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market research

Like many other developers on this forum, I have dreams of starting an ISV and I’m currently researching niche markets that I think might have some potential (what Eric Sink calls “barrel research”).  My problem is that I don’t know the best approach to market research.  There seems to be two schools of thought:  1) develop a product and try to market the product, then react to customer input and improve the product or change the product strategy, or 2) do extensive market research to determine customer needs (address the customer “pain”).

Like everyone else, I have limited resources, both time and money, and I would like to take the approach to market research that is most effective (I’m stating the obvious).  My concern about the first approach is that I’m afraid I’d spend a lot of time developing a solution that wasn’t appropriate for the market.  My concern about the second approach is that I may not really be able to illicit the kind of information I need from potential customers without some sort of tangible product as a reference.  Is there an effective way for an ISV (or ISV “wanna be”) to conduct market research for a new product?
Ewan's Dad
Thursday, September 09, 2004
 
 
Perhaps some iterative combination of both approaches would be appropriate.

Most developers seem to have domain knowledge in a few areas (e.g. mine are insurance, finance, retail, utilities and military). given these verticals, pick one to concentrate on, then get to know about it as much as possible and meet as many people as you can, at all levels.

Once you talk to people, you can see what makes their job tough, e.g. in insurance, re-keying data, and the associated delays and errors, is still a big issue, although the situation is improving now, with XML-interchange between systems.

Once you have an idea of what problem to solve, go ahead and solve it, but keep in touch with everyone, so you can get feedback and also stay up to date on other developments in your chosen market.

I remember a few weeks ago someone posted some really interesting stuff on this (in the old JoS forum). I can't remember who it was, so I don't have a link. Anyone?

Remember that you need a bit of luck as well as talent to make this work, so if the first project is a train-wreck don't give up. Just learn from it and try again. I always remember Gary Player's quote "The more I practice, the luckier I get".
Nemesis
Thursday, September 09, 2004
 
 
Nemesis is right -- you probably want a slice of both approaches you mention, in an infinite loop.  Something like this:

1.  Find customer pain (market research)

2.  Alleviate that pain (ship a product)

3.  Goto step 1.

Market research doesn't have to be formal to be successful.  Our SourceOffSite product is an add-on which helps people access a SourceSafe database over the Internet.  Our original market research was disturbingly simplistic:

1.  Corey needed it (he lives about an hour from our office)

2.  We saw people in newsgroups asking questions about how to access VSS over the Internet.

This was circa-1997.  Today, there is no excuse not to be a lot more thorough, since Google is just so easy.
Eric Sink Send private email
Thursday, September 09, 2004
 
 
The chapter on research in "The Product Marketing Handbook for Software provides a nice overview of the types of research you can conduc and what they can achieve.
Thursday the 9th
Thursday, September 09, 2004
 
 
Thanks for all of the input! 

I'm somewhat stuck in the "analysis paralysis" conundrum.  I have a market segment that I'd like to target, but within that segment I'm not certain of which direction to go (which niche to serve).

I've been thinking about buying "The Product Marketing Handbook for Software", but I haven't taken the leap yet.  I guess I should go ahead and order the book.
Ewan's Dad
Thursday, September 09, 2004
 
 
What does your gut tells you?

The market research may help you, but at the end you will not be much wiser than you are today. I am not saying don't do market research. You must do it to collect more data points but final decision will be based on your gut alone.

You can spend all the time doing market research and never get off the ground if in your gut you do not think it is good idea. You have to believe that your idea will succeed and it will.

If all market research indicates that it looks like great idea and everyone tells you it is great idea most likely it is NOT :-)
Denis Basaric Send private email
Thursday, September 09, 2004
 
 
And, this may be terribly obvious, but if you start small with a simple product in a particular niche that your "gut" tells you has potential, and flesh it out using customer feedback (the "pearl" theory), you're doing about as well as you can. Also fits in well with "fire and motion."

That's how most of our products have happened.
Chris Ryland Send private email
Thursday, September 09, 2004
 
 
I agree with the comments about "gut" feelings and starting small (limited feature set).  Part of my problem is that I haven't yet come across a niche market that looks appealing to me.  The other part of my problem is that, by default, because of limited resources, I can only provide a product with a limited feature set.  I have to be a "bottom feeder" so to peak because of limited time and money.  Finding an underserved market is proving to be difficult.

BTW, thanks for all of the input, it's really appreciated.
Ewan's Dad
Thursday, September 09, 2004
 
 
I also agree with the remarks about "gut" feelings.

And yet, several of my worst product ideas were the ones where my "gut" feeling was really positive.

And our top revenue product (SourceOffSite) was something I originally thought was a terrible idea.

Maybe "trusting your gut" is something for people whose intuition is better than mine.  :-)
Eric Sink Send private email
Thursday, September 09, 2004
 
 
Here is a kick ass link, I am following their outline, their other articles are also good. I made a mistake of making a software and also creating couple of consulting services without doing any prior marketing. That was a big mistake since the myth of "if you build it they will come" is complete BS. The crap cliche of "great software doesn't need marketing" and that a good product will sell itself is absolutelly untrue. While there are some exceptions, there are 1000s of products that are awesome but nobody uses them and their authors are not millionaires.
People buy the promotion and not the product. Of course if you have tons of time on your hand, don't really care about making money and want to just feel proud because you made a software that nobody uses, go ahead and develop it without any market research.
The perfect situation for a software developer is to have beta testers and pre-orders before even the prototype is coded. Get money flowing in right away, right after you mock up the process that the software will support and right after you flesh out all the benefits that your target market will get from your solution. You gotta prove to your target audience that they can't live without your software, and it is not that easy. Of course that doesn't apply in the case if you are creating another POS ftp program or some other irrelevant software.
Such extensive out of the box thinking seems impossible, but that is how the real big money is made. While Erik doesn't really like VC money, they are one of the quickest ways to cash out. Not many VCs will turn you down if you can show the demand for your product and a list of people who are ready to pay you money and have downpayments. Once you flip one software company, you move onto next and s on because I hope that you don't just have one idea :)
.
Friday, September 10, 2004
 
 
Woops, forgot to provide the link:
http://infrasystems.com/market-validation.html

Don't be just another Joe Bloggs :)
.
Friday, September 10, 2004
 
 
Thanks for your inspirational input and the link.  The market validation information is very good.

I have a day job that limits my ability to do a lot of hands-on market validation (via telephone or in person).  I'm wondering if highly targeted email is a viable alternative for market research.  I'm concerned that email would be poorly received because it may be perceived as spam.
Ewan's Dad
Friday, September 10, 2004
 
 
You might find Overture's tools or Wordtracker.com handy for getting an idea of how many users are searching for your type of product or solution to their problem.

In the search results I'm always a bit skeptical that 250 searches for X last month includes a competitor doing their own competitor research, or their monthly check to see where they're listed on the search engines.

This of course, if you can identify how people search for your product.
Dan74 Send private email
Friday, September 10, 2004
 
 

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