Understand the market. Step by step market research activities

Market research is easier said than done. You can read a lot of books and listen to many researchers' advice on how to perform such an analysis by yourself. I will show you how I am going to do it for my product, which is a tool to aid the quote estimation process for IT projects.

tl;dr

• Google similar products as yours
• Learn what your clients currently use
• Screen your competition
• Create your avatar(s)
• Describe your potential client in details
• Focus on psychological aspects
• Learn how you can help them
• Run a survey
• Approach as many people as possible
• Determine your population size
• Examine only people who match your criteria
• Check your competition trends
• Check your potential clients' trends
• Create a detailed report
• Use it when looking for the investor
• Use only confirmed data

Starting point

The most challenging part here is to start. You won't find answers if you don't know questions. I've decided to start with answering questions regarding my competitors: what is my competition, what companies are offering something similar to what I try to create. It should be fairly easy to find it on google or other search engines. It is the reason why this is my first thing to do: it won't cost me anything, I will use my time to find answers. There may be nothing quite like it on the market. If that will be the case, I will dig deeper. I will then consider products that may have a quotation as a module. The good thing is that I know my potential clients are in the IT sector, so it makes it easier to browse through the applications that companies in that sector use. So I will spend a day or two on searching such tools and checking features of the software that may have estimation/quotation embedded. Also, I will try to learn about vendors of that software. Like how many employees do they have, where do they operate, who are their clients, and so on.

Client's avatar

Once I learn more about competition, I will have a better understanding of who might be my client. It should help me to create the avatar of that person. There are many techniques to do that. Sometimes it's called an avatar, other times a profile or empathy map. Regardless of the name, these techniques are used to describe in detail who will look for my product. Like really, in detail. The goal here is to create a few personas, which I am going to think about when I will work not only on the research but also when thinking about keywords people like them use to find the solution for their problems. It is a powerful tool that I am going to use in the later stages, like designing the product and its packaging.

I will follow Jeff Walker's avatar creation process I will describe now briefly. Still, you can also use the Empathy Map Canvas from the book Business Model Canvas, which I highly recommend. First, I will explain who my avatar is. What is their age, sex, where do they live, what is their occupation. What is his or her type of personality? I will do this in detail. I will name these personas, and I am going to make three of them and literally- make friends with these imagined personalities. From there, things will be more enjoyable.

Next step for me will be to identify their most significant source of pain. In my case, regarding the tool I'm creating, my avatar's biggest source of the pain can be the fact that their quotation is not accurate, and it makes their company lose money. Or maybe they have problems in making these estimates, and it causes stress or issues with their supervisor? The thing here is to dig into their real concerns. This way, I will know how to address it, so my product will be their cure.

After that, I will try to identify what is their biggest danger they don't see, what are their opportunities, their hopes and dreams. All of this is to understand the client, really get into their skin and learn how I can help them. It should give me the idea of what they are looking for and where they are trying to find help. If I combine the knowledge about what's available on the market with the client's avatar, I will know what can work for them, what did they try already, and understand why it is not the right fit for them.

Real data

These were easy stuff. Now it's time for something more challenging. Till now, all the data and conclusions that I will make will come out of my head. It is a fiction level. But I will try to verify how accurate my findings are by going out of the comfort zone. With the knowledge who exactly is my client, I will be able to describe my target audience. I will try to reach people who match my avatar and ask them questions like how are they doing the estimates, how well it works, how often do they do that, how accurate they are, how much time it takes them to prepare it, and so on.

Running survey

There are many approaches on how to collect such data, but I will use the most popular one, which is a survey. I will create a survey, reach several people and ask them to answer these questions. Of course, the more, the merrier and I will try to adjust the sample size to "population size" which is a term used in the statistics. If you decide to do such a survey, you will learn how difficult it is to approach people and ask them for help like merely answering questions. It should give you the idea of how difficult it will be to convince them to use your product. The important thing is that these people must be as close to the avatar as possible. Sending these surveys to people who are not my target does not make sense. So if you do such research by yourself, don't be tempted to ask your friends to fill the survey nor random people. It will give you a false result and wrong understanding of your clients.

Checking trends

Having the survey done, it will give a nice view of how the situation looks like, what these people tried, what works for them, and what did not work in the past. Also, it will allow me to understand how many people are out there that match my avatar. With this information, I will try to find out what the trends are. I will try to learn how the market of tools which my clients use will look and also I will try to learn what I can expect in terms of the number of clients in the future. Like, whether companies my clients are working for are trending or maybe the need for their services is decreasing. I will use google trends to find this out.

Make a report

The final result of my research will be a detailed report that will answer all of these questions. It's essential to make it thorough. It should serve not only now, at the point of deciding whether to create such a product, but it will be helpful when I look for an investor or partner to help me with my business. The numbers should add up, but these must be real numbers. If you do the market research report, don't be tempted to stretch or shrink these values. They must show the brutal reality.