According to research, 35% of startups failed because of the lack of market need for their product or service. This is easily preventable by spending some time on product opportunity assessment before investing time and money in building a new product.

The more time you spend on opportunity assessment and the product discovery phase, the higher the chances you'll create a successful product that your target audience will enjoy using.

In this article, we'll guide you through the whole process, providing actionable tips and everything you need to consider.

What is product opportunity assessment?

Product opportunity assessment is an evaluation process that companies use to identify and analyze market gaps and discover unmet customer needs, which can lead to the development of a new product.

This process has different phases, including analyzing users and their behavior, competitors and market trends to determine the feasibility and potential success of the new product idea.

Assessing product opportunities helps you create products that customers want and need, preventing you from wasting time and money in the long run because you won't be using your resources on products with low chances of success.

How to do a product opportunity assessment

There are different frameworks and methodologies that you can use, but it's essential to include the following five steps in the given order.

Conduct user and competitor research

Choosing the user research method will depend on whether you already have clients using your existing products or starting from scratch.

The goal is always the same: you want to discover their pain points, desires, and problems that don't have an adequate solution yet.

1. In the first case, you need to collect their feedback, and there are various ways to do so. From sending them questionnaires to arranging calls or strategically placing quick surveys for them to fill out before leaving your app.
   Read this article to learn how to collect customer feedback in 13 different ways.
2. If you don't have a customer base, create your user persona and try to identify where your target audience hangs out. You can find them on forums, online groups, LinkedIn etc. Conduct interviews or even organize focus groups, but if you're looking for something faster and cheaper, you can ask them to fill out surveys, maybe offering some incentive or discount in return.

Here are key product survey questions that you don't want to overlook.

How can you streamline this process? Zeda.io is a customer feedback-management platform that allows you to capture and analyze feedback from different channels in one place and discover recurring themes and problems.

With the help of AI, we help you transform customer insights into actionable steps that will help you decide what product to build next.

Now, here are a few tips on competitor research:

• Start by identifying key competitors in your target market, both direct and indirect.
• Analyze their product offerings by examining features and price-quality ratio.
• You can do a SWOT analysis for each competitor to identify strategic opportunities or benchmark their products.
• Try to identify any gaps, problems they're not solving, features that are missing or could be improved.
• Analyze their positioning and branding. Study their website and social media and read user reviews.

Determine your value proposition

Your unique value proposition is a factor that makes you stand out from other companies in a highly competitive landscape and convinces your clients to choose you over other solutions.

What is the thing that sets your product apart from other similar products?

• Does it solve a unique customer problem that hasn't been addressed yet?
• Is it ideal for a particular segment of your target market?
• Do you offer some additional features that other products don't?
• Can you solve that problem faster/easier/more efficiently?

Do this thoroughly because a compelling value proposition lays the foundation for a successful product launch and all future marketing campaigns.

However, value proposition is not just a marketing strategy, it's much more than that. Product management is all about creating value for your users, and everything else starts from there.

Consider external and internal factors

When conducting a product opportunity assessment, it's crucial to consider a range of factors that could influence your decision.

The following internal factors are critical to success:

• Resources – Conduct a realistic assessment of the following resources to see whether your company has the means to develop the desired product: human capital, their skills, technologies available and your budget.
• Company goals – Is this product aligned with your long-term goals and vision? If not, it could slow down your progress and compromise success in the long run.
• Customer feedback – Does this product idea align with what your current customers want and need?

Of course, you mustn't underestimate the external factors. You may not be able to control them, but at least you can do your best to assess and anticipate them.

These external factors are critical for success:

• Market trends – Analyze current and emerging industry trends that may impact your product’s potential success.
• Economic conditions – Evaluate macroeconomic and microeconomic factors that could influence the market: inflation, purchasing power, interest rates etc.
• Laws and regulations – Check the regulatory requirements and compliance issues affecting your product.
• Competitors – Examine your competitors and find out what's their market share.
• Technology – Consider whether technological advancements in the near future may affect your product’s competitiveness.

Use prioritization frameworks

Prioritization frameworks are an essential part of the product discovery process. They allow you to maximize impact by focusing on what truly matters and prioritizing features that can make the biggest difference to customers.

