Best Practices for Learning About Your Target Market

The Pragmatic–Summer/Fall 2020We can all think of tech companies with a failed rollout or a product that didn’t catch on. Sometimes the timing wasn’t right, or the original iteration wasn’t quite there. More often, though, a failed product is the result of companies thinking they know everything but having a flawed understanding of the market.

 

For example, microwave ovens were introduced in the 1940s but remained unpopular until the 1970s, when both their size and cost dropped significantly. But even in the 1970s, no one woke up one morning demanding a microwave oven. Rather, people with increasingly busy lives wanted the ability to heat food as quickly and safely as possible.

 

When companies fail to properly gather, analyze and use information from their target market, they inevitably create products that don’t resonate or meet the needs of people they’re trying to reach.

 

Research Observations, Implications and Recommendations

Customers are best served when we give them exactly what they need; and to know that need, we must pay attention and truly listen. We must understand how our customers feel, what they think and how they go through life. Ultimately, we must understand their stories and journeys so we can lead them to buy our products.

 

Like the microwave, needs can be implicit. Unlocking what those needs are can lead to new wants—and new products. The best way for a company to gain insight on how its consumers feel is through:

  • Observations: What data and trends did we find when conducting our research?
  • Implications: How can we take what we’ve observed and incorporate it in the company? What happens if we don’t make those changes?
  • Recommendations: Based on our observations and implications, what should we do differently?

 

Because of the required investment, companies often are hesitant to conduct extensive research. But if you don’t know anything about your customers, you’ll never sell to anyone. Therefore, anything that helps you better understand your customers and their values is an essential investment.

 

Consider YouTube. This ubiquitous content-creation platform originally started as a video dating site. It even used the slogan “Tune In, Hook Up.” But the company gained no traction when it brought dating videos online—it turned out that users (especially women) didn’t want to make videos of themselves talking about who they are and the kind of partner they want. Co-founders Steve Chen and Chad Hurley even took out Craigslist ads offering women $20 to upload their videos to the site, with no success.

 

Eventually, the duo looked at the market and knew they already were ahead in the online video space. YouTube pivoted to become a general online video platform, where users could upload any genre of video. In 2006, Google bought YouTube for $1.65 billion, and the website has since been the leader in video content.

 

By using the feedback and information they gathered from the market (i.e., no one wanted to upload dating videos, but they were willing to share other types of video content), YouTube made a change to its strategy that ultimately resulted in an improved internet experience.

 

Market Research Methods and How They Work

There are many market research methods, each of which delivers different results and opinions. To be cost effective, start with one that you believe will help your company the most. Here are some of the most popular methods and the types of results they yield.

 

Sleuthing and Online Research

You don’t need formalized research to find out about your clients and their feelings about your products. People share their opinions in online forums across the internet (e.g., Reddit, a community’s professional chat rooms, product reviews). However, take this feedback with a grain of salt. People often only post extremely positive or negative reviews, so what you see online may not be indicative of what the mainstream public or majority of your product users think. Still, this is an easy and inexpensive way to gather initial information and see what direction to take your research in. Performing this step first can help shape the rest of your plan.

 

Web scraping and crawling are other ways to find information online. Web scraping is the process of extracting large amounts of data from a website to gather information. The web crawler browses the internet to find relevant links and websites. From there, the web scraper accurately and quickly extracts the relevant information from those sites. By having a lot of web data, you can extract market and pricing insight and then compare it to your own company’s positioning and pricing. Finally, run analytics on the data gathered, such as a word cloud of the key words people use to talk about your product, category or brand.

 

Survey

A survey is a quantitative tool that presents a series of questions to inspect the market. Typically, surveys ask around 15 questions plus a few on demographics, and they take about five minutes to complete (any longer and you’ll see high abandonment rates). Surveys are meant to be administered and completed with minimal effort. Because of their brevity, they’re good for getting a mass amount of information on current trends, though the feedback doesn’t offer a chance for dialogue.

 

Traditional, In-Person Focus Group

A focus group is a deliberately selected group of people who are assembled to collect their thoughts. A moderator takes the group through a product, brand or advertising campaign and asks them pointed questions about it. A well-designed moderator guide can be used to draw out more complex thoughts than a survey can. The success of the focus group depends on the quality of the participants. If they don’t warm to the product or moderator, the conversation may not gain too many insights. Focus groups tend to be more qualitative and can be used to dive into trends found in surveys.

 

Virtual Focus Group

One drawback of traditional in-person focus groups (COVID-19 aside) is that participants can fall into groupthink and repeat the same opinions. In a virtual focus group, participants sign into a text or video chat and discuss the product there. By going online, you can receive a more diverse range of people rather than being geographically restricted. With the participants separated, there is no risk of groupthink or being influenced by others’ observations. While there is no face-to-face interaction, the responders are more flexible and comfortable in their own setting. Plus, as an organizer, there is no event-space cost (although you will need access to a suitable platform).

 

One-on-One Interview

Sitting down with one person and discussing the product is a great way to have an intimate, engaging conversation. You get more personal opinions that inform how the customer uses your product and why they chose your company. Knowing their context for decision making can help you seek similar customers or learn how to convert others to use your product. The interview can be done virtually as well, though the conversation may be more insightful and informed if held in person (global health situation permitting, of course).

 

In-Product Feedback

Like a survey, you can gain a constant stream of new information by asking for feedback in your product. This is most useful for software and cloud services. You can learn new market opportunities from your clients and their usage. If you update your product, you can see how customers immediately react and feel about it and then make changes based on those observations.

 

Plan Your Research Methodology

Although you have a menu of market-research methods in hand, it’s important to remember that all the data in the world won’t mean anything if you don’t have a plan for how to use it. Here are some practical steps you can take:

  • Commit to putting the customer at the center: To understand customers, it’s important to look to the outside world. The people within your organization may be incredibly smart and think they know the answers, but their opinions don’t matter if the market doesn’t respond. Research will help you gather information about the market and go on a journey with your customers.
  • Develop a hypothesis that includes what you seek to understand: Think of your personal hero. If you had one minute with them, what would you ask them and why? What insight do you seek to learn? Take this approach when you evaluate your customers. What do you really want to learn from them? What can they get from you? Distill your thoughts and put yourself in your customers’ shoes. As the process continues, you can always do more research later and continue to learn as your relationship with and understanding of your customers evolves.
  • Develop a plan with your goal in mind: It’s easy to say you want to be “better.” But what are the tangible ways to make this a reality? What is your story and how can you achieve the best results? Talk with your team about the research results and how the company can improve the client experience. Discuss benchmarks for achieving success, then start with an achievable short-term goal, a developed long-term goal and all the steps in between.

 

‘Culture Eats Strategy for Breakfast’ — Peter Drucker

Countless companies have lost focus on their journeys and have had to redirect their approach to be more customer oriented. Using the research methods addressed here, these companies have taken what they’ve learned from the market and applied it to their products and messaging strategies. And they’ve gone on their own journey to better help the people they serve as well as transform their companies to achieve greater success.

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Norman Wong

Norman Wong

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