High Tech Market Research for New Products

One of the biggest problems in high-tech businesses is that a “technology-focused” approach often tends to dominate strategic decisions. This is especially true among startups. This shouldn’t be a surprise, of course. Many founders of software and hardware companies tend to come from engineering, programming, or other technical backgrounds. This enables a corporate strength in creating a flow of technical innovation. However, it can also cause a problem when it comes to conducting tech market research aimed at planning new products. This is particularly problematic for those products targeted at a new market.

Everyone tends to focus on what they know best; that’s simply human nature. Folks spend more time on the issues that they enjoy and are more comfortable with. They are more confident about their ability to make good decisions in these “comfort zone”. Things that don’t fit into this category are often put off or sometimes given short shrift.

In technically-driven companies, the result is often products that are well thought out from a technical viewpoint. But unfortunately, they are often much less well so from a “meeting market needs” perspective. While both are very important, the market perspective is critical in the very earliest stages of planning a new product. I referring to the time before any design or coding begins.  So what’s the right approach to market research that supports new product planning?

When Should Tech Market Research Should Be Conducted?

The answer to this is early, often, and forever. The earlier you start before design or coding, the more time you will have to obtain the most accurate picture of the market that’s possible. Sometimes there are practical limitations to how early you can start. For example, trade secrets and patent filings, or the lack of a prototype which may be considered crucial to receiving realistic market feedback. Within these limitations, get out and begin interacting with the marketplace as soon as practical. And don’t ever stop.

Markets, especially the high-tech software and hardware variety, are like living organisms. They are constantly growing and changing. What may be true in the early phases of a market could change dramatically over even a short period. Companies tend to develop an internal “common sense” that is used in making decisions This “common sense” is based upon past inputs or even experience at previous companies. That common sense can serve you well in planning products for relatively static markets. But can work against you when conducting product planning in a highly dynamic market.

Who Should Conduct Your Tech Market Research?

IMO, the best way to conduct high-tech market research is what I often refer to as the “two-headed monster” approach. By that I one marketing person, and one technical person. Not just a lone wolf if you can help it. And please–no committees. Quite often this would be a Product (Marketing) Manager along with the Engineering Project Manager who will lead the actual technical development of the project. In the smallest startups, it might be the “technical founder” and the “business founder”. For example, the CTO and CEO, or CEO and VP of Marketing.

The Business/Marketing founder should be in the lead for this task. But it’s important to note that both camps have a critical role to play in this endeavor. There are two different perspectives on market feedback. As well as two different priorities in terms of questions to ask. Having both parties involved (assuming there isn’t a dysfunctional relationship) usually leads to the most complete and risk-reducing result. In addition, it often eliminates arguments over priorities later after development starts, and schedules inevitably begin to slip. If only one can be available for market research, it should be the Business/Marketing side. In this case, they should still work closely with the Product Development/Engineering lead, to make sure their input is included in the process.

How Should Tech Market Research Be Conducted?

This is a really broad question which depends heavily on the situation. How much do you have available to you in terms of money, time, and other resources? If you’re in a big company, you may be able to commission some objective 3rd party research. If you are a startup with modest resources, it usually is an ad hoc exercise. That means visiting and interviewing potential customers, along with some background Internet research.

What’s most important is to keep an open mind, and eliminate your own biases and preconceived notions. This exercise needs to be a search for the truth. Not an attempt to validate your theories. This is VERY easy to slip into if you aren’t focused on being objective. Also, make sure that you are talking to the right people. Say you are planning a market-creating breakthrough product. In this case, you need to be talking to early adopter types. NOT the “late adopter” guy or gal that only buys after everyone else they know already has one. However, If you are introducing a product that is very similar to other products in an already large market–but maybe at a lower cost–by all means, talk to mainstream buyers and even those late adopters. Use the current market phase to guide whom to get input from.

Don’t Let Money Allow You To Avoid The Hard Work

It’s great if you have the money to do some formal primary research with an outside market research firm. But be careful about confusing formality or quantification with accuracy. For example, I know of large companies that spend huge amounts of money on focus groups. Their Product Managers only reluctantly talk to actual potential customers directly. I find this very dangerous; you might say stupid! Particularly with breakthrough technology, you tend to find a “garbage in, garbage out” phenomenon with professionally managed focus groups. But there is that formal, professional-looking report with a nice table of numbers that appears very convincing in the aftermath. Focus groups can be good if constructed properly, but I have seen a lot of money spent with very bad results. If the focus group isn’t run properly, or the technology is very revolutionary, the results can be total garbage covered in a beautiful wrapper.

With revolutionary technology and embryonic markets, I always advise a good amount of old-fashioned ad hoc research. These informal, detailed individual discussions directly with prospects can be used at a minimum as a sanity check and usually should be the main tech market research technique. There are exceptions, of course. If you are doing incremental product research where the product is well-understood and the changes are evolutionary, objective research methods such as surveys may be a great way to get a quick and definitive read on the market’s reaction.

How Do You Know When You’re “Done”?

This depends on what you are doing. But my general answer is that “you will know you are done when you get there”. It’s important to not put an absolute time limit on this type of tech market research if it is at all practical. In some cases in the real world, this isn’t possible, of course. Sometimes you just have to go with the information that you have gathered at a set point in time. then combine this with your market common sense, intuition, and gut feel. With incremental product releases, waiting may not be possible or necessary.

But avoid this if you can. Especially if starting a new company, division, product category, or business area. In these cases, please resist the temptation to “go with what you have” if it just doesn’t feel right. In my experience, when you’ve “done enough” research to begin serious product planning, it becomes obvious. You will feel very comfortable about the clarity of the current market snapshot. You’ll feel you’ve nailed the wants and needs of the market as it relates to the new product opportunity. Try not to get “antsy” and move forward because you’ve reached the original market research end date on your theoretical timetable. Resist that temptation and keep working until you are CONFIDENT that you are there unless other factors just won’t allow it.

Summary And Conclusions

Make sure that you do sufficient tech market research before you begin building new products. Product development on a developer’s gut feeling is unfortunately often a prescription for failure. That’s unless the target audience is the developer/engineer on the “next bench”. There are a few high-profile companies that have entered our folklore that were lucky enough to start that way. But more often than not this approach will quickly empty your pockets, rather than make you rich. Include both marketers and technologists in the research activities if at all possible. Here’s my short list of best tech market research practices:

• Marketing should take the lead on tech market research for new products
• Always make sure you talk to at least some prospects directly and informally
• Be wary of formal “arms-length” market research results, if not supported by an informal internally-conducted research “sanity check”
• Make market research a continuous company function
• Try not to stop a product-oriented market research project until you are comfortable that you’ve got the lay of the land.

There you have my thoughts on conducting market research for product planning purposes. I’d love to hear yours as well. Please post a comment with your experience and views.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or Subscribe to the Morettini on Management Newsletter hosted by LinkedIn. Contact Phil directly at info@pjmconsult.com