Resources > Articles

How to Evaluate Market Problems to Find Opportunities

Post Author
  • Pragmatic Institute is the transformational partner for today’s businesses, providing immediate impact through actionable and practical training for product, design and data teams. Our courses are taught by industry experts with decades of hands-on experience, and include a complete ecosystem of training, resources and community. This focus on dynamic instruction and continued learning has delivered impactful education to over 200,000 alumni worldwide over the last 30 years.

How to Evaluate Market Problems to Find Opportunities

The content of this blog is based on a Product Chat featuring Mike Smart, founder and principal consultant of Egress Solutions >> Watch Now. 

 

Evaluating market problems more often involves qualitative efforts because we are trying to understand the nuance of their environment, aspirations and the context of their situation. 

And, this critical work provides a texture for the way we will interact with customers and how we build a passion for their problem so we can design a method to solve it. 

This work must also be quantitative. If we can’t take this qualitative experience and somehow apply some factors to it that are data-driven, then we’ll never have the ability to convince others in the organization to take action on our insights. 

This is what makes the work of finding and understanding market problems so hard. We have a highly-qualitative pursuit, and people love talking to customers. The information we capture during this process is unstructured and experiential. 

But, how do I make this into a story that convinces leaders to take action and invest resources? 

 

Common Pitfalls When Conducting Market Research 

Before we dive into how to validate market problems, let’s first explore some common areas where these projects fall off track. 

If you’re the person doing the work, when you encounter these problems, they can create uncomfortable and difficult situations.

  • Focus on near-term revenue 

If this initiative, even if it comes from leadership, is aimed at fixing near-term revenue problems, your efforts are really going to be difficult. In this situation, you should argue that this is an unrealistic expectation. 

  • Spending too much time with existing customers 

When you do this, you’re not conducting market discovery. You’re actually working on the next release, which can be powerful work for sustaining current revenue and driving loyalty. But it’s not going to help find a new opportunity or build an adjacent place in the market. 

  • Investing efforts chasing competitors 

The fact that we may need to respond to competitors who are beating us to the market with features is legitimate. But, in this circumstance, you should look to a different part of the Framework to solve that problem rather than engaging in this long-term strategic activity as a defensive move. 

  • A response to a new innovation agenda 

Innovation is a part of the market research process, but it shouldn’t be leading this process. The context of this work is customers, non-customers and potentials. We are not looking for technology to solve a problem. We are looking for a problem and a feasible solution. 

 

The Journey of Finding Market Problems 

Market Problems reflect the challenges, frustrations and unmet needs elicited from the whole customer base (the market). The problems must be observable and measurable. 

Marketing problems are not stated, they’re implied. Non-customers or existing customers don’t tell us what they are looking for, they tell us what they don’t like about what they are doing right now. It’s our job to use deeper questions to figure out what that actually means. 

Then, ask, “is there emotion attached?”

If something frustrates people, there is probably intrinsic value in solving a problem. 

Next, once you find that problem, you have to quantify it. Not in terms of dollars for your organization, but you quantify it in a tangible way for that specific individual. 

Finally, when you are evaluating market problems, you have to identify other options. What most product professionals forget in this final step of the journey is that one viable option is to do nothing. 

There may be several other options both effective and not in the market, but sometimes your biggest competitor is simply leaving the problem unsolved. So, whatever problem you find it has to be pervasive enough that a customer wants to pay for a solution. 

Using Personas Add Precision 

The reason why we use personas is we want to understand our customers. We shouldn’t pursue market problems because we want to create something cool. 

Using personas helps us focus on knowing where our customers are and where they want to go. The solutions we design should take them there. Simply put, we want to shift the focus from us, the vendor, to the consumer and buyer. 

 

Engaging in Market Discovery 

Market DiscoverMarket discovery is the ongoing qualitative research process of identifying opportunities in the marketplace through the interactions of the whole customer base. This is accomplished with in-depth interviews, focus groups, etc. 

It’s important to remember, the earliest feedback is mostly noise. It may be compelling information from an impressive source, but generally speaking, it is not the answer to the problem. This is why you should collect information from multiple sources. 

These interactions are not transactions. We are trying to build relationships that can help shape the solutions we design. 

Also, because they are relationships, we can repeat the visits to help refine assumptions. 

Finally, we have to structure these inputs in a way that tells a story that’ll resonate with your organization. 

