The importance of Market research for App Development

Mobile app research helps to understand the target market, competition, and expected trends in the industry. There are important statistics that explain why this analysis is crucial before any app development starts.

Only 0.5% of all apps published on online stores are successful. Two-thirds of all apps do not get more than 1000 downloads. A further 18% do not manage to maintain at least 1000 active users. 71% of all apps churn customers within three months. Therefore, getting traction and attaining profitability is a serious challenge for app developers.

Ironically, the mobile app market is growing, based on revenue earned in the past five years and projections into the next five. Statista puts the size of the global app market revenue at $475 billion with a projected CAGR of 19%. Clearly, the pie is big and revenue opportunities exist but only for the most well-executed mobile app projects.

In this article, we will explore specific reasons why you need to spend sufficient time on market research for your next app.

Securing Funding for Your App Development Project

The average mobile business app will cost at least $10000. The costs can go up to $300000 depending on the level of complexity and the time it takes to complete. The main cost will involve hiring developers who can charge over $100 per hour in North America.

Proponents of a mobile app need to conduct in-depth research on the likelihood of success of the app in order to convince the board to make budgetary allocations for the project. Some of the questions likely to come up are:

  • How much time will the app take to build?
  • How much will the development cost?
  • What are the annual maintenance costs?
  • Are there auxiliary costs such as marketing and publicity involved?
  • What are the revenue projections or operational cost savings arising from the app?

A comprehensive report not only sends the right signal to the budget team but it gives them the opportunity to interrogate assumptions and projections made.

Reducing the Risk of Failure in App Development

Conducting market research prior to starting a development project highly reduces the risk of failure due to blind spots. Proper research would involve tapping into the wealth of knowledge of experts in the industry as well as analysts. Therefore, nothing is left to chance, and mitigating actions are taken in advance.

For instance, it is important to establish the size of the market that an app will target, and the current market share held by each existing player. It is then important to establish whether the market size is growing or shrinking. A growing market would be seen a favorable but a shrinking one would be seen as risky. Some geographical markets may be seen as too saturated prompting the business to pivot to a different country.

Another common blind spot for apps is the regulatory landscape especially when an app is launching in many countries. Different laws on revenue taxation and data privacy mean that a business has to incur costs in ensuring compliance. If these costs are not factored in the budgetary phase, they may cripple business operations short before or after launch.




New Revenue Opportunities

Ideas that have not been subjected to research are just that. Ideas. However, when you analyze the viability of an app, you are likely to uncover revenue opportunities that you had not thought of. Researching customer needs and comparing them with what existing apps are offering reveals opportunities in the market.

Successful apps are more than just a collection of features put together. With limited resources, you have to prioritize features that provide the most utility to the target market while differentiating the app from the competition. Through research, the app promoter picks the right mix of features to integrate into the app.

In addition, some features may not be included in the first iteration of the app but are included in the product roadmap. This ensures that users keep getting more value and find reasons to continue using it. A majority of apps are free and rely on ad revenue for sustenance. By adding premium features, businesses can justify adding a premium tier to their offerings.

Besides just features, opportunities also lie in untapped markets, whether geographically or demographically. This informs both current and future decisions on the direction of the mobile app development project.

Strategies for Conducting Mobile App Research

Businesses intending to carry out research on the viability of an app development idea will normally use both primary and secondary research.

Primary research would involve a fresh collection of data for analysis. The main advantages of primary research are that it provides current data, and you get to choose the number of questions to include in the questionnaire. However, primary research takes time and significant resources.

In some cases, primary research is inevitable when you need to find information with the currently available solutions for them. Besides customers, primary research may involve interviewing industry experts and even testing out prototypes with real users.

Secondary research relies on existing studies done by reputable sources. Typically, secondary research is useful in providing a high level of information on a sector or industry. However, secondary research alone cannot form the basis for the validation of an app idea.

Here are some steps to follow during the research.

Target Audience Identification

Every business must come up with demographic features that identify who their target audience is. The persona of the target audience helps to develop a mix of features that will appeal to them. The marketing communication (both the channels and marketing copy) will also be tailored to that particular audience.

The risk of not identifying a target audience is the likelihood of the app lacking focus. It may attempt to serve many demographics but not serve any well enough.

Conducting a SWOT Analysis

A SWOT analysis paints a picture of where you stand currently, where the market is, and what you need to do to create a successful app.

You may conduct a SWOT analysis of your own idea or that of existing players in the market.  Your strengths might include a good development team and a robust budget that can finance a powerful app. Threats may include the likelihood of competitors reacting to your entry into the market through pricing, advertising, and rolling out new features. Opportunities may exist in underserved markets and a continued growth in revenues in your target market.

