Finally! Welcome to the final instalment of this series. Did we bore you? I hope not. This instalment is written by a due diligence guru – ex-KPMG, now EY. Yeah. You’re in for some goodies. Enjoy!

YS.

“Data is the most important weapon in a PM’s arsenal”.

If you have been following us on this series, (and I hope you have!), you are familiar with this quote.

Accurate market research can be a definitive differentiator between products in terms of market reception and overall success of the products. The market captures the interplay between the potential users of your products and the industry in which you operate.

Conducting adequate research on the market helps you to refine your product and ensure that you are proposing to sell exactly what your users are interested in purchasing, which also provides additional value proposition relative to what your industry currently offers.

So what is market research?

Market research involves a systematic and analytical approach to gathering sufficient information about trends and current state of your target market: the users, the competitors, the regulators, and all other stakeholders.

Unfortunately, some product managers or startups fail to consider this aspect of product development and wonder why their products fail (regardless of fancy documents or other hypotheses upon which their products are based).

A classic example of this is a recent conversation I had with someone who asked me why his business of selling rice and chicken at a carnival did not work out even though he had the right product for his target market (Nigerians who looooove rice and chicken!), a seemingly large market, indirect competitors and a fancy “business plan”.

I asked him a simple question – what do you do at a carnival?

To my surprise, he said he had never been at a carnival – he just heard from friends that they did not have access to enough food during the last carnival they attended.

From my experience in carnivals, people tend to march/dance along with the bands and performers so, naturally, snacks and finger foods would be the most convenient choice, right? Well…

His “competitors” were selling snacks and finger foods inside the crowds, while maintaining their stalls as warehouses for their products! Without this understanding, he spent so much money producing inventory, hiring waiters and securing space for selling his merchandise because he assumed that since Nigerians (“the users”) like chicken and rice, we would like it under all conditions and in every situation – WRONG!

He also incorrectly assumed that since other vendors (“the Competition”) were not selling our beloved rice and chicken, he had a unique value proposition which would resonate with his Users – WRONG!

Key aspects of the market to consider during your research

With a strong background and understanding of the building blocks of the market – i.e., the user and competition, product managers must layer on a strong understanding of other components of the market in which they intend to operate.

Product Managers must consider the following:

• Location/Channel: How do you intend to reach your users, or more importantly, how do you expect your users to reach you? What is the ideal channel to sell your product to your target customers? What are your competitors doing? What can you do better?
• Regulatory environment: You may have a brilliant idea for a solution which your regulator deems inappropriate or illegal! Without resolving this hindrance, you cannot legally and successfully implement your brilliant idea.
• Marketing channels: Our Business Studies days taught us the four Ps of Marketing (Product, Price, Place, Promotion). This is the final piece of the puzzle for understanding the overall market. Understand every P as it relates to your industry to design and sell a winning product!

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Tools for Market Research

Several tools have been developed to guide you on your market research journey, each addressing key aspects and focus area:

SWOT Analysis:

This involves an assessment of the Strengths, Weaknesses, Opportunities and Threats in a market.

• Strengths and Weaknesses are internal in nature, helping you to get a thorough understanding of the proposed benefits of your potential product, as well as the areas in which there are currently challenges/weaknesses which your product may solve.
• Opportunities and Threats are more externally focused, helping you to assess other opportunities in the market (from existing weaknesses or ongoing trends), as well as potential factors which may threaten the success of your product.

PESTLE Analysis:

PESTLE involves a detailed assessment of the Political, Economic, Social, Technological, Legal and Environmental landscape of the market in which you intend to operate.

• Political landscape covers regulatory pronouncements as well as other government factors (including potential support) which may contribute to the success or failure of your enterprise.
• Economic assessment involves a deep dive into the macroeconomic environment and how these may impact the success of your product. The most widely used metrics to assess the viability of the macroeconomic environment include GDP & GDP growth, Inflation, Interest rates, Exchange rates, FX reserves, Government spending/budget/debt etc.
• Social assessment highlights the individuals and households within your target environment. Relevant indicators include per capita disposable income, unemployment rates, poverty rates, age/gender distribution, literacy rate, mortality rates, etc.
• Technological assessment involves the review of existing technological advancements as well as technology requirements for your product and market.
• A Legal review will highlight licensing and other requirements for your proposed operations.
• Environmental reviews highlight any environmental factors, including requirements for aligning with ESG agreements, as well as a general understanding of the environment in which you will operate.

Other analytical tools which may support the different aspects of your market research include:

• Five WHYs – which is especially helpful in drilling down on specific problems.
• CATWOE (Customers, Action, Transformation process, World view, Owners and Environmental constraints), which can be useful in transforming and refining your product design.
• SCRS analysis (Strategy, Current state, Requirements and Solution), which can be an important tool for assessing the industry and developing a product to solve any existing challenges.

Now that you have sufficient information about your market, what are the next steps?

1. Incorporate your findings into your product design and development: Take all the feedback from your potential users and refine your product in a way that addresses the users’ requirements, preferably in a manner that is not currently being addressed by your competitors.
2. Validate your assumptions and prioritize requirements and features based on market needs: Listen to your potential customers – what do they want and how does your product address this? User surveys and testing can help you to eliminate unnecessary and expensive product features and improve your focus on customer needs and preferences.
3. Track your product’s performance in the market: Conduct ongoing reviews and research on the industry and the market and compare with your initial hypothesis and KPIs. Without analytics, every product is as good as dead!

Thank you for joining us on this series. I hope you’ve learned a thing or two.

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