Picture this: you’ve got a great idea for a new product, or for improving your current product or service. At least, you think it’s great. When you explain it to others, they raise their eyebrows.
While you are incredibly enthusiastic about the product, they have critical questions about consumer trends, the market, and those latest developments in the world. Ouch.
‘My gut told me to go for’ won’t convince a lot of investors to invest in your idea. Plus, your designers, marketers and engineers will work in a much more confident way if they know that what they’re working on has a chance to succeed. The only way to give them that confidence, is through market research.
In this article, we’ll explore why consumer research is so important when you’re developing a new product or want to change something you’re currently already selling. We’ll take you through five crucial steps and give you some valuable tips along the way.
What is market research in new product development?
Market research for new product development can focus on different areas. You can research market viability, the demand for the product you have in mind, the features your target group is looking for, or the best way to position, price, market and communicate your product to your target audience. You take into account your competitors, market developments, and important trends.
Market research for new product development is all about identifying opportunities and finding out if it’s worth bringing your product idea to life. And if so, how to do that in the best way.
It’s about more than what the competition is doing, and if your target audience would be willing to spend money on you. You can also dive into market trends to identify the best ways to market your product.
You can use market research to fine-tune your product development and the relevant aspects around it. Based on how your audience is developing, what price and type of message would grab their attention? What kind of marketing tactics are likely to work, and what channels dominate your market.
Consumer research is about understanding all the aspects of your market. You can approach it as a big puzzle, and once you have all the pieces in place, you can proudly present a solid plan or research to your investors and team, to help them understand why your product development idea is worth working on.
Why Do Market Research for New Product Development?
Market research for your new product development strategy helps you minimise risks and prepares you for a successful product launch. You get to know your market and audience in a way that helps you create not just the perfect product concept, but also the right messaging and marketing around it—something that will actually resonate with your audience.
Market research is used to base your decisions on facts, not just ideas and hunches – however good you might be at guessing games. Before spending time and money on a product idea, you get a good idea of how likely it is to be a success. This will also help you plan how much time and money you’ll actually need.
Investors and stakeholders will also want to see market research if you want to launch a new idea: they want some kind of security that the product will actually sell. Even though market research isn’t a crystal ball and doesn’t exactly predict the future, when it’s done right it can definitely give you a clear picture of how your product concept will be welcomed into the market.
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The importance of market research in product development
Market research is not only important to verify if your completely new product idea is worth the work. You can also use it to optimise existing products, by keeping a close eye on how competitors are changing their products. You might even read online reviews on products similar to yours and see that customers are asking for specific features. This is also market research.
This also goes for adding new products to a line to supplement your current assortment, or if you want to start an entirely new adventure with your breakthrough product idea.
Market research for product development, whether new or existing, is all about listening to what is happening in the market. Step outside of your organisation and ask the people who pay for your products how you would make them even happier, or find out what trends you can jump onto now, so you can become a frontrunner in the future.
Product development shouldn’t just be done in-house, with your designers and developers closely looking at the product. It’s easy to get tunnel vision and build a product that’s more focused on what you can and want to deliver, and less on what the customer wants.
Market research done right forces you to step out of that bubble and not just look at how you can make the product shinier, faster and stronger, but how you can give it the right place in the market. Because product development is also developing a marketing and sales strategy. It’s having a customer journey and experience ready to put the product in and turn your customers into fans. All you need to do, is go talk to them!
Moreover, market research helps you determine what the marketing mix should look like, since developing a new product is never just about a product.
Choose the correct type of market research
Let’s get back to basics: what types of market research are there? We often lose ourselves in the wide variety of tools out there that give you data – but what kind of data is available, and how relevant is it to you?
It’s important to understand where data is coming from and how complete it is. How can you supplement it with additional research to get the full picture? Let’s look at the types of research you can – and should! – combine.
Quantitative market research
Don’t let the saying ‘quality over quantity’ fool you for this one—if you’re trying to make money, quantity certainly does matter. Quantitative research focuses on things you can measure.
How many people are interested in your type of product? What are they willing to spend, on average? Has that number been growing, been steady or are they willing to pay less and less? And if the latter is the case, is the group growing in size at least?
You can also gather information on how happy people are about a product or service. What’s lacking in this type of information is the motives behind it. For that, you need qualitative research.
Qualitative market research
Qualitative research gives context to the numbers. Yes, people are increasingly interested in product X – but why is that? What were they looking at before, and what made them make the switch? Was it a change in price, a recommendation from a friend, something they saw in the news?
Now, it’s nearly impossible to gather qualitative data for all the quantitative data you measure. That’s why it’s incredibly important that you get that qualitative data from a hyper-relevant part of your target group. Don’t send out surveys to gather quantitative data from a specific part of your target group, and then ask another part to explain those numbers. That wouldn’t be helpful at all.
Qualitative data often comes from focus groups. You could find a focus group in the people that you survey, or by interviewing existing customers that fit the profile you’re studying. This will help you get a real-life picture of consumer needs and consumer problems. The best person to ask is the one you’re trying to fit into a buyer’s persona.
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How is qualitative market research important for your product development process? It’ll help you understand the needs of your target market better. You conduct research that will steer your product idea generation in the right direction, gathered by real consumer insights and consumer feedback.