A SWOT analysis is a powerful framework to help you decide what information to gather during research.

Reliance on Big Data

Big data is the secret sauce to making objective decisions on user needs. If you can find access to data on your target user behavior, you are likely to uncover user needs and preferences that even the customer is unaware of. In fact, the establishment of a data-gathering strategy ought to be a big part of any app improvement efforts after launch.

Businesses that launch beta versions of their apps often do so in order to collect real-time data that then inform later versions of the app.

Social Media Listening

Social media listening tools are critical when building apps for the mass market or the consumer market in general. It involves tracking of conversations to find out what users think of existing products or pain points that have not been addressed by any product so far.

Social media listening tools such as BuzzSumo are great for following conversations on multiple social media platforms. You will get insights on what the demographic is talking about. This may include the pain points you are addressing, the nature of the language they are using (formal vs informal), influencers they are engaging with, where they are going for opinions, and so forth. It really helps in establishing a communication strategy for brands.

Even after launching your app, social media listening tools are a must-have in order to draw a candid analysis of user experiences. It may also help you get ahead of issues by addressing problems identified by users quickly before they evolve into crises.




Understanding the Competition

One of the most important things to establish is the business model of your competition. The context in which they operate may help you determine what their future actions are likely to be. For instance, a cash-rich business may be able to respond to new competition with pricing incentives and advertising. A publicly owned company publishes its finances and that may help you understand their financing position.

Once you figure out their business model, you must break down their app according to features. What purpose does each serve? What gaps exist there? What technologies have they used? How secure is the app? How much revenue are they making? How many active users do they have? What percentage of users are on a paid tier?

A detailed breakdown establishes what you are up against and what you must beat.

Examples of Well-Researched Apps

It is possible to find numerous well-documented app development proposals that indicate the importance of market research prior to development.

Alma- The Document Scanner App

The creators of this app were working for a client who owns an app publishing firm. The idea was to create a document-scanning app that scans an image and converts it to PDF format.  Users can export the document or store it within the app. However, there already exists solutions in the market that do this. What differentiates the proposed app is the use of optical recognition technology to enable text translation in more than 18 different languages.

The app would use existing technologies such as WeTransfer for scanning and Google Firebase ML Kit for optical character recognition. The app would also provide the option to add watermarks to documents and e-signature. Customers can also lock documents using a password on the app. The app would allow customers to pick the orientation in which to export or print documents with sizes such as A3, A4, A5, Business Cards and Legal included.

The project team expected most customers to use the basic free version of the app, but a few features would be only available for premium users. Such features include email scanning and being able to scan documents in batches.

The project was solely focused on building an iOS version of the app. The preferred development language was Swift while the Database would be built using Core data-iOS and MySQL.

School Bus Tracking App

Another well-documented project is one that aimed to solve the problem of parents being worried about their children’s whereabouts after school. The project team built a solution that used GPS tracking to help both parents and schools.

The project involved building several apps and admin panels. There would a parent’s app, a driver app, a school admin app, and a super admin to manage all schools that would get on the project.

Some of the most important features for parents would include a payment gateway for parents, real-time tracking of buses, and push notifications for when new trips begin and end, as well as when there have been delays or reroutes.

For schools, the app would help them manage their fleets better through real-time tracking as well as data on trips made, time taken, stops made, and much more.

The project’s proposal was crystal clear on the target audience, benefits to each stakeholder, revenue model, and technology stack to use to build.

Let NS804 Handle Your App Development

As seen, conducting proper research is key to avoiding committing resources to any app development project. The odds are often stacked against you owing to competition and quality expectations from target customers. An underwhelming experience often leads to app installations within a few days. Retention relies heavily on the ability to deliver real utility to target users. Therefore, a clear focus on customer needs is paramount and this can only happen through a thorough dive into customer pain points.

A combination of primary and secondary research is your best bet for determining the best mix of features. In addition, you need information on what the competition is doing well, what they have missed, and where differentiation opportunities exist.

At NS804, we take great pride in helping businesses ideate and build successful apps. Prior to any development work, we help clients conduct a thorough analysis of their intended projects in order to validate the ideas. We help them gather the necessary information to come up with a target audience persona, analyze competitors, find gaps, and list all the features to include in the MVP.

After the building and deployment of apps, we also take part in the maintenance and building of future iterations of projects.

If would like to talk to us about conducting market research for your app development project, reach out to us through our website. Our team will be in touch to discuss how best to bring your idea to life successfully.

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