The mobile app market is insanely competitive —sadly not every idea is brilliant enough to make it. Consider that, Android users had access to over 3.48 million apps as of the first quarter of 2021 (Statistica). As many as 3700 apps make it to the Play Store daily.
A study revealed that 80% of apps don’t outlive their first year.
With good marketing, a failing app may get some downloads. But users will end up abandoning the app, resulting in losses for the development company or app owner.
Many of the problems that spell doom for mobile apps may be avoided by undertaking rigorous market research for an app idea. The issues may include failing to address a real-life problem, poor user experience, no originality, and too few or too many features.
If you’re undertaking app development, our guide on how to conduct market research sampling for a mobile app startup will be instrumental for the future survivability of your business.
So let’s consider the process, step-by-step:
Why market research is important for creating a mobile app
The app development process encompasses planning, design, coding, testing, deployment, and ongoing refinement to create a functional and user-friendly application.
Market research for a mobile app is not a difficult concept to grasp.
It’s simply the process of evaluating the viability of an idea using real data about the behaviors of the target group, market conditions, dominance of competitors, and potential for users to use your solution.
For instance, an e-gaming platform developing an online action multiplayer game may undertake curiosity-driven market research to challenge their assumptions. Along the way, they may discover that their storyline is less existing or challenging than what players are accustomed to.
Assumptions on their main user base may be disproven. They can also discover the most optimum pricing models adopted by competitors or features users didn’t like in similar games—giving them a competitive edge.
So, mobile app market research provides actionable insights on mistakes to avoid, how to position an app, and a game plan to implement for lasting success in a highly competitive market.
Here are more individual reasons why market research for startups is critical:
- Know the market and its size: Not all markets are built the same. Some have more revenue potential and less competition. Others have reduced revenue potential from too many competitors.
- Form the target audience: The target audience represents the core group of people who will download and use the app regularly. They will willingly buy your merch, subscribe, or make in-app purchases.
- Determine user problems and needs: An app is only useful as the problem it solves. Solving difficult and large problems gives you a better edge.
- Strengths and weaknesses of competitors: Studying competitors is a crucial part of market research for a mobile app. It allows your software development team to spot opportunities from competitor weaknesses, or differentiate your app to stand out amidst the strong competition.
- Spot and capitalize on trends: Market research can reveal the hottest trends in your industry. If you’re building a solution from the ground up, it’s easier for your app to take advantage of new innovations and topple industry giants.
- Highlight a competitive feature: You may perform competitor feature analysis as part of the market research. It may entail determining the standout features of competing products and analyzing how platforms market them.
- Find a niche: Simple market research for a mobile app idea such as reading negative reviews on app store reviews may reveal forgotten and undeserved niches.
- Financial planning: If you’re planning on making a profit from the mobile app, financial planning will be crucial in the research and design process. Market research can help establish potential revenue options, platforms to target, download projections for each app, and industry retention rates.
- Developing a monetization strategy: Figuring out the best revenue stream for an app is not a walk in the park. The wrong choice can hurt profitability and impact the user experience. With unique solutions, it may be easier to adopt a paid app model with a freemium that contains limited features. In a market where users have a lot of options, the app may subtly generate income from partnerships or advertisements.
- Developing a familiar design: Users may expect that new apps will have apps better features and user experiences. You may need to conduct market research to determine the standards that have already been set.
- Highlighting UVP: The unique value proposition is a single statement that tells potential users why they should use the app. Market research can help refine the UVP, as you’ll identify customer pain points, potential app benefits, and how benefits connect to the buyer’s pain points.
- Validation of ideas: Ultimately, market research can help validate ideas. You may even stumble upon better ideas and drastically take a different path from the original one.
Tiding it up, here are the top reasons for startup failure based on research by FRACTL.
Systematic market research for startups can help overcome leading challenges such as an unviable business model.
How to do market research for a new app
It’s important to grasp the fundamentals of the research process to figure out how to do market research for a mobile app idea.
As a refresher on a topic you probably learned in school, there are two main types of research:
- Primary research: The researcher gathers first-hand information from a focus group. It’s described as original data, as the information is not already contained in online articles, databases, or books. Tools used for primary research include surveys, interviews, first-hand observations, and focus groups.
- Secondary research: Researchers organize and analyze information from existing literature to draw insights. They may review published articles, newspapers, peer-reviewed journals, and even social media.
