What is Market Requirements Document (MRD) and How Does It Fit in the Product Management Process?

The Market Requirements Document (MRD) is a strategic document containing details about the target audience, value proposition, competitive landscape, revenue opportunities, and metrics to measure the product's success.

The goal of an MRD in product management is to ensure agreement and alignment between various teams and stakeholders while keeping the product profitable.

A product manager and/or the product marketing manager is responsible for creating and managing the MRD, with inputs from the cross-functional product team and stakeholders. An MRD is a living document that should be constantly reviewed and updated as the business goals and market conditions evolve.

Let’s take a closer look at the importance of MRD in product management to understand its importance.

The role of MRD in the product management process

The market requirements document helps the product team tangibly outline the pain points and expectations of their customers and the current marketing conditions. This allows them to start the product development process on the right foot.

Eliminating bad ideas in the product ideation and planning phase minimizes the risks of failures and saves resources such as time and effort. An MRD, for instance, will tell you whether a feature will make a product profitable based on the preferences of the customers.

Additional benefits of an MRD include:

1. Better alignment and prioritization

An agile market requirements document brings stakeholders, developers, marketers, and managers on the same page in regard to the market requirements and business goals.

Consequently, everyone uses the same parameters to prioritize features, action items, or initiatives throughout the product lifecycle.

2. Reference for PRD (product requirements document) & Difference between MRD v/s PRD

To understand how an MRD facilitates the creation of a PRD, let’s first differentiate the market requirements document vs. the product requirements document:

A PRD is developed when the market conditions, requirements of the target audience, available resources, etc., are understood — which are all present in an MRD.

It is crucial for product teams, regardless of the industry and size, to create a living MRD to kick off their product development process in the right direction.

Let’s understand how you can create one.

How to create an MRD (Market Requirements Document)

There are three steps that will help you create an MRD for your product easily:

1. Understanding the key components (or the contents) of an MRD and their importance
2. Collecting the relevant information and formatting it appropriately
3. Following certain best practices to minimize mistakes in the above two steps

Let’s dive deeper into each of these steps.

1. Key components of an MRD

It is essential to share all the relevant details while keeping your MRD concise and to the point. Keep in mind that an MRD is a living document that evolves over time and helps with team collaboration.

The key components of an MRD include:

• Executive summary: It is a mini version of your entire MRD. It contains your findings, assumptions, and suggestions. For example, an executive summary of an MRD for a product for local musicians might look like:

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• Vision: This is where you differentiate your potential product (or its features) from what is available on the market. You can use the following format to write the product vision for your MRD:
  
  For [the end users], who [their pain point], the [product’s name] is a [type of product] that [unique value offered]. Unlike [competitors/alternative solutions], our product [key differentiating factors].
  
  The above product vision template for the MRD, for example, can describe Zeda.io’s product vision as:
  
  For product managers, who find it difficult to manage their process because it is distributed across multiple apps, Zeda.io is a super-app for product teams which allows PMs to manage their processes from one place.
  
  Unlike our competitors, our product gives the freedom to the users on whether they want to use the native features or bring their existing tools to Zeda.io via integrations.
  
  
• Target market: This section of your MRD will make a business case for your product by mentioning the market size to quantify the opportunity.
• Personas: You have to describe your target audience by creating specific user personas for different use cases. For example, check out how Spotify developed and evolved its user personas with time.

• Competitor analysis: This helps you understand how your target audience is currently solving the problem at hand. Is it one tool, a combination of tools, or something that they came up with themselves? Answering these questions will help you carve a unique identity for your product which will ultimately guide your PRD.
• High-level capabilities: You need to step inside your users’ shoes and outline what features or functionalities your solution must contain for it to be more successful than its competitors.
• Metrics strategy: Broadly, every product has two kinds of metrics. The first kind tells you whether the product is desirable and the second one reveals whether it is profitable.
  
