Our goal with this desk market research for a new product is to get a first understanding of what it would take for a new product to succeed. And by success, as always, I mean being able to sell at a profitable price.
To begin, let’s start by thinking about why we’re doing this, and what the outcomes of this desk research should allow us to do. Starting with the end in mind always makes things so much simpler.
I’m assuming that you have a product or service idea, and you’re here because you want to make sure that you invest your time and money into creating something that will succeed.
Well, if that is the case, you’re in the right place, because desk market research really is the first thing you need to do to improve the odds of product success.
So. When we do desk research (aka secondary research), we’re collecting information that’s already available out there (usually on the internet), and that can help us generating hypotheses and preliminary strategies for our product development and marketing work.
I firmly believe that product development and marketing must go hand in hand form the get go. If you later can’t sell it at a profitable price, the product isn’t good (for you). Unless that’s not your goal, of course. In this video I’m assuming that it is.
Anyway, this initial research may also be very useful to help us realize the amount of things we don’t know and that we need to figure out to improve chances of success (because often we aren’t even aware of what we don’t know until we start the learning process).
So, at the end of this market research exercise, we should have enough information to allow us to put together our hypotheses regarding:
- What our product or service should include,
- What our product or service should not include (this one is a lot more important than most people think. Watch the linked video if you want to know why),
- What our achievable price range is likely to be,
- Who our customers will be (I mean in terms of understanding our main target market segment’s characteristics. A lot of people call this “finding your niche” lately),
- What our main value claims will be. And by that, I mean what will be the marketing messages and characteristics of our product or service that we should highlight to be able:
- A) to get people’s attention, and
- B) to make a sale.
A quick side note here: if you come from a business background, beware that a lot of people using the term “niche” aren’t actually referring to the traditional niche marketing sense of the word, but rather to segmentation and targeting at large.
So, don’t be misled by the use of the term “niche”. Whether to target actual niches or not is a very important detail that can get you into major trouble, but I’ll have to leave it for another day.
So. Now that we know what we want to do with the information we will be collecting, let’s move on to what exactly we need to collect, where we can usually find some information, and why it’s important to gather all of this.
Step #1: How are people solving the problem?
The first thing we’re going to do, is a list of all the ways in which people might be solving the problem that our product or service addresses right now.
Note that I’m not saying similar products, but different solutions that address the same issue. These can be similar products, of course, but might also include different product categories, or sometimes even services.
We want to focus on problem solution or goal attainment, and not necessarily on the concrete product or service type. We’ll see why in a minute.
Also, if you haven’t developed your product or defined your service yet, keep an open mind for now regarding what your final offer will be. The good thing about conducting market research prior to development is that you can turn a potential flop into a hit. If you keep an open mind, listen, and adapt.
Anyway, for now, we just need to put together a list of products or services that our envisioned one will potentially substitute (broadly). And try to include some that you know that are successful in there.
If you know your market a little probably you already know what these are, but if you’re brand new you can always do some digging into online stores and marketplaces that are relevant for your market and see what you can find.
And if online stores and marketplaces aren’t relevant in your situation, try taking a look at forums and social media, such as Facebook groups that potential target customers hang out in, or Reddit, and see what people are saying they use.
Is a competitor successful?
As to understanding whether a competitor is successful or not, in some situations you may be able to find actual unit sales volumes of competitor products.
For example, some online course marketplaces like Udemy publish the number of students enrolled. And “customer only” Facebook groups (that are so typical for example in the case of info products) give a good indication of sales volumes thanks to the publicly available number of members.
Those are very specific situations though, and I admit that won’t apply to most markets.
Still, regardless of the sources that you can find, usually having a lot of reviews online is a fair indicator of product success, so use the number of reviews you can find to estimate how well a product is doing.
Note that sales success may not necessarily be an indicator of a good product that we can learn from in terms of product development, but even if that’s the case, it’s at least an indicator of good marketing. And we want to learn from good marketing too. So, products that sell well are good to learn from regardless.
And that’s one of the reasons why even if it’s not likely that you’ll be competing directly with the major players, it might still be a good idea to include a couple in this list, because we can learn a lot from studying what they do.
Once we have the broad list of products or services that our envisioned one will potentially compete with, it’s time to do some detective work on each of them.
Step #2: Analyzing competitor products
So, for each of the alternative solutions found in the previous step, we’re going to look for:
A list of the product’s characteristics. What does it do? What is included?
We want to know this because it can help us brainstorming ideas regarding what our product or service might include that would help us making it a valuable addition to the current market.
What are the people who bought the products saying that they liked, and that they didn’t like about those products?
The first reason for this is obvious, right? We want our product to be an improvement over what already exists, at least for some people who will be our target market. So we may want to incorporate some of the things people liked, and avoid what they didn’t.
The second reason to list this, is to try to figure out if there’s a portion of the customers who don’t seem to be properly served by the solutions that currently exist, and that are looking for something different that they have not yet found, and that you may want to provide.
As to finding this information, if your competitors are sold through online stores or marketplaces, this should be easy to find (for example sites like Amazon or Udemy (if you’re selling courses) are information goldmines). But if you’re not lucky to have your competitors available in these sites, you may need to do a lot of reviews googling.
