“Your job as a product manager is to make the hard choices and prioritize what not to build.”
– Ben Yoskovitz
Welcome to Day 03 of the PM series – Product Management in 30 days!
Today’s topic? Customer Research and Market Analysis—the dynamic duo behind every successful product.
Think of building a product like preparing a dish for a dinner party. If you don’t know your guests’ preferences, allergies, or what’s already on the menu, you might end up serving shrimp pasta to a table full of vegetarians—or worse, something no one wants to eat.
The same goes for product development. If you don’t understand who your customers are, what they need, and where the market is going, you’re setting yourself up for failure. So, let’s break it down step by step—how to research customers and analyze markets like a pro.
Why Customer Research & Market Analysis Matter
If you’ve ever poured months of effort into building a product, only to hear crickets at launch, you’ve felt the pain of poor research.
Imagine you’re launching a brand-new to-do list app. You’re convinced it’s the best thing since sliced bread. You’ve spent months designing a beautiful interface, adding every possible feature—voice reminders, calendar sync, even AI-generated motivational quotes. But after launch, no one downloads it. Confused, you look at the app store and realize there are already hundreds of other to-do list apps, and yours didn’t offer anything new or solve any major pain points.
What went wrong? Simple: You didn’t research your customers and the market before building.
Understanding the Customer: The Foundation of Great Products
A great product starts with a deep understanding of the customer. But who is your customer, really? If your answer is “everyone”, you’ve already made your first mistake.
Let’s take an example. Suppose you want to build a fitness app. You might think, “My app is for everyone who wants to get fit!” But that’s way too broad. A 22-year-old gym rat who wants to build muscle has very different needs from a 45-year-old office worker who just wants to stay active.
A better approach is to break your users into personas—fictional characters that represent different customer types.
- Meet Jake, the Gym Enthusiast. He’s 22, spends an hour at the gym every day, and is obsessed with tracking his macros and lifting progress. He wants detailed stats, integration with his smartwatch, and meal-planning suggestions.
- Then there’s Sarah, the Busy Mom. She’s 38, works full-time, has two kids, and barely has time to work out. She’s not interested in gym routines; she just wants quick, 10-minute home workouts that fit into her schedule.
See the difference? If you don’t segment your users properly, you might create a one-size-fits-none product—too complex for Sarah but not detailed enough for Jake.
How to Conduct Customer Research (Beyond Guesswork)
Now that you know why customer research is important, let’s talk about how to do it properly.
The biggest mistake new product managers make is relying on assumptions instead of real data. They think, “I know what my users want!”—only to discover later that they were completely wrong.
Imagine a team building a smart fridge that can suggest recipes based on the ingredients inside. They assume customers would love AI-generated meal plans. But after conducting actual customer interviews, they discover that people don’t trust AI recommendations. Instead, they just want simple grocery reminders and a way to reduce food waste.
If the team had built the AI-first, they would have wasted time and money on a feature nobody wanted.
So how do you actually conduct customer research? Here are a few methods:
1. Talking to Real People (Yes, You Have to Do This)
The best way to understand your users is to talk to them directly. This means conducting interviews, surveys, and focus groups.
For example, let’s say you’re designing a language learning app. Instead of guessing what people struggle with, you interview 20 real users and notice a common theme:
- People don’t practice speaking because they’re afraid of making mistakes.
- They’ve tried other apps but quit because they felt unmotivated.
Now you know the real pain points! Instead of just offering more vocabulary and grammar lessons, you might add features like real-time speaking practice with AI or motivational streak rewards to keep users engaged.
2. Watching Users in Action
Another powerful technique is user observation. Instead of asking people what they want, watch how they actually behave.
Take Airbnb as an example. In its early days, the founders noticed that people were hesitant to book rooms because the photos were low quality. Instead of just improving the website, they took a different approach—they personally visited hosts and took professional photos of their homes. Bookings skyrocketed.
What does this teach us? Sometimes, users don’t know what’s stopping them from using your product—you have to figure it out yourself.
Understanding the Market: Finding the Right Opportunity
Customer research is just one side of the coin. The other? Market analysis.
Even if you have a great product idea, if the market is too crowded, shrinking, or heading in a different direction, you’ll struggle to succeed.
Competitive Analysis: Know Your Rivals (and Outsmart Them)
Let’s say you want to build a new ride-sharing app. Before diving in, you analyze the market and see that Uber and Lyft already dominate the space. So how do you compete?
Instead of creating yet another generic ride-sharing app, you look for a gap in the market. You discover that elderly customers and parents with kids find traditional ride-sharing inconvenient because drivers don’t offer additional assistance.
So you create a ride-sharing service specifically for seniors and families, with trained drivers who help passengers in and out of the car. Boom—now you have a unique value proposition.
This is exactly what DiDi (China’s Uber) did. Instead of directly copying Uber, they focused on features tailored to the Chinese market—better customer service, in-app messaging, and driver incentives. Now, they dominate China while Uber struggles there.
Spotting Trends: Staying Ahead of the Curve
Another critical part of market analysis is trend spotting.
Think about how Netflix evolved. They started as a DVD rental service, but when they saw streaming gaining popularity, they pivoted early and invested in online streaming. Meanwhile, Blockbuster ignored the trend and stuck with DVD rentals. We all know how that ended.
The same happened with Tesla. In the early 2000s, car manufacturers laughed at the idea of electric cars. But Tesla saw the shift towards sustainability and invested aggressively in EV technology—now they’re miles ahead of the competition.
The lesson? Markets change. The companies that survive adapt before it’s too late.
Bringing It All Together: The Winning Strategy
To build a successful product, you need to integrate both customer research and market analysis into every stage of development.
- Identify your ideal customer – Who are they? What do they struggle with?
- Talk to real users – Conduct interviews, observe behavior, and collect feedback.
- Analyze the competition – What’s already out there? Where are the gaps?
- Spot emerging trends – Is the market growing or shrinking? What’s the next big thing?
- Keep iterating – The best products evolve based on ongoing research.
Quiz Time:
1. What is the responsibility often associated with product managers within an organization?
a. Voice of the CEO
b. Voice of the Customer
c. Voice of the Marketer
d. Voice of the Developer
2. What is the first step in effective customer research ?
a. Data Analysis
b. Identifying the Right Questions
c. Actionable Insights
d. Persona Development
3. Why is an iterative approach emphasized in product development?
a. To increase marketing expenditures
b. To maintain a static product strategy
c. To adapt to changing market conditions and customer preferences
d. To discontinue products quickly
4. What is SWOT analysis used for in the context of market analysis?
a. Assessing customer satisfaction
b. Evaluating product features
c. Assessing a product’s position in the market
d. Identifying emerging trends
5. What is the significance of establishing feedback loops in product management?
a. To create detailed user personas
b. To integrate user research and market analysis
c. To align with business goals
d. To continuously gather customer insights and enhance product features
✍️ Write your answers in the comment section. e.g 1-a, 2-b, 3-c etc.
If you want to learn more about product management, you can also find other posts. The Full series is available here
One of the recommended books to learn about product management is The Hard Thing About Hard Things by Ben Horowitz
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Disclaimer:
Please note that I don’t make any guarantees about the information supplied in this post. I share educational and informational resources that are intended to help you succeed in understanding product management. You nevertheless need to know that your ultimate success or failure will be the result of your own efforts, your particular situation, and innumerable other circumstances beyond my knowledge and control.
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