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Sunday, April 4, 2010

Agile Market Research

We live in a time when ideas for products and services can be acted upon with a fraction of the cost and resources required even a few short years ago. With an eye on fast time to market, passionate entrepreneurs are often tempted to "code first, ask questions later". Its not that entrepreneurs don't want every advantage possible, they just don't always realize the need to validate concepts that seem so clear to them. Especially in these times of rapid development cycles it's easy to forget how slowing down a bit to conduct market research can actually help companies go further, faster. The right use of research can identify opportunity (features and functions that hadn't yet come to mind) as well as save time and reduce risk (guess we didn't need to code that XYZ feature - looks like nobody needs it) and make a tremendous impact on the company success.

Lean startup model suggests validating business idea with as little resources as possible. Is there a conflict between this model and a need to invest thousands of dollars in the research before implementation? You bet there is if you think about classic market research that costs an arm and a leg, takes a few weeks and is typically very complex to conduct. By the time you get your results you may break your budget and loose the momentum. What works for the large corporations is not always an answer for the startups and small businesses.

The good news is that market research evolves as rapidly as other services and available today in the same agile affordable style that became a standard of Web 2.0. Leveraging social networks and power of internet enables market research providers to help companies to set up and complete their studies at a fraction of the classical cost and within a few hours/days. Using this new trend you can wake up at night with your brilliant business idea, write and launch a survey and by morning get responses from US consumers that fit your target market demographic profile. Business validation and market research becomes available for the rest of us and can help at many stages of your business' lifecycle.
So we know that there are different stages in a company lifecycle. Different research strategies and techniques are effective for each stage and can help finding you the best odds that lead to the success. Here are some stages of research to consider:

Phase 1: Idea Exploration
Many disruptive or innovative ideas get their start by understanding the latent or unmet needs of a particular group. Latent needs are those that often aren't seen as a need by end users - they are seen as a problem or an annoyance. They often don't know that a solution is possible. In this stage of research it's important to observe and ask questions, the problems you uncover might be bigger issues than the one you had already identified. Consider the days before camera phones - people still enjoyed taking pictures but they didn't always have a camera available when they needed it. They often experienced photo worthy events when they didn't have a camera handy. They had a latent need to be able to take photos more often. What did they have with them? Car keys, wallet and their cell phone. Hence, adding a camera to one of these would help solve the unmet need.

Phase 2: Idea Validation
Ok - you proved that there is a pain and that your concept may solve it - hence there is got to be a business opportunity. Check how large it is and what's the best way of approaching the market with your innovation. You can do that before you have your first customer and/or before the first line of code is written. Your objective here is to get a broad test reaction to the idea and to learn who the target market really is. Also known as a concept test. You don't always need to have something to show at this stage - it's often best to simply explain the basic part of the concept and leave out the details until they have a good idea of the core of the idea.
Important to understand more than just appeal of a concept.
A thorough concept test often includes digging into questions such as:
· Is it appealing?
· Does it satisfy a need?
· Is it unique and different?
· Is it believable - this will work?
· Does it offer value for money?

Phase 3: Continuous User feedback.
Your alpha or beta is live and you have your first adopters Congratulations, if you made it here equipped with research knowledge you have made your first investment with much higher chances for success than an average startup. It's time to ask your first users' feedback – create feedback loop and also don't forget to re-test broad market to see if concept has evolved to appeal to a broader audience or if an unexpected market sector is even more interested in your service/product than the one you are targeting. While getting feedback from existing customers can be done "in house" you will need some external market research tools to get access to the fresh outside look at your offering.

Phase 4: Logo and branding research
You're lucky if your first name and logo are well received but in most cases we just don't have enough time and recourses to do it right from the beginning. If the model turned out to be a failure, then who cares if you have a killer logo. This is a good time to look around and see if your corporate identity, logo, branding, name of the company, site name are conveying the right messages and helping you to build a stronger brand. You don't have many users yet so it's not too late for a redesign.
Use hybrid - existing users and outside consumers research to choose the best logo and build a strong brand. Get to know what to say and how to say it, get used to the new infrastructure you just created and about to explode to a larger scale.

Phase 5: Brand extension and new product development
Exploring ideas that build on original product or support adjacent and complementary markets, helping solve sudden crises and keep growing. It's a good time to introduce more complex market research solutions, dedicate larger budgets and hiring professional consultants. You have the big boys to compete with and you have a good chance of beating them if you are smarter about exploring new ideas.

Lev
Lev Mazin

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