Let’s consider the steps of how to make market research for a mobile app idea:
Step 1. Formulate your app idea
Formulating an idea entails thinking about the details more carefully.
- Begin by writing it down;
- Observe similar projects or install apps and use them;
- Read more about the industry, attend seminars, or participate in webinars;
- Expand on the app’s functionality, features, and benefits;
- Note down potential use cases;
- Roughly sketch out what the app will look like;
- Think about various scenarios where the app will be useful for future users.
Step 2. Explore your current business environment
The business environment typically consists of internal and external factors that may directly or indirectly affect the development of the app idea.
- Explore technological, demographical, economical, or political factors;
- Consider any external risks beyond your control that may pose challenges to the development of the idea;
- Examine social, market, and technology trends such as AI;
- Examine the business’s immediate environment (Microenvironment): Consider potential development partners, customer preferences and behaviors, immediate competitors, stakeholders, and the general public.
Step 3. Find and research your competitors
Researching competing apps is one of the best mobile app research strategies to implement.
Accurately determining your competitors first requires a deep understanding of the app’s target niche.
High-level niches such as calendars & timers, apps for children, and healthcare may be further broken down into highly-specified groups.
Once you find the niche, conduct market research by carrying out a SWOT analysis of each competitor. Review their website, social media, SEO profile, app reviews, past ads, and press mentions.
Step 4. Define TAM, SAM, and SOM
Defining the TAM, SAM, and SOM matters because it gives you a realistic view of the potential number of people that may use your app. It can also inform investors about the app’s market viability, upside potential, and the idea’s viability.
Here is what each term means:
- TAM (Total Available Market) — It’s anyone and everyone who is a good candidate for your app. This may be millions of smartphone users.
- SAM (Serviceable Available Market) — The SAM is a portion of the TAM, and represents users that you can ideally reach with your marketing or realistically acquire.
- SOM (Serviceable Obtainable Market) – It’s the number of uses your startup will ideally capture. For startups with huge potential, it may be less than 1% of the TAM.
Step 5. Set up your market research criteria
The market research criteria spell out the market research objectives and aid in the selection of research methods. You will need to:
- Identify and define the problem (what you want to know);
- Write a statement of research objectives;
- Design the research tools, such as formulating questionnaires;
- Organize the focus group;
- Spell out procedures to collect, process, and analyze the data.
Step 6. Calculate your required marketing budget
Before calculating the required marketing budget, you need to select ways to market the app.
You have access to organic and paid marketing strategies. For instance, you can run paid social media campaign optimized for app installs. It’s also important to figure out if you will hire an in-house team or outsource to an external agency —and how much both services may cost. You can learn more about the composition of the software development team structure and its cost.
Step 7: Analyze your target users
Gaining an innate understanding of the target audience is highly critical as you figure out how to conduct market research for a startup.
Here are some questions to answer to define your ideal audience:
- What’s their age, gender, and location?
- How do they think or make decisions?
- Which hobbies do they have or general interests?
- How much time do they spend online, where do they spend it, and how do they consume information?
- How do they prefer communicating?
- Which apps have they installed before, and which apps have they bought?
- What are their major pain points?
- What do they want to see improved?
Useful tools for market research
The following list contains tools that are quite handy for market research:
Market research platform Data.ai
- Appanie (now Data.ai): App Analytics data.
- Appfollow: Tracking app user reviews.
- Builtwith: Technology lookup.
- Craft.co: Source truth on companies.
- Crunchbase: Company insights.
- Census Bureau: Data on people and economy.
- Facebook Audience Insight: Information about target audiences.
- Latana: AI-driven brand monitoring.
- Keywords Planner by Google: Insights on keyword searches.
- Semrush, Serpstat, Ahrefs: SEO tools including keyword search, & competitor analysis.
- SimiarWeb: Behind-the-scene website analytics.
- SurveyMonkey: Build surveys.
- Sensortower: App store optimization data.
- Statista: Market data and industry statistics.
- Typeform: Forms and surveys.
Bottom line
To recap, we have examined the reasons why market research matters and covered the steps on how to do market research for a startup. They have entailed formulating the idea, researching the competition, defining the target audience, and preparing a marketing budget.
If you need to build a solid foundation for your mobile app development, consider delegating the initial market research to a dedicated team of experts. Market research comes first before building any project. We also choose the right people for the development.