Using Market Research to Uncover Product Innovation Opportunities

Business owners often miss valuable opportunities to create innovative products because they do not invest in market research. Market research helps entrepreneurs discover unmet needs and create new solutions that are extremely beneficial to their target customers. In this article, I highlight how entrepreneurs can leverage market research to create innovative products.

What is Product Innovation?

There are many different types of innovation. Product innovation, as defined by Kenneth Khan, refers to new products and services. This type of innovation usually entails businesses implementing product improvements, launching new features or creating new products that they typically don’t produce. As you can imagine, each of these tasks involves an incredible amount of uncertainty as business owners have to ask themselves a plethora of questions to ensure their innovations are relevant & appealing to their target audiences. This is where market research is valuable to entrepreneurs. Entrepreneurs who want to identify product innovation opportunities should follow this market research process.

Step One: Establish Your Goals & Objectives

Before embarking on any research project, you must have a clear picture of your key objectives and goals. These goals and objectives encapsulate your answers to one key question: “After this research project is complete, what do I want to achieve by leveraging the insights?”. Your business goals could fall into the following categories:

1. Product Range: You could have an overall objective of increasing your product/service range and a specific goal of X amount of new products.

2. Financial: You should set a clear goal of how much potential revenue a new product can generate for your business. This will help you decide which opportunities to pursue. You also need to determine how much you are willing to invest in the market research project.

3. Customer: You need to have a clear idea of what you want to find out about your customers and target audience. For example, “we want to find out the top 3 new features customers want and the extra money they are willing to pay for those new features.”

4. Frequency: You need to determine how frequently you will conduct market research to identify product innovation opportunities.

Having clear goals and objectives helps you properly design your data collection tool.

Step Two: Design Your Data Collection Tool

Now that you have clear goals and objectives, it is time to design your data collection tool. There are three foundational tools you can use to discover product innovation opportunities:

• Polls: This is the easiest tool to use. The good thing about polls is that you can use different mediums to implement them such as social media, WhatsApp or traditional survey software. You should use this method if you already have a few new product ideas, or if you have a large client base or many social media followers. The disadvantage of this method is the lack of depth you get from the results.

• Traditional surveys: This is the most common tool, especially for entrepreneurs who want to get a deeper understanding of people they may not have direct access to. I recommend this method if you want to find out more information about the wider target population and not only your customers. Another benefit of using this method is the rich data analytics you get from survey data: you can get average prices potential customers are willing to pay, correlation and segmentation.

• Interviews: This is best if you want to collect qualitative data. For example, you want to find out why customers want particular features.

Some key best practices for designing your data collection tool are:

1. Keep it as short as possible. Only include questions that will help you reach your objectives.

2. Include pricing questions. Ask your respondents what they are willing and able to pay for new products and features.

3. Identify unmet needs. Ask customers what current solutions in the market are missing.

Here are five key questions you should include in your data collection tool:

1. What frustrates you about existing products or services in this category?

2. How do you see your needs evolving in the next [time frame]?

3. What technologies or tools do you use daily?

4. Can you describe your ideal [product/service] in a perfect world?

5. What are your biggest challenges or pain points in [related industry/area]?

Step Three: Glean Insights

After conducting the study, it is important to interrogate the data and glean insights from it. After analysing the data you should be able to decide what product innovation opportunities are available and which ones you will pursue. Here are a few questions you should ask your data:

1. What unmet need is shared by the majority of the market? Let’s use old-school desktops as a case study. Imagine you were the product development lead at a major computer manufacturing company, after extensive research you find out that 80% of the market desires smaller computers that they can easily carry around wherever they go. This finding would suggest that a more portable computer would be welcomed by the market.

2. What is the value of meeting this need? Remember, desiring a solution is only one part of the demand equation: you need to analyse the data and see how much customers are willing to pay. How valuable is a new product upgrade to the target market? You need to determine how profitable the opportunities are.

3. How could we solve this problem? This is the product ideation phase. You need to come up with different product ideas that meet the expectations of your target audience.

4. How much would it cost? What resources do you need to create the new product or add a new feature? How big would the investment be? If you need to hire new suppliers, how much will that cost?

Market research is a great way to identify new product innovation opportunities. By following this simple framework, you will be able to uncover insights to fuel your creativity.

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