How We Think Product Development Strategy: Part 2
Identifying your target market
Sometimes, developing a product is the easy part. You have an experienced team, and a knowledgeable group, you’re agile, everyone knows what to do, and you’re in your element.
You have a tonne of plans for your incredible product. So many features. Some of them are so new people don’t even know they are possible. Your team is ready to go full-steam ahead.
But in what direction?
What should be built first? What can be last? When do UX and UI come in? How about marketing? How long will it take to get an MVP out? How will the product find its market fit?
The answers to these questions are different for every company. They are different for every product that they push onto the market. There’s one thing they all have in common, however: for a company to be successful, these questions need to be answered as soon as humanly possible, preferably before development begins in earnest.
One does that through market research.
First step: Identifying customer needs
While we all have an instinctive grasp of what the market needs (no one starts a company to build a product they don’t see a space for), the specifics of this can very often be hard to grasp without running proper research.
It’s easy to be misaligned with the market without proper data collection and serious analysis. Customer needs should always be a top priority when considering any product development strategy, even (especially if!) when research suggests they may not be in sync with our anecdotal evidence.
Identifying customer needs plays an essential role in ensuring the development of a product that has a great chance of being successful, instead of a problem to be fixed later on, when the company is seeking to become profitable.
Gaining a deep understanding of customer needs starts with market research. Market research helps to identify demographics, motivations, and buying patterns in a target market. It is important to consider the wider market size, competition, and position of the product before deciding on the best product development strategy to follow with. This research can also help to identify the features that customers expect to see in the product, which can inform the development process.
It’s important to note that market research and identifying customer needs don’t replace a founder’s decision-making process. It’s not about preceding one’s judgment or replacing creativity with predictability.
It’s about making informed decisions, instead of flying blind. Ultimately, the success of a product depends on how well it meets customer needs.
It also bears keeping in mind that this is a continuous process. Maintaining regular customer feedback is necessary to develop products that are attractive and relevant to customers over time. This feedback loop can be used to make adjustments to the product development strategy and ensure the product is up to market standards. Additionally, customer feedback can lead to the development of innovative and creative features, which can give the product an edge in its market.
Second step: Identifying gaps
It’s not all about figuring out what the customers want either. It’s also about connecting that information to what you can provide. Moreover, it’s about figuring out what you can provide that others can’t or won’t.
Companies should be able to identify areas of the market that need to be addressed to increase sales and revenue. Identifying gaps can help guide product development decisions, such as introducing new products or features.
Gaps in the market are often identified by analyzing customer needs and industry trends. After completing step one, companies will have access to vast amounts of data on customer needs, preferences, and behaviors. This data can be used to identify existing gaps, as well as areas of potential opportunity. Companies typically rely on data analysis to uncover potential areas of improvement in the market and innovative product ideas.
This is also a continuous process, but it’s also a creative endeavor. To expertly exploit a market gap, the strategy must take into consideration some factors, including the company’s productive output, what the competition is doing, and the company’s ability to market a product. Sometimes it’s not about being first, it’s about having the right product at the right time with the right marketing.
You want the iPad, not the Windows XP Tablet.
Third step: Identifying buying habits
Now you know what the market wants, and you’ve figured out where your sweet spot lies. You are ready to start developing, right?
You need to make sure your product fits into the way your prospective customers buy. Different demographics buy in different ways. Purchasing behaviors vary geographically, by age group, by purchasing power, etc. If you’re making a luxury product for wealthy customers, you need to make sure it’s available where wealthy people buy, and the same is true for every other data point that drives purchasing behaviors.
Maybe the simplest way to explain why this is a key thing to understand early on is an example: let’s say you’re making a video game.
Porting your game to a different console/system, later on, will be much harder, more expensive, and more cumbersome than developing it for the right platforms from the get-go. The same is true for whether you’ll make physical copies. What marketplaces do you want your game to be present on?
Most of the time, the answer isn’t all of them, because different platforms will appeal to different kinds of gamers, who will have different purchasing habits. While Football Manager does fine on Steam, FIFA needs to be on PlayStation and Xbox. Both are football simulators, but their audiences have very different buying habits.
Purchasing trends, price points, and competition are all things you should be aware of as you do your homework before starting the development of a product, but also as time elapses. All of these things will also provide insights into the lifecycle of a product. Business owners must track customer buying habits to discover when and where sales decline. This information can be used to update the product and make changes to increase demand and remain competitive.
Understanding customer buying habits can also help companies identify when it’s time to launch a new product or discontinue an existing one.
In the next chapter, we will be looking at researching the competition specifically. Expect some more notes on what to look out for, specific tips, and practical advice.
Until next time!
Make sure to follow us on our social channels so you can keep up-to-date with our activities, and make sure you tune in next week for part 3!
If you have read enough, and feel like you want to work with us and develop your product with our team, we would love to hear from you.
Want to know more, get in touch!
Thanks for reading Untile Diary! Subscribe for free to receive new posts and support our work.