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Friday, October 11, 2013

New Techniques for Market research

The purpose of market research is to validate and inform a company’s planning assumptions regarding their strategy, target customer, product, and marketing communications. Technology start-ups have unique research needs. They differ from more established companies in that their market, product category, technology and competition are difficult to define. This means that the relevant market research techniques for start-ups vary from those used by bigger companies.

For a company to be truly market-driven, it has to observe, engage and listen to the market continuously. The techniques described in Section 1 (below) are practices that companies should build into their daily way of operating―their DNA, so to speak―as a means to ensure they stay in tune with market needs and avoid expensive product development and marketing errors.
The techniques in Section 2 relate to testing specific product or marketing concepts at various stages before they are rolled out to the public. Many of these are quite technical and require the assistance of an experienced researcher.
Section 1: Market research techniques the start-up can and should do themselves
  • Pretend to be the customer: What would it be like to be your own customer? Why would you use the product? How would you prefer to buy your product? Where would you like to learn about it before buying it? What would be the most important product benefits? Make sure you record your answers to these questions, and any thoughts about them, so you can use this when planning your product and its marketing.
  • Customer interview program: This involves a conscious and systematic customer visitation program undertaken by a cross-functional team to best understand customer needs. Apply this technique from day one of your venture to ensure that decisions across the company about the customer value, product solution and marketing are made against a backdrop of market needs. The purpose of these visits is to learn―not to sell. This should be made clear to the customer upfront.
  • Lead users: Customers that are ahead of market trends often are the first to feel the need for new products. Studying lead users can help you identify important market and technical trends. While this technique is useful for both start-ups and established businesses, it is important that you do not extrapolate your observations of lead users to entire market segments. Rather, they should be regarded as trend indicators.
  • Quality Function Deployment (QFD): Building on Emphatic design [see below] or Customer Visit Programs, QFD aims to map customer requirements onto the product design process. Involving marketing, product development and customers, QFD is an important technique for companies once they approach the Chasm/Bowling Alley stage of development (for further details, refer to the technology adoption life-cycle [TALC]).
Section 2: Market research techniques that require professional researchers
  • Concept testing: This technique evaluates early-stage ideas and determines which should be developed further. Often done in the form of focus groups, it is most relevant when customer needs are known to the customers themselves; it is less beneficial in cases of radical innovations.
  • Cojoint analysis: Companies use cojoint analysis to help prioritize decisions over product attributes and corresponding price levels. It is applicable in Bowling Alley and Tornado markets (for further details, refer to the technology adoption life-cycle [TALC]), when differentiation is becoming more important.
  • Empathic design: This technique offers value when customers may be unable to articulate their needs. Emphatic design involves observing what customers do to overcome challenges they face. It is employed by tech companies to get ideas for new product concepts or to learn about new market segments.
  • Prototype/beta testing: Testing on prototypes/beta versions is done by users to help the company obtain customer feedback and identify technical problems before they launch the product. It provides a cost-effective quality assurance process and should be done by most companies, unless time and expenses prove prohibitive.

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