Here are the most popular ones:

• RICE scoring model – This framework has four components: Reach, Impact, Confidence and Effort. You measure each feature on a scale of 1-10 and then use a formula to determine which one you should focus on first.
• ICE scoring model – This framework is similar to the previous one, but it focuses most on identifying high-impact tasks that you can do with relatively low effort.
• Kano prioritization model – This framework classifies initiatives into different categories based on how they'll affect your customers (from delighting them to neutral and even negative impact).
• MoSCoW analysis – This framework allows you to classify features into four categories: must-have, should-have, could-have and won't-have.
• Impact mapping – Impact maps are a great way to visualize multi-level diagrams to help you understand the bigger picture.
• Impact/Effort matrix – This framework is great for boosting efficiency when you want to maximize the positive impact of your efforts.
• Value/Effort – This is the best framework for identifying high-value, low-effort business opportunities.

Our platform, Zeda.io, allows you to choose between RICE and the Value Effort framework. If neither works for you, you can always set up your own customized prioritization framework.

Test your idea

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Now that you've decided on one particular idea, it's time to test it before developing it.

• Create a prototype: Rapid prototyping has many benefits, from reducing costs and gathering real user feedback to mitigating risks associated with launching a new product. Remember that a prototype doesn't need to be a fully functional product, but it should showcase your product features and functionalities.
• Conduct user testing: You can then ask your target group to test the prototype and give their feedback. Observe how they interact with it and pay close attention to whether there are any usability issues or improvements needed.
• Create an MVP: If your product idea passes the initial test, you can develop a Minimum Viable Product (MVP), a scaled-down version with only essential features. Launch your MVP to a limited audience to test user engagement and satisfaction.

This article will help you understand how to get feedback for an early-stage product.

The final step is – to iterate and improve. Now that you've gathered enough user insights and validated your idea, it's time to consider necessary improvements.

In a recent study, 55% of companies said that their main focus is improving their product to align even more with customer needs, and that's what successful businesses have always been doing. You should continuously work on enhancing user experience, as that's the best way to boost user satisfaction and retention.

Product opportunity assessment questions for product managers

Here are ten fundamental questions created by Marty Cagan, famous product management thought leader and founder at Silicon Valley Product Group, that every product manager should ask themselves and their product teams:

1. Exactly what problem will this solve? (value proposition)
2. For whom do we solve that problem? (target market)
3. How big is the opportunity? (market size)
4. What alternatives are out there? (competitive landscape)
5. Why are we best suited to pursue this? (our differentiator)
6. Why now? (market window)
7. How will we get this product to market? (go-to-market strategy)
8. How will we measure success/make money from this product? (metrics/revenue strategy)
9. What factors are critical to success? (solution requirements)
10. Given the above, what’s the recommendation? (go or no-go)

Product opportunity assessment: Real-world examples

Amazon Prime

By analyzing user behavior, Amazon discovered that their customers increasingly sought fast and convenient shipping options. They went on to do market research and examine their competitors' offerings, and they realized there was a gap.

When they first launched Amazon Prime in 2005, there weren't many e-commerce websites that guaranteed fast shipping, and those with this option were very pricey and not accessible to everyone.

Amazon realized that a combination of fast shipping and convenient prices could be their differentiator, so they tested it. First, they surveyed their existing customers, asking whether they'd be willing to pay for faster service.

When the answer was predominantly positive, they launched the first pilot program of Amazon Prime, where they guaranteed two-day shipping of selected items within the United States in 2005.

(By the way, this is still relevant, as one recent study revealed that almost 60% of customers would be willing to pay more for better customer service.)

The program was so successful that it spread to four other countries in the next few years (UK, Germany, Japan and France) before eventually spreading worldwide and being available in over 20 countries today.

Slack

Slack was first developed as an internal communication tool by Stewart Butterfield and his team that was working on a gaming project.

Due to the project's complexity, they needed a tool for quick real-time communication, and they weren't satisfied with the solutions available at the time. They wanted to reduce the time-consuming practice of sending emails back and forth, so they created the app that later became known as Slack to solve that problem.

When the game they were creating didn't turn out to be successful, they realized they had accidentally developed another product that was solving a real problem. There were other people across the tech industry who were complaining about the lack of effective communication tools.

Their biggest competitive advantage was the ability to test Slack on their in-house team over a prolonged period. They were able to analyze their behavior in-depth and see what could be improved.

The MVP phase included testing Slack with a selected group of users outside their company and validating the idea. After gathering their feedback, the development team refined the app and improved the design and user interface to meet the demands of the broader user base.

Despite its remarkable success, Slack still thrives on continuous feedback from its user base as the team constantly improves the app.

Conclusion

You now have a complete guide and everything necessary for a good product opportunity assessment.

But why would you do it manually when our platform can help you streamline the whole process, gather and analyze user feedback in one place and then make a data-driven decision on which product to prioritize?

Sign up today and let us transform your customer data into actionable insights that will help you build your next product.