How to Identify Market Problems and Build Products Your Customers Want
Understanding and learning how to evaluate market problems is fundamental to successful product development and marketing. It’s so important, in fact, that it’s the very first box in the Pragmatic Framework and the key to every other activity and decision your organization makes. When you truly understand your market—not just your customers, but those who aren’t customers as well—that’s when you can use that insight to drive every other activity. It all starts with market problems.
Many companies make the mistake of either assuming customer problems equal market problems or by presuming to know their market problems when they really don’t. The companies that make these mistakes will be unable to sustain long-term success and eventually will fail altogether.
Learning how to evaluate market problems and validating their pervasiveness in the market is your No. 1 responsibility as a product developer or marketer. With this guide, you’ll learn the true definition of market problems and how to discover yours by interviewing customers, recent evaluators and potential customers.
What are market problems?
Simply put, market problems are the challenges, frustrations and unmet needs of your customer base. Easy enough, right? But don’t mistake a simple definition as a simple concept. Let’s take a closer look.
First, be sure you’re using the broadest possible definition of “market.” It’s easy to think of your market as your customers or even your target audience. But that would be ignoring a larger, potential customer base that includes customers of your competition and also non-customers.
Second, it’s necessary to be able to distinguish problems (challenges, frustrations and unmet needs) from market desires and competitor capabilities. Problems can be observed and are measurable. They’re qualitative and quantitative. They’re what really drives a decision to buy.
Market problems and the
“jobs-to-be-done” theory
If you’ve ever heard of the “jobs-to-be-done” theory, you may already be familiar with the concept of market problems. Builder, entrepreneur and product developer Bob Moesta developed the jobs-to-be-done theory in the mid-1990s.
In our podcast Jobs to Be Done vs. Market Problems, Moesta explained, “People don’t buy products. They hire them to make progress in their life.” In other words, people buy products—and that includes physical products, solutions and services—to do a job for them, however large or small, important or mundane. In some cases, products help people complete a literal job like how an Allen wrench allows someone to assemble furniture. In others, products help with metaphorical jobs, such as how a smartphone app helps pass the time while waiting for a to-go order.
Whatever your product, Moesta’s jobs-to-be-done theory says it’s imperative to get to the causal root behind someone’s purchasing decision. And that goes beyond simply looking at demographics and data. Because those details give you correlations but don’t speak to the “why” an individual decides to buy. In our podcast, he gave an example of getting to the “why” when he was working on a new construction project in Detroit.
People don’t buy products. They hire them to make progress in their life.”
On paper, the plans for the development seemed perfect. The target market was empty-nesters—older people whose adult children had left home—who were looking to downsize. The homes in the development were all one-story, two-bedroom condos, which the market had indicated it preferred. They were priced well, had adequate square footage and elegant finishes. They had large breakfast bars for casual entertaining but no formal dining room, because the market expressed they were less interested in hosting family get-togethers and more interested in going to someone else’s home for the holidays.
A successful marketing campaign generated tons of foot traffic, but few people were actually signing on the dotted line. The developers conducted surveys, asking buyers if additional features would make them more likely to buy. Of course, the respondents said yes, and the developers went so far as to rework plans to install bay windows and other features their surveys supported. Still, sales were flat.
Moesta talked to buyers and found their biggest issue was their dining room table. While they no longer wanted to host large gatherings, they found it difficult to part with such an emotionally charged piece of furniture. They didn’t like the idea of giving the table—where birthdays and anniversaries were celebrated, where kids colored and did homework, where memories were made—to a donation center or, worse, relegate it to a garbage heap. Buyers who found a family member to take their table were much more likely to buy in the new development.
Having finally gotten to the root of the barrier to entry, Moesta had a realization, which he described to Harvard Business Review: “I went in thinking we were in the business of new-home construction. But I realized we were in the business of moving lives.”
I went in thinking we were in the business of new-home construction. But I realized we were in the business of moving lives.”
So he and his team got to work on solutions. They added an option for buyers to have a larger dining area to house their beloved table by making the second bedroom smaller. They also offered buyers two years of storage and added a sorting room within the development where new owners could take their time deciding what belongings to keep and what to get rid of.
Even after raising prices to offset these new costs, condo sales skyrocketed. And when the Detroit housing market plummeted 49% in 2007, the development still saw a 25% increase in sales.
This goes to show that a person’s decision to buy has almost nothing to do with your product and everything to do with their needs. And that’s the spirit behind the jobs-to-be-done theory and the concept of market problems.
Why is it important to understand market problems?
Understanding market problems is the key to uncovering what really drives customers to buy a product. This knowledge will provide the information you need to develop the right products and market them effectively.
Without this understanding, it’s difficult to achieve success and sustain long-term sales. Because customers will either decide not to buy or buy and then not use the product, hurting your chances of repeat business.
What are examples of
market problems?