 

Avoiding a Crowded Market with Validation 

Market Validation is the combined qualitative and quantitative process of verifying that a problem found during market discovery is worth pursuing. 

Market ValidationOur objective in this step is to avoid the “me-too” offering. If we are relying on a new opportunity to deliver significant results we want to avoid the mistake of creating an already known feature. 

A big portion of the work we do as product professionals is keeping our offering competitive, but that is a different exercise than what we want to achieve when validating a market problem. Albeit, we might use some of the same techniques. 

Instead, We’re Looking for Uncharted Territory 

Market validation is looking for opportunities with high importance and low satisfaction. 

 

Market Problem Success Triad

Market Problems Triad: Satisfaction Importance and Feasibility

What are three elements that indicate a market problem is worth pursuing? 

First, you should always evaluate a market problem based on its importance and its satisfaction level. Those two elements are all about listening to the potential buyer. 

Second, we should consider feasibility. 

Obviously, there is technical feasibility, which is whether or not the solution can realistically be built by engineers. 

There is also market feasibility. This is when you consider the business structure, goals, personnel and communication practices and weigh that against the proposed solution. Essentially, can your organization feasibly bring this solution to market and sell it successfully? 

The best approach to using this diagram is to start with satisfaction and importance and then layer in feasibility. If you start with feasibility, many good ideas will be shut down when they deserve more consideration. 

Market Problems to Opportunities

Are you looking to improve your skills at evaluating market problems? 

We have a big course update to the course Market, which helps you gain a thorough understanding of your buyers and how they like to buy so you can build the product marketing strategies that deliver results. >> Learn more 

We also launched a new course, Insight, which provides you with a grounded and actionable approach to incorporating data into product practices and decisions. >> Learn More 

Both of these training opportunities can help you take your product management and product marketing skills to the next level. 

And, of course, if you’re new to Pragmatic Institute, we invite you to take the course, Foundations, which helps you understand your market and the problems it faces, and then use that market knowledge to build and sell products people want to buy. 

This course is live online and on-demand. It’s also a prerequisite for all of our other product courses. >> Learn More 

Author

  • Pragmatic Institute is the transformational partner for today’s businesses, providing immediate impact through actionable and practical training for product, design and data teams. Our courses are taught by industry experts with decades of hands-on experience, and include a complete ecosystem of training, resources and community. This focus on dynamic instruction and continued learning has delivered impactful education to over 200,000 alumni worldwide over the last 30 years.

Author:

Other Resources in this Series

Most Recent

plan, strategy
Article

How to Create a Strategic Product Plan

Most technology companies have a product management department serving as the voice of the customer and helping to understand market needs better but is product management really being used strategically?
Optimizing product management budgets
Article

How to do More With the Same (or fewer) Resources in 2023 with Segmentation and Targeting Updates

Six steps to a data-driven understanding of your best-fit buyer. Improve the efficiency and effectiveness of your marketing programs by shifting your focus (and budgets) to best-fit personas and ICPs. 
Person working on project management software on a tablet
Article

10 Tools for Product Managers 

The right product tools can make it easier to manage your team, but there are hundreds out there—so how do you choose which one is right for you?
Purchasing on a mobile device with a credit card
Article

8 Distribution Strategy Examples For Product Teams 

A distribution strategy is a blueprint for how your company delivers its products to customers. Here are 8 methods and helpful examples. 
Magnifying glass emphasizing the word data
Article

Going Beyond Win/Loss Data

The true value of a win/loss program comes from unfolding the narrative behind that data. 

OTHER ArticleS

plan, strategy
Article

How to Create a Strategic Product Plan

Most technology companies have a product management department serving as the voice of the customer and helping to understand market needs better but is product management really being used strategically?
Optimizing product management budgets
Article

How to do More With the Same (or fewer) Resources in 2023 with Segmentation and Targeting Updates

Six steps to a data-driven understanding of your best-fit buyer. Improve the efficiency and effectiveness of your marketing programs by shifting your focus (and budgets) to best-fit personas and ICPs. 

Sign up to stay up to date on the latest industry best practices.

Sign up to received invites to upcoming webinars, updates on our recent podcast episodes and the latest on industry best practices.

Training on Your Schedule

Fill out the form today and our sales team will help you schedule your private Pragmatic training today.

Subscribe

Subscribe

Training on Your Schedule

Fill out the form today and our sales team will help you schedule your private Pragmatic training today.