How product managers should do market research
Why do customers buy your product? The simple answer is they have a problem to solve. But a deeper explanation exists beyond the benefits and features of what you offer. You must understand who your customers are, what they really care about, and why they choose your product over another if you want to ensure long-term success.
This is something product managers know well. In fact, it is part of the job. Product managers are responsible for determining what target customers need and value to build a product they will love. This process is called product discovery. And it begins with research.
Market research involves gathering and analyzing information about the overall market environment, prospective customers, and competitors for your product or service. For product managers, this helps you formulate a nuanced worldview of the opportunities and threats that exist for your offering. Think of it like studying a habitat — you are exploring the elements that could affect your product's ability to thrive. Like any habitat, conditions can be variable. You will want to keep learning and observing as markets are constantly shifting (especially in the tech industry).
While research is a core product management task, the entire cross-functional product team needs to understand the market — each representative will zero in on different aspects to help your product succeed. This guide will give you an overview of what market research entails and how to get started conducting your own.
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Why is market research important?
Understanding the market is an important part of crafting your product strategy — along with defining what you want to achieve and how you plan to get there. Market research brings external factors into consideration.
This is important because market research is critical to finding product-market fit. You need to deeply understand your market position, audience, and any alternative solutions if you want your product to succeed. This matters whether you are launching a new product, enhancing an existing offering, or entering a new market.
In other words — intuition alone is not enough. Even if you have a clear product vision and substantial industry experience, conducting regular market research often uncovers new and unexpected ways to improve your product. This can also improve your resilience as an organization.
Of course, there will always be external forces you cannot control. But if you have a deep understanding of the market environment and customer values, you will be in a better position to adapt to challenging situations.
Plus, market research enables all members of the core product team to make more informed decisions. The following are only a few examples of many, but market research helps:
Product management — Empathize with customers and understand their needs to better prioritize upcoming product work.
UX design — Make design choices that reflect how customers want to use modern products.
Engineering — Stay up-to-date with technologies used by competitors.
Product marketing — Update product positioning to resonate with what customers want to hear.
Related: How do product managers work with other teams?
What are the components of market research?
For product development purposes, you will want to explore three core components of market research — the overall market landscape, competitive analysis, and customer research.
Overall market landscape
Examining the market as a whole is a good place to start. Typically this piece of market research looks at macro-level industry characteristics and customer behavior. Below is a list of different factors to consider when researching the market landscape.
Buyer power | Ability of buyers to impact product quality, price, and customer service within a market. |
Demographics and psychographics | Similar characteristics and common beliefs your buyers share (e.g., age, income, cultural values). |
Growth rate | Quantified measure of the change in demand within the market over a given period of time. |
Market share | Portion of revenue attributed to each company in the market (including your own, if applicable). |
Market size | Number of customers and/or revenue within the market over a given period of time. |
Pricing | Current amount customers are willing or expect to pay for similar products. |
Risk | Likelihood of volatility, financial loss, or other market factors that could negatively impact your business. |
A PESTLE analysis — which stands for political, economic, social, technological, legal, and environmental — can be a helpful exercise to get your team thinking about the broader market and where your product will fit into it. Give it a try in Aha! software with this whiteboard template:
Competitive analysis
Researching competitors involves looking at established players in the market and alternative solutions used by prospective customers. By assessing competitor strengths and weaknesses, you can learn how to differentiate your product.
Read more: A guide to competitive analysis
Customer research
Customer research drives product innovation by enabling you to glean insights directly from your target audience. This helps product teams build empathy for the problems customers want to solve. It can also reveal your customers' true feelings about your product.
Read more: A guide to customer research
How to do market research as a product manager
The market research process will vary in complexity depending on the scale and extent of your plans. Launching a brand new offering often calls for a comprehensive analysis of the entire market — in other scenarios, like enhancing established products, a lightweight look at the current competition could suffice. But in general there are four essential steps for conducting successful market research:
Define your objectives. In order to collect the right data, you must first establish what you are trying to learn. Clarify the focus of your market research by listing out the questions you have about a problem or opportunity, then distill this into a goal statement.
Plan and conduct research. Figuring out where to find the information you need. You can employ a mix of primary and secondary sources — primary includes interviews, surveys, and focus groups while secondary includes sources like industry publications, trade associations, and market reports.
Analyze and share the results. Once you have gathered your data, review it closely to uncover trends and other insights. Summarize your findings and make them accessible to your team. You might even create a presentation to showcase what you discovered.
Plan next steps. Market research should inform action. Use your newfound learnings to build customer personas, form a well-rounded product strategy, or prioritize product decisions that will deliver more value to the market.
Many product managers expedite their research and analysis by using pre-built templates. If you want to get started fast, download one of our customizable research templates or the SWOT analysis whiteboard template. This framework is helpful both for identifying what to research and organizing your findings for discussion after research is complete.
Market research is not a one-time endeavor. It is something to continually invest in as conditions change and your product grows. But the insights you gain as a product manager should more than make up for the effort that conducting market research requires. When you are able to paint a full picture of the market, you will have more clarity on how your product fits into it.
FAQs about how to do market research
What does a market research analyst do?
A market research analyst gathers and analyzes data about market trends, consumer preferences, and competitive landscapes — helping businesses make informed decisions. This role is crucial for organizations looking to understand their target audience, assess demand for products or services, and develop effective marketing and business strategies.
How can product managers define their target market?
Product managers can define their target market through research, analysis, and a deep understanding of their potential customers. This entails conducting market research, creating customer personas, gathering direct and indirect feedback from prospective customers, and analyzing competitors.
What's the difference between primary and secondary research?
Primary research involves gathering new data directly from your target audience through surveys, interviews, or empathy sessions. Secondary research includes analyzing existing data collected from other sources such as reports, publications, or studies.
What questions should a product manager ask when conducting market research?
Understanding your market is core to deciding what you want to deliver and the value it will bring. Here are some essential questions to get you started:
What problems do potential customers face and how can your product help?
Who are the target customers and what do they need?
Who are your competitors and how can you stand out?
What market trends and opportunities can you leverage?
What is the right price and value proposition for your product?
How can customers easily access and buy your product?
What might prevent customers from adopting your product, and how can you overcome those barriers?
How can you gather and use customer feedback for improvements?
