The most common reason why startups fail is due to a lack of market need (42%) -CB Insights
Understanding your market need is important but it can be daunting to know where to start.
What is 'market need'?
A market is a shared group of people that are potential customers who have a similar problem and require your product or solution to solve their challenge. If there is a large group of people with this challenge and the number of people with this challenge is growing, this is a good market to aim for, even if it is niche.
Users and customers are different:
- Customers are the ones buying the product and are your market.
- Users are those using and interacting with the product or service but may not be the buyers.
Market need is referring to customer needs. However, the buyers will be influenced by user needs if they are buying on behalf of other people.
How do you define your market?
First, let's look at how far down the timeline your product or service idea is, as this will influence how you define your market. You may know the market well or it may be completely new.
- Early idea
At this point, your product or service is likely to be quite exploratory. You need to talk to people to find out more about their challenges to refine the definition of the market. We usually start with 3-5 customer groups and prioritise the ones we'd like to speak to first based on the size of the challenge they face and how likely it is that they'll use or buy your product or service.
You may have a basic idea of the challenges that potential users face and have a prototype that you can test. Through user testing you can gain a deeper understanding of the challenges and refine the prototype so it meets user and market needs.
- Pre-launch fully built product
You may have a product or service that is built and ready to launch. It isn't uncommon for products and services to be built in isolation and then put into the market to see how they fare. However, this is a high-risk approach as retrofitting and changing the product is likely to be needed when feedback comes through from customers. At this point doing focused testing and piloting can be useful before launching into the market.
- Existing product with little market traction
When products and services can be launched into the market without any user or customer feedback in the development process, metrics for success may be based on engagement and website visits. These statistics alone bear little meaning if the customer and user needs are unknown. Stats and data are great when used as part of a 'softer' approach where you can regularly chat to people to understand how they use the product and service and to explore their challenges further and how well this product met their needs.
How important is research?
We can't stress enough the impact that research can make to a business. We've seen it spur better ideas and sharpen focus on new markets. Here are 7 reasons research is transformational to a business.
- Research avoids wasted time and money
One hour of research can save 10 hours of development time. Being proactive and doing research saves time undoing development.
- Research informs key design decisions
Key product and service design decisions can be made with the users and customers who will be using the product. It can prioritise development tasks in a roadmap.
- Research spots gaps in the market
Understanding what is and isn't working for customers can allow you to spot gaps that competitors are missing and to provide better solutions.
- Research allows for experimentation
Research allows time for reflection and experimentation and to build and test ideas. It creates a culture for trying things that can spur innovation.
- Research influences strategic business decisions
A clear definition of the problem the business is looking to solve can feed into the strategic direction of the overall business and how to reach customers.
- Research enhances brand and communication
Knowing your customer and user doesn't just help product development. It improves brand, marketing and communication generally.
How have we helped businesses understand their market need?
We've worked with many start-ups and scale-ups looking to learn about who will buy their product. Either they are creating a new product to disrupt a market or looking to improve the product they have so it better fits market needs.
Case study 1: Exploring market need for an innovative retail data product
Startup Store Performance secured innovate UK funding to support the design and development of an innovative product that would provide food retailers with the data they needed to track daily costs and profitability.
The Nightingale team carried out interviews with industry experts and with potential users of the product to explore and map the market and to understand the specific needs of food retailers.
Using the insights from our research, we worked with the Store Performance team to create a plan and a clear direction for their product that would ensure its success.
Case study 2: Developing a tool for reserving electric vehicle charging spaces
Accelogress had developed a successful parking reservation app and was working with Transport for West Midlands to expand the app to include EV charging reservations.
To inform the development of this new functionality, we interviewed EV and prospective EV owners to understand their experiences and pain points around EV charging. We also designed and distributed a survey that gathered further data and validated the interview findings.
We worked with the product designer to ensure that app would meet the needs of users and once a prototype version of the service was created, we tested it to identify and rectify any design issues that made it difficult or confusing to use.
We also worked with the Accelogress team to develop a commercialisation plan that would allow them to identify potential partners and customers and give them clear actions to begin bringing the product to market.
The product is now ready to launch and has received interest from local authorities, chargepoint providers and investors.
Want to know more?
Take a look at our webinar on YouTube which will give you the information you need to get started with research.