Ultimate Guide to New Product Market Research (2023)

A great product market research process mitigates the risk of a failed product launch and can help you stay ahead of the curve.

The key variable is the quality of your market research process.

It's pretty easy to find random market statistics.

It's much harder to identify important signals in market data and then figure out how to leverage them to make better strategic decisions.

So this post solves that problem.

It lays out a dead simple (yet highly effective) market research process that anyone can use to guide new product development.

Step 1: Identify Promising Market Trends

If you accurately identify the next big market trend and create a great product to meet the new demand, you'll have the first-mover advantage and stay ahead of the competition.

The tricky part is accurately identifying new product market trends.

Most people rely on their network, industry publications, and influencers to stay up-to-date on the latest product market research trends, but there are a few problems with this process:

1. It's time-consuming to scroll through industry news and influencer content each week.
2. It's probably too late to capture the first-mover advantage if the rest of the industry is already talking about it.

So what if you could flip the market trend identification process and have market trends served to you – before the rest of the market knows about them?

We built Exploding Topics to do just that.

To quickly identify promising market trends, go to the Trends Database (you can try the free version now) and sort by category (e.g., fitness, pets, sports, fashion, beauty, etc.).

Each topic you'll see is a keyword for a brand or product, and you'll also be able to see its Google Search volume over time:

You can also click on any trend to see other similar keywords, categories, and more details:

If you upgrade to Exploding Topics Pro, you can unlock premium trends, sort by trend growth status (Exploding, Regular, and Peaked), and access several other premium features we'll discuss below.

To save interesting topics for further research, you can click "Track Topic" and add it to an existing Project or create a new one.

For example, if you're selling pet products, you could create a Project for pet companies and another for pet products:

In addition to collecting product keywords, be sure to also create a list of trending brands. Competitive analysis is a key step in the product market research process (which we'll discuss in more detail below), so have a list of these brands on standby.

Once you've saved some trends, the market trend identification process is complete!

So if you haven’t done so already, jump into the Exploding Topics Trends Database now and complete this first step.

Objection: How do I know these trends are high quality? And how can I be sure that Exploding Topics won’t miss the next big trend?

Great question – if your trend discovery tool doesn't surface high-quality trends, you'll have to go back to manually researching trends.

So trend data quality is our primary focus at Exploding Topics, and it's a key differentiator that separates us from other trend spotting websites.

Here are three reasons why Exploding Topics trends quality is so high.

Key Differentiator #1: Exploding Topics Rarely Misses Emerging Topics – AI and machine learning thoroughly scans billions of content for emerging trends.

One person can only consume so much content per week – so you may miss new emerging trends.

So Exploding Topics uses AI and machine learning to scan billions of webpages and other media (like podcasts and videos) to identify trending topics.

Some of our content sources include Google, Spotify, YouTube, Reddit, Twitter, and Amazon.

Then, AI and machine learning then flags topics that are steadily gaining traction.

By scanning virtually the entire internet (rather than just a few sources), it's unlikely that Exploding Topics will miss new market trends.

For example, if a new trend is emerging on a random subreddit and a few obscure podcasts, our algorithms will still detect that trend if it has enough interest and traction.

Key Differentiator #2: Trends Are Backed By Reliable Data – Topics must show steady Google Search volume growth over time to qualify as a trend.

If you plan to put a product into R&D for six months, you want to be sure you're creating a product for a long-term trend – not a fad that will quickly die in a few months.

So after AI and machine learning flags a topic, we analyze its Google Search volume trend history to see if it has shown compounding growth over the past several months/years.

It's also worth noting that these trends aren't randomly selected by a person's subjective opinion of what they think the next big trend is.

All trends in the Trends Database are selected based on data.

Key Differentiator #3: We Filter Out The Noise – A human analyst manually vets qualifying trends for business value before adding them to the database.

Many popular topics have little to no business value. For example, celebrity news, movies, songs, and other pop culture topics aren't relevant to product research.

