Importance of Market Research in Product Development Lifecycle

Product development lifecycle is a process that involves creating, designing, and launching a new product into the market. It is a difficult process that needs meticulous preparation, investigation, and execution. One of the most critical components of product development is market research. Market research involves gathering and analysing data about the market, customers, and competitors to inform the product development process. In this article, we will discuss the importance of market research in the product development lifecycle.

Table of Content

• Understanding the Market and Customer Needs
• Concept Development
• Product Design and Development
• Pricing and Positioning
• Launch and Post-Launch Evaluation
• Conclusion

Understanding the Market and Customer Needs

Defining the target market

The customer demographic that is most likely to buy the goods is referred to as the target market. Understanding the target market is crucial because it helps businesses tailor their product to meet the needs and preferences of their customers.

Conducting market research to understand customer needs

Market research involves conducting primary research and secondary research. This information can help businesses determine gaps in the market and what features or benefits customers want in a product. Companies can also gain a better understanding of the competition. Additionally, market research can help companies identify trends and emerging technologies that may impact their industry, allowing them to stay ahead of the curve and remain competitive.

Identifying market trends and consumer preferences

By analysing market trends, businesses can predict future demand for certain types of products. They can also identify consumer preferences, such as a preference for environmentally friendly products or a preference for products that are easy to use.

Developing customer personas

A fictional portrayal of a target consumer is known as a customer persona. Developing customer personas can help businesses understand the needs and preferences of their target customers and tailor their product to meet those needs. It includes information about the customer’s age, gender, income, interests, and purchasing behaviour.

Few Practical Tips

• Understanding the market and customer can be done primarily through sources of secondary market data. To go a step further, various methods such as using survey tools and focus groups can be used.
• Surveys can be conducted online, through email, or in person. A well-designed survey should include questions that help businesses understand their customers’ needs, preferences, and pain points.
• By monitoring social media platforms, businesses can gain insights into customer sentiment, preferences, and trends. This information can be used to develop products that align with customer preferences.

Concept Development

Concept Development is a critical phase in the product development lifecycle that involves generating and refining ideas for new products. A study by Nielsen found that products that underwent concept testing before launch were more likely to be successful than those that did not. The study also showed that companies that conducted concept testing had a higher return on investment than those that did not.

Market research can help businesses determine what features and benefits are most important. Essential features can go through a feasability analysis and prioritize those in their product development efforts to stay profitable. This approach can help ensure that the resulting product meets customer expectations and is well-received in the market.

Product Design and Development

In the case of new product, beta version of a product can be deployed to collect feedback. Once the feedback is collected from users, the product development team can add feedback points in backlog and selected them while improving the product.

One recent case study that highlights the importance of market research in product design and development is the development of the Peloton exercise bike. Peloton used market research to identify a gap in the market for a high-quality exercise bike that could be used at home, and then used this insight to develop a product that met the needs of its target audience. As a result, Peloton has become a market leader in the home exercise equipment industry.

Pricing and Positioning

Recent research has shown that price is a significant factor in consumer purchasing decisions. According to a survey by Statista, 60% of consumers consider price to be the most important factor when making a purchase decision. Market research can help businesses understand their competitors’ strengths and weaknesses, as well as their pricing strategies.

Market research can help businesses develop a marketing strategy that highlights the product’s unique features and benefits. This information can be used to differentiate the product from competitors and attract customers.

Here are some examples:

• Apple: Apple is known for its premium pricing strategy, positioning itself as a high-end technology brand. Its products are priced higher than its competitors, but the company has been able to maintain its market share by delivering high-quality products and excellent customer service.
• Dollar Shave Club: Dollar Shave Club disrupted the razor industry by offering a subscription-based service that delivers razors and other grooming products to customers on a regular basis. The company was able to differentiate itself from competitors by offering a convenient and affordable solution to a common problem.
• Airbnb: Airbnb has positioned itself as a more affordable and personalized alternative to traditional hotels. By offering unique and authentic travel experiences, Airbnb has been able to attract a loyal customer base and maintain a competitive edge in the travel industry.

Pre and Post Launch Evaluation

Recent research has shown the importance of launch and post-launch evaluation in the product development lifecycle. For example, a study conducted by McKinsey & Company found that companies that conducted thorough market research before launching a product were more likely to succeed in the market. Additionally, companies that conducted post-launch evaluations were able to make improvements to their product and increase its success in the market.

Implementing launch and post-launch evaluation in the product development lifecycle can be done in several ways. Companies can use surveys, focus groups, and other forms of market research to gather feedback from potential customers before launching their product. They can also use data analytics to track sales and customer feedback after the product has been launched.

The insights gained from launch and post-launch evaluation can be highly valuable for companies. By conducting this research, companies can make informed decisions about their product and marketing strategy, and increase their chances of success in the market.

Conclusion

Market research is critical to the success of product development. It helps businesses understand their target market, customer needs, and preferences. It also informs product concepts, design, pricing, positioning, and marketing strategy. By incorporating market research into the product development lifecycle, businesses can develop products that meet the needs and preferences of their target customers and maximize their chances of success in the market.