A product market study is an analysis that assembles all pertinent information about the potential market for a specific product. This includes information on need for the product, market size and targets, consumer opinions, buying habits and competitors. Such studies are commonly used to determine the viability of a new product offering.
Those conducting a product market study, also called a product market analysis, will first create sections that define their products. This may be a physical product or a service offering. This section will describe the product, list its benefits and state a price point for the product, if one has been established.
The next section of a product market study is identification of the target audience. This explains what type of person will most likely buy or use the product. It may or may not contain demographic information such as age, sex, ethnicity, geography and income of the potential buyer.
In some cases, the person most likely to buy the product and the person most likely to use the product may be different. This most often occurs when the primary user is a child. For example, a child would be the primary user of a toy, but the child’s parent might be the most likely buyer. The toy company will want to identify both target audiences because producing a toy that the child loves may be useless if there is no chance the parent will buy it. The child is also important because the parent is more likely to buy the toy if the child wants it.
A product market study will also provide any consumer history available on identical or similar products. If the product is an established commodity, such as sunglasses, the study will give details about seasonal buying habits, purchase trends over time and fashion trends. If the product is new, the study will establish why consumers need it. In this case, survey or focus groups may be conducted, and the study may incorporate sales data on similar products.
Finally, the product market study will identify the main competitors in the industry. It should include information such as each competitor’s market share, size, time in business, strengths and weaknesses, geographic location and reputation. It should then explain how the company in question intends to compete with each major industry player.
The process of completing a product market study can benefit a business in many ways. It can uncover previously unnoticed problems or benefits, can spark ideas for marketing campaigns and can alert the business to new potential target audiences. Once complete, a correctly conducted study should indicate whether a product is viable and may help a company secure financial support, if necessary.