Part 3: Technical Product Manager's Guide
A big part of product management is making sure the product, the solution or the feature you are looking at is worthwhile. Even though there is no particular step by step process to follow through, you should consider the following steps when doing your market research.
- Determine the Market Size
- Identify Competitors
- Categorize and understand your Competitors
- Feature Comparison
- Monitor your Competitors
I will take the following example within this post to explain the market research process. Please refer to Identify Your Customers and Ideas for more details.
- Mobile App that allows users to change their video background.
Determine the Market Size as a Product Manager
Market size is vital as we need to make sure the market we are going in is big enough to earn a return. Usually, there are two ways to approach this
- Top-Down Market Analysis
- Bottom-Up Market Analysis
Apart from these fancy titles, Top-Down approach is all about finding total market share and estimating your market share. If we take our first example, imagine that we found out 10 million people took portrait videos at least once in the US last year through some white paper. We can estimate out of those 10Million at least 5% must have wanted to change their video background and If we capture 5% from that and sell our app $5 per a user, we can earn
1000000*0.05*0.05*$5 = $12500
The disadvantage of this method is we have to make predictions you're product's market uptake. Because of this lot of product managers choose the next approach.
The bottom-up analysis is done by thinking about the current sales of similar products and estimate how much of those sales you can get. It is comparatively more accurate because it looks at patterns that exist today rather than the total market. The difference is we look this approach is more data-driven than pure estimates. Following are a couple of tools and techniques I frequently use to find some numbers.
- Google is your best friend, search for keywords like the "market size of" or "industry reports for"
- Google keyword planner. Using this you can get some idea about how many users need your product. Also, make sure to select your target countries.
- Moz is again similar to keyword planner, but you can identify your competitors and other similar things that are people looking. Remember nowadays ranking on google's first page happens to be the best way to get noticed.
- Facebook campaign manager tool, You can sometimes use this to get the most accurate figures around the user groups and interests. Example: you can get how many FB users have shown an interest in your competitor's product. However, remember that you only can see users that use Facebook. So if you are doing a product for China or Russia you are can't use it.
- App Store & Play Store: You can find out how many users are using apps similar to you.
- Twitter, Reddit and Quora - See how many people have the issues you are trying to sort out.
Following are some sample screenshots on the type of research I do if I were to conduct a Bottom-up analysis of our example.
See the next post regarding "Identifying and Categorizing your Competitors".