Identifying a relevant problem in the market before developing the product/service to be marketed is a crucial matter that subsequently enables the creation of innovative and competitive solutions, that meet the needs of customers.
However, before embarking on the brainstorming phase to decide on the problem at hand, it is necessary to thoroughly understand the market in which it operates.
Studying the Target Market:
Identification of the Target Market:
Start by selecting a target market, in which all the research to be developed will be focused. The choice of this market can arise based on several factors, namely:
- Personal interests;
- Areas where you have experience and useful skills;
- Sectors showing potential for growth;
- Markets that align with the values of the company.
Data Collection:
Next, it is crucial to conduct a detailed analysis of the market in question. To do this, it is necessary to collect data that describes the target audience and the market itself. This collection can be done in two ways:
- Collection of secondary data: Data collected by third parties, which can be found on search engines and social networks, provides information about all types of markets (e.g., platforms like Google Ads and Google Trends, comment sections on competitors’ websites/social media).
- Collection of primary data: Data collected by the entrepreneurs themselves to support their market analysis. These are very important as they allow for a more personalized research approach, addressing the specific questions the company wants answered about the market and target audience (e.g., surveys, polls on social media, interviews with potential customers).
Market Analysis:
With all this data, it is now possible to analyze the most important elements of this market:
- Target audience: we have potential customers’ demographic data, their preferences, purchasing habits, and the challenges they face in this market.
- Competitive analysis: knowledge about the products/services offered by competitors, strategies applied, strengths, weaknesses, among other information.
- Market trends: what kind of products/services are successful in the market and demonstrate more potential.
With this, you will already have an idea if it is possible to identify problems to be solved in this market that have sufficient demand to be a business opportunity.
How to Define a Problem:
Defining the problem should be a robust decision. With that said, the brainstorming phase with the team to choose the most suitable problem for the analyzed market is extremely important.
During ideation, problems should be identified based on:
- Personal life:
- What problems do I (or people I know) face in everyday life that could be solved within this market?
- Target audience experience with competitors:
- What are the weaknesses of the competition and what problem are they associated with? What causes market pain(1) to customers? What challenges do customers face in this market?
- Market trends:
- What kind of problems do the most successful companies solve? What are the most competitive topics?
- Lack of supply:
- What is the problem within the target market that companies rarely focus on? What problems aren’t addressed by any competitors?
- Existing business:
- What difficulties do existing companies in the market feel? Are there problems to solve that would be a good complement to existing businesses? Are there problems inside companies that could be solved by third parties (outsourcing)?
1: Market Pain – unmet need or frustration with a product/service experienced by customers
After gathering several ideas of possible problems to solve, the one chosen should:
- Be relevant in the target market;
- Be viable in technical, operational, and complexity terms;
- Align with the vision and mission of the company;
- Match the competencies of the responsible team.
Difference Between Problems and Needs:
Problem and need are both relevant dimensions in the spectrum of innovation; however, it is important to highlight that these terms have different meanings:
- A problem is a difficulty, a challenge, or any situation that needs to be addressed and requires a solution. In this context, an example of this is: some small businesses face difficulties in managing their internal processes due to the lack of integration of adequate software. Platforms that exist today, such as Odoo, emerge as a solution to the presented problem.
- A market need is related to something that is essential for the survival or improvement of a process. This need may arise as a result of an existing problem. For example: excessive emissions of polluting gases by some industries are a problem. This has created the need for more sustainable alternatives to emerge. Companies like Tesla (electric vehicles and renewable energies) are examples of businesses that were born based on a market need. Another example: To support globalization, devices that allow connectivity between people have been a market need for a long time now.
Both a problem and a need can serve as the basis for a successful new business.
However, a business that solves a market need has the following advantage: the product/service is based on a fundamental need for customers, so it is less volatile in terms of demand, which leads to resistance to changes in the market and customer loyalty.
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