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Methods for Conducting Early Market Research

Stephen K. Markham, Prof. Management, Innovation and Entrepreneurship, North Carolina State University

Getting an early, accurate fix on the market is essential for any company regardless of their product or service. Understanding the market, however, is not easy. Three quick and inexpensive methods helpful in understanding customer needs are introduced below.

In the product development cycle, understanding customer needs comes after establishing a target market and before establishing the product concept. Too often people develop the product concept before customer needs are known. By understanding customers' needs, product can be developed that meets the intended customer's requirements.

Be Your Own Customer

A few years ago I was working with a telecommunications firm designing phones. The few phones sold returned—they were impossible to use. I asked the engineers to perform simple tasks using their phones and they couldn't do it.

The first qualitative market research tool is to be your own customer. Although this may sound obvious, this is a technique that is needed to get good results. First, describe how you would be your own customer. Why would you use it? What would you do with it? How would it fit with what you are already doing? What steps would you go through to buy it? How would you convert from the way you are now doing things to the way you would do them with your own product? What benefits would you derive from your product?

Using this approach you can spot fatal flaws early, and it is inexpensive and fast. You can also gain tacit information about customer needs, design tradeoffs, and redirection. On the down side, this technique is not general and may not represent the intended market. Do not limit this approach to yourself; get other to try this for you too.

The keys to success for being your own customer:

  • Stop, think, and record all the questions necessary for a customer to recognize, decide to buy, use, and maintain use of your product.
  • Go through these steps yourself in a disciplined manner and record your thinking and experience.

Critically Observe the Customer

The engineers of the phone manufacturing company mentioned above would not go to customers locations, so we brought customers into the lab and asked them to perform simple functions like putting someone on hold and connecting a three-way call. At first the engineers literally couldn't watch, but this activity was too compelling for them not to.

The second qualitative market research tool is to critically observe your customers. Again this may sound simple but to get useful results requires some discipline to apply the appropriate technique. First, identify who your customers are and be able to describe them. Second, identify questions about the significant needs customers are exhibiting through their everyday actions.

This approach enables you to generate a great deal of information about customer needs. The challenge is to determine what information is germane and what is extraneous. This approach also provides information about your customers' work flows and the types of processes you need to fit new products into their existing behavior. Tacit knowledge about customers' language and constraints and information you might not readily think to ask the customer is also revealed.

The keys to success of Critically Observing the Consumer:

  • Critically observe customer actions to see how customers were really reacting to the product features as benefits.
  • Recognize both normal and abnormal behavior.
  • Translate actions into customer needs statements.

Listen to Voice of the Customer

After the shock of watching someone using their product, the telecommunications engineers began to tell the customers what they needed. The customers simply told the engineers they were wrong. This produced a startling amount of caution among the engineers, and they began to ask questions carefully of the customers in order to understand their needs and the problems that needed to be solved.

"Buried in the conversations with customers are the nuggets of information detailing their needs."

Abbie Griffin, Originator of Voice of the Customer

The third qualitative market research tool is the Voice of the Customer (VOC). The VOC technique is sometimes used indiscriminately to refer to any conversation with a customer. VOC is used to gather customer needs as an input to product concepts, not to validate a product idea.

This method allows you to gather a lot of detailed information in the customers' context. It reveals a breadth of information about underlying needs, and anyone can perform this technique. Unlike critical observation VOC does not produce workflow or process information. It also relies on the questions asked rather than an unaided expression of needs. Nevertheless, it is a powerful technique to gather specific information about customers needs.

There are four parts of a VOC interview:

  • Context. Set the context for the respondent to answer questions. For example, ask the person to answer about the latest experience or a time when they had a specific type of problem.
  • Opener. Put the respondent into a specific situation. Get them to relate the story rather than having them passively answer yes and no. Help them visualize specific details. There is no need to ask a lot of questions; simply try to understand their needs from a story they are telling.
  • Ask Specific Probing Questions. Develop questions to elicit specific details about the domain area. Where did you go? When?, What time of day? Who was with you? What was their reaction? How did you respond?
  • Ask General Questions. Why did you mention that? Why was it important? Does that work well for you? How do other people handle that problem?

Again, this is to understand needs not test product features. You are trying to discover the problem the features will need to solve.

The keys to success for Voice of the Customer:

  • Put the interviewee into a specific situation.
  • Develop specific probing questions ahead of time.
  • Be able to ask appropriate general and follow-on questions in real time during the interview.

Deciding on the number of people to interview is important. Ten people will reveal about 70 percent of the needs while twenty people will reveal about 90 percent and thirty people will reveal upwards of 99 percent of customer needs.

As with all market research, qualitative techniques are susceptible to unintended and unknown bias. How you ask questions can impact the meaning as much as the questions themselves. None of these techniques produce results that are amenable to statistical significance and cannot be blindly applied without further research. These techniques provide important customer needs as input into the product design phase.

© 2007 Stephen K. Markham. All rights reserved.

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