Most great products don’t happen on accident. They’re the result of creativity, innovative thinking, and in the majority of cases, a lot of research. Two critical pieces of the research puzzle include market research and user research, each with its own distinctive purpose.
Product managers need both, but at different points and for different purposes over a product’s development and lifecycle. In this article we’ll address the differences between user research and market research and explain when you would want to use each.
What is market research?
Market research is a way for businesses to get a realistic snapshot of a potential market. In its most basic form, it provides a broad, high-level understanding of a market or industry in order to help determine a product’s potential.
Market research seeks to answer questions like:
- Does a market exist for this product?
- Who are our target customers and what challenges do they have?
- How large is the total addressable market (TAM)?
- What does the competitive landscape look like in the space?
Conducting careful, detailed research early on can save organizations a lot of headaches by identifying risks before too much is invested in a product. Some of these risks can be overcome through smart design, while others can be part of the decision to shelve an idea. That said, market research can also identify new opportunities and real gaps waiting to be filled.
When to conduct market research
Generally, market research is used in the earliest stages of a product’s development to verify whether there is sufficient potential demand. But that’s not the only time it makes sense to use market research.
Market research can help with any of the following:
- When confirming potential demand for s product during new product development
- When seeking to improve an existing product to strengthen competitive differentiation and/or increase market share
- When expanding an existing product’s reach into new markets
Market research is absolutely essential for new products. Otherwise, the product is set up for failure. A product idea has to be researched before anyone will invest in it. There has to be an unanswered need out there for it. This is why the industry and competition review side of market research is so important.
Market research can also find new customers for redesigned products. Or the same product can be expanded into other markets if market research bears this out.
Market research methods
The vast majority of market research focuses on collecting quantitative insight, but some market research methods also gather qualitative data.
Common market research methods include:
- Literature reviews, often with trade and industry journals.
- Large-scale surveys
- Interviews with experts in the industry.
Market research isn’t so much about asking people questions as it’s about seeking information to justify investing in or passing up on a product’s development. For most companies, it’s about measuring the potential to make money.
What is user research?
User research often overlaps with market research, particularly for products that compete with others already on the market or which are undergoing an upgrade or redesign. But, the two are not the same. User research generally looks at narrower populations than those in market research and focuses on learning about user behaviors. User research can be broadly defined as a way to gain insights into user behaviors, needs, and motivations.
User research can help answer questions like:
- How are potential users currently solving the problem we want to solve?
- How well do those solutions work for them?
- How are current users using the product?
- What do users wish they could do differently with the product?
- How could we change the product to make users happier?
When to conduct user research
User research is typically only necessary after market research has determined “yes there is a market out there.” User research is useful at various stages in a product’s development cycle.
Here are a few situations where you’d want to conduct user research:
- When deciding what to build next
- When validating a problem and possible solution
- During the design process to make sure potential designs are intuitive
Product managers’ time is better spent in user research than market research. They know how the product is intended to be used and should be open to new information that can lead to improvements. They often identify with users, or at least understand their motivations, which helps them notice and capture more subtle clues about how a product is used and how it can be enhanced.
User research methods
There are countless different user research methods out there. User research usually focuses on gathering qualitative information.
User research methods commonly include:
- Usability tests
- Focus groups and customer interviews
- User surveys
- Analyzing user feedback elsewhere online (i.e. in forums, on social media, on review sites)
Face to face user research is often cited as the “gold standard” in this type of research. But it is not always easy to arrange a face to face meeting with users and it can get expensive if there’s a lot of travel involved. For that reason, Jakob Nielsen suggests using other methods to “approximate” focus groups, such as email surveys and assessing comments on websites and in newsgroups. He doesn’t necessarily suggest replacing focus groups, but perhaps balancing them against these less expensive methods
Combining user research and market research
Both market and user research should be ongoing throughout a product’s lifecycle, Elisabeth Mischel writes in MediaPost.
Mischel, who is vice president of the digital marketing platform Insights, urges product development teams to keep a close eye on what the competition is doing. She also urges them to look at new products that come to market and how customers react to them, a kind of distance version of user research. New products from competitors should be evaluated to see advantages that can be addressed in upcoming product redesigns.
In truth, market and user research overlap a lot as a product ages on the market. Christian Rohrer, writing about user research methods for the Nielsen Norman Group blog, offers a useful model that demonstrates different approaches to user research that also serves as a way to understand where it differs and overlaps with market research. The further “out” you take user research and look at qualitative (why and how to fix) and quantitative (how many and how much) data, the closer you get to market research. Bring it in closer, and there’s more of a mix of user research.
Case Study: Combining user and market research to expand into new markets
Let’s take a look at a real-life example of these two types of research working together for one market in particular.
A decade ago, the market for gluten-free food was pretty sparse; limited to people with Celiac disease, who are unable to process gluten. Gluten-free diets typically bar products that also have high carbohydrate content and food manufacturers spotted this (no doubt through market research) as another entryway into the very lucrative diet food market.
They were right: sales for gluten-free foods rose 34% each year from 2009 – 2014, ending close to the $1 billion mark, according to market research from the firm Packaged Facts and as reported in Food Navigator. By 2019, sales for the baked goods segment of the gluten free market alone were well over $2 billion. It’s now estimated that by 2025, annual sales of gluten free products will exceed $9 billion.
How did food manufacturers grow this market? They conducted customer research (user research) to find out what people new to the gluten-free diet missed most.
This is the kind of user research that fine-tunes new markets and products.
User and Market Research: Better together
Let’s review. While there are some similarities between user research and market research, it’s important to understand how the two differ.
Market research provides a scope, a “big picture” of who will use a product. It can also help identify additional customer segments and markets.
User research helps product managers and their teams see where a product’s appeal can be strengthened. For new products, it’s most useful in the prototype stage and in the after-market stage.
Think about the people pitching their products on Shark Tank. Those who’ve conducted both market and user research thoroughly are the ones who get offers. Insufficient market research? You’re dead to Mr. Wonderful and probably Mark Cuban. User research lacking? You’ve lost Mark Herjavec and Barbara Corcoran. Damond John and Lori Greiner rarely jump in alone.