So we have a human analyst manually analyze each trend to ensure it's relevant to business.

This way, you don't have to sort through any noise to find the signal.

As you can see, there are three key benefits to this trend identification and qualification strategy:

1. It's unlikely Exploding Topics will miss the next up-and-coming market trends for your industry.
2. These trends are backed by Google Search volume data and have shown sustainable growth. They also aren't chosen based on a person's subjective opinion.
3. You never have to sort through irrelevant trends as a human analyst disqualifies any topics irrelevant to product research.

In addition to the Trends Database, Exploding Topics Pro users also have access to a handful of other helpful resources, including:

• Weekly Reports: To help you stay up-to-date on the latest market trends in just a few minutes per week, you’ll receive Weekly Reports.

  Each report includes a breakdown of five trending companies and five trending products selected by our research analysts. This way, you don’t even have to log into the Trends Database to stay up-to-date with market trends.

• Meta Trends: While the Trends Database helps you identify individual products and brands that are exploding, the Meta Trends dashboard identifies the larger trend that those exploding products and companies are part of.
  

  Here’s an example of a Meta Trend:

  
• Trends Search: While each topic in the Trends Database is heavily analyzed before it qualifies as a trend, we realize that you might already know about a topic and just want to see that keyword’s Google Search volume trend data and other related keywords.

  So we built Trends Search. It lets you type in any keyword and immediately generates a report with keyword search volume history and other related keywords:

  

You can try Exploding Topics Pro today and check the first step in the market research process off your to-do list!

Step 2: Validate Market Trends With Secondary Market Research

Now that you have a list of trends, the rest of the product market research process helps you narrow down the list to the most profitable market/product idea.

So the first step to narrow down the list of trends is to look at general market statistics.

Before diving into industry reports, search strategically to answers for these simple questions:

• What's this market's total size and compounding annual growth rate (CAGR)?
• Is this a market investors believe in, and are there any notable acquisitions in the space?
• How much have consumers spent on this product/industry over the past several years?
• How many of these products are sold each month, and at what price point?
• What's the average CPC for this keyword on Google?

Below, we'll discuss exactly how you can collect this quantitative data.

1. What’s the total market size and compounding annual growth rate (CAGR)?

A quick Google search of the trend usually pulls up a market report from Globe Newswire, Allied Market Research, or Grand View Research – all of which are great resources. These reports usually include general market statistics, CAGR, and forecast predictions.

Here’s a sample report on the U.S natural skin care products market:

This data is a great way to get a general idea of how mature the market is and estimate its growth trend for the future.

2. Do investors believe in this market, and are there any notable acquisitions in the space?

Venture capitalists spend all of their time and resources analyzing market trends. So use this to your advantage and look at the market's investment trends.

You can use a paid tool like Pitchbook to analyze startup funding in a particular trend, or you can search through Google, which often surfaces various press releases with helpful insights.

Venture capitalists aren't always right – but identifying trends is their full-time job, so investment activity is definitely a good sign.

3. How much have consumers spent on this product/industry over the past several years?

Consumer spending trends are also golden signals, as customers determine product demand.

Statista often has consumer spending insights that you can use to gauge broader trends:

If your target customers are in a particular region in the United States, the Census Business Builder is a great tool to analyze consumer spending. You can select a state, zip code, or county and view consumer spending data for that region.

For example, you can see how much consumers in Virginia typically spend on clothing and apparel:

4. How many of these products are selling, and at what price point?

As you zero in on a particular product, use a tool like Jungle Scout to figure out that product's typical retail price and profit margin.

While this only uses Amazon dropshipping data, it's still a great way to get a general estimate of profit margins and how much consumers are willing to pay for a particular product.

Jungle Scout also provides data on the number of units sold for each product in the “Monthly Sales” category. While this data is sampled from the suppliers they use, it’s still a great way to get a general estimate of product demand.