  For each type, it is a good practice to focus on one metric that matters rather than multiple vanity metrics. For instance, in a product management case study, Medium’s Product Lead explained how their key (North Star) metric was total time reading (TTR).

2. Gathering relevant information for an MRD

One of the biggest challenges with creating MRDs through traditional methodologies is to ensure their time relevance when they are completed. If you take three months, for example, to complete a long-form MRD, it might be irrelevant because the market has evolved.

So, a better solution is to create agile market requirements documents that you can easily update for retaining their utility.

Zeda.io provides a collaborative workspace where product teams can create agile MRDs from scratch or can import it from existing sources such as Confluence, Google Docs, and Notion.

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This will allow you to keep this process collaborative throughout the product lifecycle. You can also use other documents such as PRDs, GTM plans, etc.

3. Best practices & Tips for product managers while creating MRDs

Keep the following three tips in mind to create accurate MRDs for your product quickly:

1. Keep the process collaborative: If you look at the key components of the MRD, it is evident that you need inputs from everyone in your cross-functional product management team. It will help you avoid mistakes, redundancies, and ambiguities in your market requirements document.
2. Update the document regularly: Although it might be difficult to update the MRD for each sprint, you can do it on a quarterly basis. While deciding the update frequency, it is crucial to consider the rate at which your market evolves. Keep an eye on the new (and disruptive) technologies and tools in your industry.
3. Track relevant KPIs to monitor impact: The MRD helps build the PRD which helps build the product roadmap. To ensure the factual accuracy and utility of your MRD, you can:

• Collect user feedback on your proposed solutions. You can build wireframes with Zeda.io collaboratively for this purpose.

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• Monitor how your prototypes and minimum viable products (MVPs) are received.

Summing up

Market requirements documents (MRDs) are living strategic documents created by the cross-functional product team which contain the “what” of the product development plan.

An MRD explains the problem faced by the target audience, analyzes the existing solutions in the market, and proposes a new approach to the solution while making a business case for the product.

Traditionally, product teams took months to create MRDs through the waterfall methodology which could render it obsolete by the time it is completed as the market evolves much faster these days.

Fortunately, with the help of ready-to-use templates, collaborative workspaces, and agile methodology, product teams can create MRDs significantly faster.

While creating MRDs, it is important for product teams to keep the process collaborative, update the document regularly, and measure their progress through business and product performance metrics.

Apart from guiding the PRD and the product roadmap in subsequent stages of product development, the MRD also aligns the efforts of various teams and brings everyone, including the stakeholders, on the same page.

Considering the importance of a market requirements document in a product’s lifecycle, product teams need the right tool where they can not only create MRDs fast but also put them into practice every step of the way.

Zeda.io is a suite of product management tools that provides a collaborative workspace for product teams where they can create and manage strategic documents like MRDs together.

Your team can also run and manage the entire product management processes from one place, whether you use the native features of Zeda.io or bring data from other tools through integrations.

Start your free trial today.

FAQs

• What is a market requirements document (MRD)?

Answer: A market requirements document (MRD) is a strategic document that contains details about the target audience, their pain points, a proposed solution, and the business opportunity it brings. It helps shape the PRD and the product roadmap as well.

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• How do you create a market requirements document?

Answer: Research the market, define your audience, identify their needs, suggest a solution with a unique selling proposition, and make a business case for that solution. Use an MRD template to collate all that information and revise it regularly to keep it relevant.

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• What are the 4 requirements of a market?

Answer: The four requirements of a market are: demand, supply, revenue, and a marketplace. A market requirements document contains the details about these four requirements which help product teams during product development.

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• What is the difference between MRD and PRD?

Answer: An MRD is a strategic document that helps everyone understand the scope of the product and the business opportunity it brings. A PRD is a tactical document that details the features and their methods of development and testing of that product.

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• What is MRD software?

Answer: MRD software is a collaborative tool for product teams such as Zeda.io, that helps them create, share, and manage market requirements documents throughout the product lifecycle.