customers. It can be done via:

    • Surveys
    • Polls
    • Focus groups
    • Interviews

  2. Secondary Research
    Secondary research depends on the existing data already available and can be done via:

    • Articles
    • Blogs
    • White papers
    • Journals
    • eBooks
    • Data from Government

  3. Qualitative Research
    Qualitative research gives us insight into what customers are thinking and does a customer decide to buy your product or some other brand i.e the underlying reasons, motivations, emotions and opinions. This is done via open-ended questions like:

    • What made you buy our product or service?
    • How do you find our product or service compared to our competitors?
    • What features do you most like about our product or service and why?
    • What features do you most dislike about our product or service and why?
    • How can we improve our product or service? etc

  4. Quantitative Research
    Quantitative research helps in measuring and quantifying information using numerical and statistical analysis. It helps in uncovering patterns within data. It can be done via:

    • Net Promoter Score (NPS)
    • Metrics (Bounce rate, Conversion rate, Page views etc)
    • Social media followers
    • Surveys
    • A/B test results etc

Most Common Research done by Product Managers

Though they are various methods you can use for research, the most common methods used by product managers are:

  • Exploratory Research
    This research is used to investigate a problem which is not yet clearly defined and helps us understand if the problem is extensive enough to even solve it. Mainly used by start-up’s, this research will give us insight into whether to launch a new product idea or rethink the idea, find the product-market fit, plan new features for the product, need of the product etc. This kind of research is done at the very start of the product development life cycle. You may not even know your users, their expectations, pain-points or even opportunities.

  • User Insights
    This research is used to gain understanding for who you are building your products for i.e the customers. It helps in understanding our customers, their needs, thoughts, feelings, emotions, behavior, expectations, problems, loyalties etc. User insights provide valuable insights to the entire product development lifecycle. It helps the product manager to make informed recommendations on behalf of customers or users.

  • Competitor Analysis
    You are not operating in a vacuum when you are solving customer needs and problems. There are probably many more companies that are building products to solve the problems of the same set of customers. Researching competitors is crucial as it helps in understanding where do gaps lie and which features can become your product’s strength.

  • Beta Testing
    In case you have a MVP (Minimum Viable Product) ready, you need to beta test your product with a selected set of users. This helps in understanding whether your product needs improvement, is solving customer problems, customer expectations from your product, features customers like etc. It mainly helps assess if customers will buy our product when it's rolled out on a larger scale.

Benefits of Market Research

  • It helps to determine what the customers need and want from the product
  • It gives valuable insights about the existing and new products
  • To make well-informed decisions based on data
  • Understand the market size and intended target audience
  • Understand customer perceptions about the product
  • Minimizes risk of building a product which customers don't want
  • Identifies potential problems and helps you plan ahead
  • Discover new opportunities
  • Helps in finding the product-market fit
  • Helps in building the product strategy
  • Etc

Conclusion

Market dynamics change often and it's best to make sure that as a product manager you are conducting the market research process regularly depending upon the budget and time. If you want to gather information from actual customers to build better products, then you need to understand and conduct market research.