Once you find the reviews, pay especial attention to the middle of the range ones. Usually the 3-star reviews are the ones where people mention what they liked, but still give constructive feedback on what could be improved upon without being overly positive or negative.
Also, if you start finding a lot of “my honest opinion” rave reviews that go above and beyond what a normal person would write on a review, and it include links to buy the product, beware that that’s an indicator that your competitor probably has a nice affiliate program in place.
So, pay attention to that, because it’s an important piece of information to collect. Also keep an eye open for sponsored reviews. It’s important to find out what you’re up against in terms of promotional efforts.
But moving on...
The third thing we’ll need to find out for each one of the potential competitor products in our list, is their price (if we can get that information; sometimes it’s not easy, and you may have to use best guesses based on what you do find out).
There are two main points for this:
- One, is to try to understand what can be driving the value of the different products or services up or down. By understanding what drives willingness to pay upwards, we can:
- Build those features into our product if we wish to, and
- Highlight what it is that our product offers that matches those valued aspects that people are willing to pay for, therefore improving our product’s value communication.
- And then, we want to get an idea of what price range our product could potentially achieve.
Considering that the easiest way to justify a price is to justify a premium (or parity, or discount) vs. another alternative’s price, we want to make sure that we find the alternatives that help us justify our product’s price more easily, by comparing the price/value relationship that each of them offers.
And this is why we want to study not only similar products, but alternative solutions to the same problem, which might help us justifying that our product is worth more than what a potential customer might be willing to pay at first glance.
We want to find nicely priced alternatives, and arguments that will help us building an argument that those alternatives’ value should be seen as comparable to our offer in some way, and therefore, its price should also be somehow comparable.
The fourth thing we’ll need to find out for each one of the potential competitor products in our list, is what are the main marketing messages that the seller is using to sell the product or service.
This is interesting, because if the seller is experienced in selling this type of product, and is able to do it successfully, he or she has already learned what works and what doesn’t. So, we can take advantage of their experience by noticing which key issue they are positioning their product or service to address:
- What features are being highlighted?
- What benefits are being highlighted?
- Are there any messages that seem to be objection handling ones? (that is, sentences that seem to address a worry that potential buyers might have that might deter them from buying?)
- And, most importantly, what dream, or goal attainment is being sold? What is the big promise? What is the underlying pain that the marketing messages are speaking to?
Obviously, we should not copy someone else’s marketing. However, by studying it, we can understand who our competitors are speaking to, and which underlying customer pain points and dreams they are speaking to.
In case we’re targeting the same people, we may want to test whether speaking to similar pain points can be beneficial for us. If we don’t have similar target markets, that probably won’t work though, since target customers may be looking for entirely different things.
But in any case, understanding what underlying needs the different successful competitors are speaking to can help us brainstorming ideas regarding what pain points we may want to target, or which dreams we may want to speak to.
Note that the final selection of value messages isn’t a part of this initial process; remember that for now we’re just collecting information and generating ideas and hypotheses.
So, now that we have collected all this information, we need to start developing a draft strategy. It’s time to do an initial analysis of what we have, and define the hypotheses I mentioned at the beginning, namely:
- What our product or service should include
- What our product or service should not include
- What our achievable price range is likely to be
- Who our customers will be
- What our main value claims will be to 1) get people’s attention, and 2) make a sale.
But I have to point out a crucial thing now: you may think you have your market figured out by at this point, but all you have are hypotheses.
Don't be misled by the data!Even if you believe you have a better product, until you confirm that this is the case, what you have is a belief. Because:
I haven’t been referring to what we get out of this research as hypotheses because I like the word. They really are nothing but hypotheses.
You see… you are not your competitors. So what worked for them, may not necessarily work for you.
What you believe potential customers value, may not be exactly what they do value. So, you must confirm your expectations with real potential target customers. You must make sure that you’re developing the right features, and using the proper marketing messages to sell whatever your product is.
What you expect people to be willing to pay, again, may be wrong. Actually, I’m afraid this is usually the case.
Your competitors and you may have completely different access to potential customers to begin with. They may also have:
- A lot more experience selling this type of product,
- A higher marketing budget,
- A trusted brand,
- A larger following,
- An affiliate program,
- A better network that can put their product in front of the right people
- Etc, etc, etc…
I mean… they can have a completely unfair advantage that makes their possibly inferior product sell like hotcakes while your amazing one isn’t even seen by anyone.
Unfortunately, the best product isn’t always the one that wins. It’s unfair, but it is what it is.
And that’s why it’s so important to understand what is that little foot in the door that will help your product become known and preferred.
And it might even be a minor detail: it can be communicating in a given way, or using a given platform, or targeting a specific market segment (either through the product’s characteristics, or through the way you communicate)… and talking to people can really help you figuring this out.
So... I’m afraid your market research can’t end here if you have a lot at stake. If you don’t, well… this is way better than nothing.
But if you’re creating a new business, or a product that requires a significant investment of time and/or money on your part and you want to make sure you get it right, you absolutely must get feedback from people that are relevant for the purchase decision before you start creating anything. There’s no other way to decrease the risk of failure. Desk research isn't enough.
Anyway, in my next posts I’ll go over how you should test what your product or service should include, how to select your key marketing messages, and what you must prepare before you even start talking to people (preparation is actually the most important step).
I hope this was useful!