Of course, you can’t come to your market consumer in the initial stages of the process and ask them to design the product for you. You’ll gather the base information you have through quantitative methods and online surveys, so you can ask focused questions to your focus group.
Primary market research
Primary market research is collecting raw data directly from your target customers or market by doing your own research. It simply means you only use data you yourself have collected, from things like surveys and focus groups – no trend reports from third parties.
This is important for product development research, because you can’t base your decisions and product development strategy on someone else’s findings for different product and target group entirely.
Anything you directly collect from your market, whether it’s through focus groups, surveys, interviews or product research is primary data.
Secondary market research
Secondary research can be done using existing data. The fact that it’s not brand-new information, doesn’t mean that it doesn’t hold valuable insights. You just need to collect the right information and connect that to information that’s relevant for your case specifically.
Secondary research can be done to identify business risks, for instance by looking at market developments. Competitor research is also a valuable form of secondary research. Through competitor research you’ll get a real understanding of the other options your potential customers have – a good starting point for any new product development strategy.
How to conduct market research for a new product
What parts of market research can you not skip over when your goal is using it for product development research? We’ve divided it up into five bite-sized steps that will give you a solid framework to work within.
Step 1. Exploratory research
Basically, this is researching what you specifically want to research. It’s completely normal not to immediately know what your research goal is, or how you’ll get there. That’s where exploratory research comes in.
You start by gathering secondary data on all kinds of aspects. Find things that stand out, developments that you hadn’t thought about and things you want to know more about.
With that information, you can start defining what’s most relevant for you in this stage. Where are your knowledge gaps, and how do you make sure you get the relevant data to make wise business decisions?
This is not necessarily about gathering as much data as you can – you want to keep it manageable and relevant. Find out what questions you can’t answer straight away, and focus your exploratory research on that.
Step 3. Define research objectives
After your exploratory research, you can start pinpointing what you really need to know to move forward in your product development process.
Will you be focussing on customer needs, or how to get a competitive advantage? Will the market analysis focus on market demand and pricing, or is there still a lot of ground to cover in the physical product and usage habits?
It’s important to have a clear idea of what you’ll be researching. Ask yourself: what actionable insights do I need to win in this market segment? Make your objectives as concrete as you can, so your answers will be focused and you can confidently use them to base your next step on.
Step 4. Define the scope of the research
Of course, market research is a way to minimise risk. But there’s always a risk if you’re venturing out with a new product. You can never get a 100 percent guarantee of what will happen, until you launch your product.
That’s why it’s important to define a scope around your objectives. It can also help you to decide where you can use secondary data, and where you definitely need primary data.
Step 5. Decide on market research tools or partners
Are you going to focus on the product or business as usual while a research agency does the heavy lifting? Or do you want to keep everything in-house? In that case, you’re going to be in charge of deciding what market research tools you use. And the possibilities are nearly endless…
There’s a tool for every part of research, but it’s important that you use tools that are easy to work with, and collect all the data you want, so you don’t need to glue it all together from different tools. Especially if you’re going to talk directly to your consumers, you want to use a tool that’s as easy and pleasant to use for them as it is for you.
As interesting as the market itself may be, this specific research is still about your product development idea. Is the idea you have in mind good enough to enter the market, or do you need input to fine-tune it?
That’s where concept testing comes in. With concept testing, you create an MVP that you can show to your focus groups. You find out what they think about it. What features do they miss and love? What would they pay for this? How easy is it to use?
But, like we said, you’re not just developing a product. You are also developing the marketing and communication around it, and that also needs to be tested thoroughly. That’s why you can also target your market research at your marketing for the new or improved product, by creating mock-ups and testing messaging with your focus group.
Examples of market research for new products
How are brands you love using Attest to do market research around product development? Let’s tale a look at US farming cooperative, Organic Valley. They save time and money by using quantitive analysis for new product development.
‘For a lot of our day-to-day work we had been using other tools that weren’t necessarily user-friendly, easy to use or intuitive. We were looking for a tool with a fairly rapid turnaround and I wanted my team to be able to use it themselves, I didn’t want to have to go out and hire somebody else,’ says Tripp Hughes, Organic Valley’s Senior Director of Consumer Strategy. He saw a need for a tool that his team could use, without having to go through excessive training.
After seeing Attest demoed at a conference, Hughes brought in some of his peers to take a look. They now use it for market analysis, concept ideation and testing, creative testing, and messaging testing.
Hughes estimates that being able to make quick initial learnings through Attest saves Organic Valley between 10 to 20 times what it would cost to make the discoveries later down the line.
‘The impact is coming in reduced time and improved next-round thinking that we’re taking into focus groups where we’ve got a high-cost factor. If we don’t go in with the right materials and the right framework, we’re wasting money. And so Attest has helped us do a lot of the front-end work that then we’re able to go and build on.’
What product development idea have you been dallying off?
We get it – taking risks is scary. But developing new products is exciting, and could lift your business to the next level. And while doing product development research, you could find a lot more inspiration about other improvements you can make in your business.
If you’re looking for a tool that brings you closer to your target audience and helps you find hyper relevant results, try Attest.
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Alexandra joined Attest in 2018, with a strong background in market research. In the Customer Research Team, Alexandra takes a leading role in supporting brands to uncover consumer insights and explore new opportunities for growth.