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, especially among startups. This shouldn’t be a surprise. Much of this occurs because many founders of software and hardware companies tend to come from an engineering, programming or other technical background. While this enables a corporate strength in creating a flow of technical innovation, it can also cause a problem when it comes to conducting tech market research aimed at planning new products, especially those targeted at a new market.

Everyone has a tendency to focus on what they know best; that’s just human nature. Folks spend more time on the issues that they enjoy, are more comfortable with, and are more confident about their ability to make good decisions on. Things that don’t fit into this category tend to be put off, or given short shrift.

In technically-driven companies the result is often products which are well thought out from a technical viewpoint–but much less well so from a “meeting market needs” perspective. While both are very important, the market perspective is absolutely critical in the initial stages of a planning a new product.  So what’s the right approach to  market research which supports new product planning?

When Should The Research Should Be Conducted?
The answer to this is early, often and forever. The earlier you start prior to 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–trade secrets and patent filings, for example, 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 of time. Companies tend to develop an internal “common sense” that is used in making decisions, which is based upon past inputs. 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 dynamic market.

Who Should Do Tech Market Research?
The best way to conduct high tech market research is what I often refer to as the “two-headed monster” approach: 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 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 Marketing. The Business/Marketing manager should be in the lead for this task, but it’s important to note that both camps have a role to play in this endeavor. There are two different perspectives on market feedback, and 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 in the process after development starts (and schedules inevitably begin to slip). If only one can be available, it should be the Marketing side–working 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 of visiting and interviewing potential customers, along with some background Internet research.

What’s most important is to keep and open mind, and eliminate your own biases and pre-conceived notions. This exercise needs to be a search for the truth, not an attempt to validate your own theories – which is VERY easy to slip into if you aren’t focused on being TOTALLY objective. Also, make sure that you are talking to the right people. If you are planning a market-creating breakthrough product, you really need to be talking to Early Adopter types, not the guy or gal that only buys after everyone else they know already has one. 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 those mainstream buyers and even the late adopters. Use the current market phase to guide whom to get input from.

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 with accuracy. For example, I know of large companies that spend huge amounts of money on Focus groups, while 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” phenomena with professionally managed focus groups. But there is that formal, professional looking report that appears very convincing in the aftermath. Focus groups can be good if constructed properly, but I have seen a lot of money spent for a very bad result. If the focus group wasn’t run properly, or the technology is very revolutionary, the results can be total garbage covered in a beautiful wrapper. Especially with revolutionary technology and embryonic markets I always advise that a good amount of old-fashion ad hoc research–informal, detailed individual discussions directly with prospects–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 really depends on what you are doing, but my general answer is that “you will know when 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 up at a set point in time, along with your market common sense, intuition, and gut feel. With incremental product releases, waiting may not be possible or necessary. But if you can avoid it, especially if starting a new company, division, product category or business area, 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 with regards to the clarity of the current market snapshot. You’ll feel you’ve really 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 feel is unfortunately often a prescription for failure, unless the target audience is the developer/engineer on the “next bench”. There are a few high profile companies which 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.

• 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
• By 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 an individual product-oriented market research project until you are comfortable that you’ve got the correct answer.

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

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