The Nest Learning Thermostat
Market: Energy-conscious consumers Problem: There isn’t an easy, automatic way to control the temperature in my house. Solution: You can do that with your thermostat—or can you? I saw a great picture showing a brand-name thermostat with a one-and-a-half page “how-to” sheet taped next to it. It really hurt the aesthetic. The Nest actually learns the temperatures you like and builds a schedule that helps you save energy. It also confirms that you connected your wiring correctly, hops on the Internet to coordinate with the weather forecast in your area, and sends you an email once a month with details on your usage and tips for improvement. And they even included a screwdriver in the box! Nice.Dropbox
Market: Wired professionals Problem: Moving files between multiple devices can be cumbersome. Solution: Have all your important files with you everywhere on every device. We’ve had this problem ever since we had more than one computer, previously solving it with floppy discs, then memory sticks and then shared network folders. Synchronization between devices just works.Shopify
Market: Small online retailers
Problem: I want to set up an online shop, but I’m not a programmer.
Solution: Shopify does one thing and does it very well. In just a few minutes, you can set up an ecommerce website. You don’t need to know programming; just set up your catalogs, fill in some parameters and you’re ready to start taking money. It’s forever changed the way I think of customization. All products should be as easy to customize as Shopify. Just fill out a simple form—company name, tax ID, Google Analytics code, your company logo or graphic—and voila, all your customizations are implemented.
crowdSPRING
Market: Small business owners on a budget
Problem: I need a logo or a website, but I don’t have the skills to do it myself.
Solution: CrowdSPRING offers design as a service: logo and site design from thousands of creative professionals around the world. People who need design don’t know designers; people who know design don’t have easy access to buyers. crowdSPRING brokers the two, while protecting both with a safe environment for buyers and creatives alike.
How to determine and evaluate market problems?
While data analysis and buyer personas give you insight into who your potential customers might be, they don’t get to the real root of why people buy. For that, you need to know how to evaluate market problems. And you do that by talking to evaluators—both people who decided to buy and decided not to buy. As Michael Mace from UserTesting explained in our webinar Best Practices for Uncovering Market Problems, “There’s just no substitute for talking to people.”
When conducting market research, Mace says, you need to focus on two things:
- Be sure you’re talking to people who are representative of your core customers.
- Make sure you’re using the right methodologies to gather information. That includes asking the right questions and being really careful about how you interpret the answers
During live interviews, ask open-ended questions. Moesta likes to ask evaluators to draw a timeline of how they got to their decision. You can also ask questions like, “What led to your decision to buy/not buy?” and “What problems does the product solve/not solve for you?”
Then, and this is key … listen. Don’t react to the first interview, or the second, or the third. But as you continue to interview, watch for patterns to emerge. This is where you can start to identify market problems. With this data, then you can conduct surveys to confirm how pervasive the problems are.
There’s just no substitute for talking to people.”
Challenges of market problems and how to overcome them
Uncovering market problems is key to business success, but it’s not always easy to get to the root of them. Some challenges you may face include budget for conducting research, gaining access to non-customers and converting data into meaningful information.
Budget
Yes, it costs money to conduct market research in the form of employees’ time, materials and incentives to get buyers to participate. But it’s money well spent. In fact, we would argue it’s money best spent. However, you may have some internal convincing to do. It helps to include leadership in Pragmatic Institute’s Foundations class, which explores the importance of understanding market problems. You can also use information from our Jobs to Be Done vs. Market Problems podcast, our Best Practices for Uncovering Market Problems and The Problem With Finding and Validating Market Problems webinars and the Know Your Customers’ ‘Jobs to Be Done’ article from Harvard Business Review to make your case.
Access to non-customers
It’s easy to get interviews and feedback from current customers, but what about non-customers? It can be a challenge to find, let alone engage, them. And there’s no one-size-fits-all approach. Finding non-customers will depend on your business and your market. If you’re trying to define market problems for a B2B product, consider networking at conferences and tradeshows and online, such as on LinkedIn and industry forums. If your products are B2C, you’ll need to go where your market interacts, which could be on TikTok or the local senior center.
Whatever path you take to connect with your market, the next step is to develop a relationship. Get to know them and allow them to get to know you before asking them to participate in your research. Be genuinely interested in what’s important to them, and they’ll be more likely to respond and respond truthfully.
Converting data into meaningful information
It’s easy to get interviews and feedback from current customers, but what about non-customers? It can be a challenge to find, let alone engage, them. And there’s no one-size-fits-all approach. Finding non-customers will depend on your business and your market. If you’re trying to define market problems for a B2B product, consider networking at conferences and tradeshows and online, such as on LinkedIn and industry forums. If your products are B2C, you’ll need to go where your market interacts, which could be on TikTok or the local senior center.
Whatever path you take to connect with your market, the next step is to develop a relationship. Get to know them and allow them to get to know you before asking them to participate in your research. Be genuinely interested in what’s important to them, and they’ll be more likely to respond and respond truthfully.
How often should we revisit our market problems?
Product developers and marketers should constantly be conducting buyer interviews and surveys and re-evaluating their market problems. This is how you ensure you stay in lockstep with the market and ahead of your competitors.
Learn more about
market problems
Understanding and learning how to evaluate market problems is the most important thing you’ll do in your career as a product developer or marketer. Register for Pragmatic Institute’s Foundations class today to learn more about how to identify your market problems to build and sell products people want to buy.