Posted on date 2022-06-13
Products We Couldn’t Live Without That Exist Because of Market Research
All companies use market research to at least some extent because the only other option is to make wild guesses about what your potential customers or users want.
There’s actually some merit to that approach, but it’s hardly scientific.
Instead, what we’re going to look at are the companies that used market research to propel themselves to the front of their respective industries.
In many cases, their innovations disrupted entire existing markets and created brand new ones.
Let’s look at some of the new products from market research beginnings.
Believe it or not, Twitter was originally envisioned to be a platform for podcasters to create and share their podcasts on. There was one tiny snag -- Apple beat Twitter to the punch by launching iTunes in June 2005, scooping up the podcast market at the time.
Evan Williams and Biz Stone didn’t quit, instead analyzing the market for user-generated content platforms and realizing that Twitter was something brand new for that audience.
While every other social network was looking to add more bells and whistles, Twitter embraced minimalism, and the term microblogging was born.
Twitter is a perfect example of why market research is so valuable.
It prevented Williams and Stone from trying to compete with the powerhouse that is Apple.
The average person would probably associate market research with a room full of frustrated data analysts staring at flipcharts, doing their best to create the perfect audience survey.
And then spending weeks analyzing the data before making their final assessment.
But market research can be as simple as a man returning his VHS rental of Apollo 13 to his local Blockbuster store, and promptly being charged $40 in late fees.
This was no mistake either because 20% of Blockbuster revenue at that time came from late fees. But Reed Hastings walked away from that encounter deciding that there had to be a better way for people to rent movies.
So he created one.
A service that allowed customers to rent as many DVD movies as they wanted for just $20 per month, and they did this by mail at a time when everyone else was pushing to go digital.
This was also when only 2% of American homes had a DVD player, but market research indicates that would change, and change it did as DVD players became more affordable.
Reed Hastings and co-founder Marc Rudolph gambled and won.
Blockbuster, on the other hand, filed for bankruptcy in 2010.
Steve Jobs is famously on record as saying, “We don’t do market research and we don’t hire consultants”, so you might wonder why he’s included here.
It’s simply because Jobs didn’t do market research in the same way as more traditional companies. Jobs was the original disruptor and free thinker.
That’s why he didn’t rely on consultants or projections instead, he studied human behavior and cultural patterns. Portable CD players had taken over from the “Walkman” but were large, cumbersome, and breathing too hard made your CD skip.
The market was primed for a replacement, which arrived in 1997 in the form of the MPMan F10 MP3 player.
Apple, however, released its first iPod a whole three years later. The reason for the delay was simple – wait for broadband to become widely available so that people could download all the music they wanted to their iPod.
The iPod pushed all competitors aside almost overnight, including technically superior products from Microsoft and Archos.
In another bizarre turn of Internet history, YouTube was originally designed to be a video dating site.
Online dating is a hugely profitable industry so Jawed Karim, Steve Chen, and Chad Hurley decided they wanted a slice of that particular pie.
There was just one problem – nobody wanted to upload their video profile to YouTube. So in a fit of entrepreneurial spirit, the founders offered to pay people to upload their dating profiles.
Nobody took them up on the offer – not a single person.
And then Janet Jackson had a very unfortunate wardrobe malfunction during her 2004 Super Bowl appearance. That video went viral, except it was almost impossible to find online.
This is precisely when the founders of YouTube had their “What if we allowed people to upload whatever video they wanted?” moment. An obvious gap in the market was now staring them in the face.
YouTube launched as a video sharing platform in early 2005, and a little over 12 months later Google paid US$1.65 billion to acquire it.
Simply because three friends looked at what the market wanted and then provided it.
The concept of having fast food delivered to your front door is hardly revolutionary.
After all, you simply dialed your favorite restaurant, told them what you wanted, and then paid the driver when they arrived.
But that meant having to keep potentially dozens of different takeout menus in a drawer somewhere in your home or office.
There was another problem – what if their delivery driver was ill or had just quit?
DoorDash came about as a result of its founders hearing a Palo Alto restaurant manager turn down a delivery order for similar reasons to those mentioned above.
So they queried other restaurants in the area and found that the process of delivering food to loyal customers was a real pain point for them. It was a headache they would be willing to pay somebody else to deal with.
They also understood that if this problem existedin one city it most likely existed in every city of the United States.
So DoorDash started small, the founders delivering the food themselves, and then scaled up massively thanks to some external investment to become a business currently worth US$55 billion.
The idea of downloading or streaming music via the Internet had been around for almost a decade before Swedish company Spotify launched its music streaming service.
Several other companies had tried to launch online music services only to fail and sink into obscurity, including Napster after it tried to become a legitimate business instead of offering pirated music via its P2P platform.
What Spotify had to its advantage is that their market research had already been done for them by Napster.
What made Spotify different from its competitors is they understood the only way to beat the music pirates was to offer a better product that also had the potential to pay royalties to musicians.
So they offered a freemium music service that featured ads played every few songs, but also a paid subscription that meant you could enjoy your music ad-free.
The rest is history.
As you can see market research often starts as an inspiration that’s then backed up by crunching numbers and making projections, but not the other way around.
That’s how you wind up with cool products from “market research”. Some of the world’s biggest success stories have been the result of nothing more than paying attention to a good idea, validating it, and then running with it.
Your story could be the next one we read about.