5. What’s the average CPC for this keyword on Google?

The average CPC (cost per click) is also a great way to gauge whether or not a particular product keyword is profitable.

While the CPC will vary depending on the product's retail price, a higher CPC is generally a good sign that the product is highly profitable.

You can use Google Ads or a third-party research tool like Ahrefs or SEMrush to look up CPC data.

Step 3: Conduct Competitive Analysis On Leading Brands

Step two probably narrowed down your list of market opportunities even further, so now let's look at the top competitors in each market and analyze:

1. What are they doing to win, and how feasible will it be for you to break into the market?
2. Who is the target audience? Is there any overlap with your existing audience (if you already have a store)?

As both of these questions are still pretty general, here are some specific questions you can use to gather actionable insights:

• When were the leading brands established?
• Who is their target audience, and if you already have an audience, is it similar to yours?
• What does their marketing strategy look like? How difficult will it be for you to capture some of the market share?
• What do their pricing trends look like?
• Have they expanded the product line or has it mainly stayed flat?

​​Let's discuss how to find the data to answer these questions.

1. When were the leading brands established? Are they mostly startups, or are there also some bigger brands offering this product line?

You can use a free tool like SimilarWeb to quickly generate plenty of target market data like gender, age, demographic, and even more detailed insights like other frequently visited websites.

Spyfu and SEMrush also offer similar data.

This step is particularly important if you already have an audience and want to launch a new product line to your existing customers.

If you notice that there are clearly some differences between your customer base and the top competing brands’ customer base, it might not be a great product to launch.

2. Who is their target audience, and if you already have an audience, is it similar to yours?

You can use a free tool like SimilarWeb to quickly generate plenty of target market data like gender, age, demographic, and even more detailed insights like other frequently visited websites.

Spyfu and SEMrush also offer similar data.

This step is particularly important if you already have an audience and want to launch a new product line to your existing customers. If you notice that there are clearly some differences between your customer base and the customer base of the top competing brands, it might not be a great product to launch.

3. What does their marketing strategy look like?

This question helps you identify how difficult it will be to break into the existing market. You can use SpyFu, SEMrush, or SimilarWeb for this step, and the goal is to collect data like:

• Which marketing channels are they using to target potential customers (email, social media, paid ads, SEO, PPC, etc.)?
• What is the SEO difficulty of the product keywords?
• Is traffic increasing or decreasing? If most competitors see traffic decreasing, demand might be drying up.

4. How are prices trending?

If you have access to a competitive analysis tool like Prisync, you can dynamically track competitor pricing and see how it fluctuates over time. A steady price increase is a sign of growing product demand.

If prices decrease, it could be that there is now more competition in the market (a positive sign) or that there isn’t enough demand to sell the product at the original price point (a negative sign).

5. Have they expanded the product line or has it mainly stayed flat?

The initial offering was probably profitable if the company expanded the product line.

You can use a tool like the Wayback Machine to see how big the product line was a month or a year ago compared to how big it is today.

This is also a great way to see how competitors' marketing messaging has changed.

Step 4: Collect Qualitative Customer Data

The best way to cut marketing costs, reduce customer support issues, and sell more total units of a product is to create a product that's better than your competitor's products.

So to create a higher quality product, conduct qualitative research by talking to customers and learn what they like and dislike about existing products.

There are three ways you can capture customer data:

1. Read competitor reviews
2. Survey customers
3. Conduct customer interviews

Here's how to execute each of these steps.

1. Reading customer reviews

Start by checking Amazon – it's easy to find a high quantity of reviews quickly, and most are legitimate.

When you look through reviews, extract information like:

• What aspects of the product design do they like?
• What aspects of the product design would they change?
• What are the pain points they're using the product to solve?

For example, this review of a migraine cap is a goldmine of customer insights:

Here are just a few valuable insights you can extract from this review and incorporate into your product design:

• Customers like that the stretchable design makes the migraine cap easily fit their heads (rather than wrapping ice packs or using band straps).
• Customers want 360 degree cooling rather than a band that cools only certain parts of their heads.
• Customers prefer the gel design to ice pack inserts.
• Customers want to make sure it's safe to wear on bare skin.
• Customers want a sleek fit rather than a bulky cap.

