4.9 KiB
Market Research Methods
Purpose
Structured approaches for understanding the competitive landscape, sizing the opportunity, and making informed build-vs-buy decisions before committing engineering effort.
Competitive Analysis Framework
Step 1: Identify Competitors
- Direct competitors: Same product, same market (e.g., Slack vs Teams)
- Indirect competitors: Different product, same problem (e.g., Slack vs email)
- Potential competitors: Adjacent players who could enter your space
Step 2: Feature Comparison Matrix
| Capability | Our Product | Competitor A | Competitor B | Competitor C |
|---|---|---|---|---|
| Core Feature 1 | ||||
| Core Feature 2 | ||||
| Pricing Model | ||||
| Target Segment | ||||
| Integration Ecosystem | ||||
| Key Differentiator |
Rate each: Strong / Adequate / Weak / Absent
Step 3: Positioning Map
Plot competitors on two axes representing the dimensions that matter most to your target users (e.g., Ease of Use vs Power, Price vs Completeness). Identify underserved quadrants.
SWOT Analysis Template
| Helpful | Harmful | |
|---|---|---|
| Internal | Strengths: What do we do well? What unique resources do we have? | Weaknesses: Where do we lack capability? What do competitors do better? |
| External | Opportunities: What market trends favor us? What unmet needs exist? | Threats: What could disrupt us? What are competitors planning? |
Making SWOT Actionable
- Strengths + Opportunities = Strategies to pursue aggressively
- Weaknesses + Threats = Risks to mitigate or defend against
- Strengths + Threats = Defensive strategies leveraging advantages
- Weaknesses + Opportunities = Investments needed to capitalize
Porter's Five Forces
Assess industry attractiveness by analyzing:
- Threat of New Entrants: How easy is it to enter this market? (Low barriers = high threat)
- Bargaining Power of Suppliers: How dependent are you on key suppliers/platforms? (Single cloud provider = high power)
- Bargaining Power of Buyers: Can customers easily switch? (Low switching costs = high power)
- Threat of Substitutes: Can the problem be solved differently? (Manual process, different tech)
- Competitive Rivalry: How intense is existing competition? (Many similar products = high rivalry)
Rate each force High/Medium/Low. High forces compress margins and reduce attractiveness.
Market Sizing: TAM / SAM / SOM
Definitions
- TAM (Total Addressable Market): Total revenue if you captured 100% of the market globally
- SAM (Serviceable Addressable Market): Portion of TAM your product/model can realistically serve (geography, segment, channel)
- SOM (Serviceable Obtainable Market): Realistic market share you can capture in 2-3 years given competition and resources
Top-Down Calculation
Start with industry reports, narrow by filters:
TAM = Total industry revenue for category
SAM = TAM x % in your geography x % in your segment
SOM = SAM x realistic capture rate (typically 1-5% for new entrants)
Bottom-Up Calculation (More Reliable)
SOM = Target customers x Average deal size x Purchase frequency
Use both methods and compare. If they diverge wildly, investigate assumptions.
Build vs Buy Assessment
Evaluation Criteria
| Factor | Build | Buy | Score (Build -2 to +2) |
|---|---|---|---|
| Core differentiator? | Build if it is your competitive advantage | Buy commodity capabilities | |
| Time to market | Months to years | Days to weeks | |
| Total cost (3-year) | Dev + maintenance + opportunity cost | License + integration + vendor risk | |
| Customization needed | High customization favors build | Standard needs favor buy | |
| Data sensitivity | Full control | Vendor data handling policies | |
| Team expertise | Requires in-house skills | Transfers complexity to vendor | |
| Maintenance burden | Ongoing responsibility | Vendor handles updates |
Decision Rule
If the capability is not your core differentiator and a mature vendor solution exists, default to Buy. Build only when the capability is central to your competitive advantage or when vendor solutions fundamentally cannot meet your requirements.
Trend Analysis Methods
Approaches
- Technology radar: Categorize emerging technologies as Adopt / Trial / Assess / Hold
- Hype cycle mapping: Identify where relevant technologies sit on the Gartner Hype Cycle
- Customer signal analysis: Mine support tickets, feature requests, and churn reasons for emerging patterns
- Adjacent market monitoring: Track what is happening in related industries that may spill over
Validation
Trends are hypotheses. Validate with:
- Customer interviews confirming the trend affects their buying decisions
- Revenue data showing market movement (not just media coverage)
- Competitor investment signals (hiring patterns, acquisitions, product launches)