In addition to product-specific feedback, you can also gather customer satisfaction data for each brand.

For example, are there any pain points around shipping, customer support, and other logistics that the competing brand could improve?

To help you complete this step, here's a spreadsheet template you can use to notate customer feedback.

Once you've thoroughly combed through reviews and have a general idea of common customer needs and pain points, do some primary research by conducting detailed surveys and in-person or online interviews.

2. Survey customers

Ideally, you want to survey people who have purchased competing products because they'll be able to tell you more about your competitor's products.

To do this, you can use Pollfish or SurveyMonkey's Market Audience tool. These tools let you specify the audience you want to survey, and then it finds and surveys that audience for you.

For example, you can specify that you want to survey women in their 20s or 30s in the United States with an income of more than $70,000 per year. Then, ask a screening question like "Have you purchased a (product name) from (competitor's brand)?"

Then, you can ask respondents questions like:

• What do they like most about the product?
• What pain points are they using the product to solve?
• How were they solving their pain points before buying this product?
• What event prompted them to purchase this product?
• How did they learn about the product?
• If they could change anything about the product, what would they change?

3. Interview customers

The final qualitative data collection method is to conduct in-depth customer interviews.

It's perhaps the most time-consuming research method, but it will also give you the most detailed information as you can ask follow-up questions and dig deeper into their general persona.

Not sure how to find people to interview?

You can run ads to people who have viewed competitors' products and drive them to a landing page that offers a reward (gift card, door dash, etc.) to schedule and attend a quick call.

The key is to verify that they've actually purchased the product. You can do this by requesting them to send a screenshot of the order details.

You can use a tool like Discuss.io to organize your customer research calls. It lets you host, record the calls, and even offers helpful analysis features like theme identification, keyword clip searching, sentiment analysis, and more.

Step 5: Presell Your New Product

A common mistake many entrepreneurs make is diving directly into the product development process only to discover nobody wants to buy it.

So to avoid this scenario, create a quick landing page with an overview of your new product concept and run ads to it.

If people pre-purchase it, move forward with the product development process.

If not, go back to the drawing board and figure out why people don't want it.

It might just be that you didn't accurately position your product in the marketplace and a few simple messaging tweaks can help you generate sales. Or, you may have just saved thousands of dollars by not creating a product nobody wants.

Step 6: Create a Focus Group and Test Your Product

The first version of your product will probably have some flaws.

To iron out these challenges before the launch, create a focus group for product testing.

The focus group can give you initial feedback on the product so that you can improve it and mitigate customer complaints for the real product launch.

To create a focus group, you can either hire a research agency or find local focus groups in your area (a quick Google search will help you find these groups):

If you don't want to pay for a focus group, you can offer your beta users a discounted price in exchange for feedback.

When collecting feedback, you can ask the same questions you asked in the initial survey questions.

Once you have some feedback, identify common patterns and make changes accordingly.

Start The Product Market Research Process Today

If you followed all of the steps above, you’re well on your way to a successful product launch as you've already:

1. Selected a market trend with promising growth potential.
2. Generated a handful of paying customers.
3. Gathered feedback from a focus group confirming the product is high-quality.

While there will undoubtedly be some hiccups during the product development process, stick to the steps above, and you'll eventually find a winning product that drives sustainable business growth.

So to get started today, take action on step one, identifying market trends.

You can use the free Exploding Topics dashboard to sort through a handful of exploding trends in your category and then write them down in a spreadsheet.

Alternatively, you can jump into Exploding Topics Pro to unlock premium trends, save them in an organized Project dashboard, receive weekly trend updates, and access other advanced market research tools.

Finding new trends only takes a few minutes, so take the first step towards developing your next winning product right now!