Effective market research can be the difference between an app that turns into a breadwinner or a flop.

Everyone has bright ideas for apps but – guess what – not all of them will work. You can’t just create an app because your mom thinks it’s a great idea;  this is a business and you need to find out if there is a market. Lack of market research is a classic mistake we seen in the Dragon’s Den, which usually follows with a fire of ridicule from the Dragons.

Avoid ridicule and disappointment and get some real market validation before investing in app development.
Even if you have a proven idea that works, you need to know the marketplace to know how and where to find your specific customers. Do you think Starbucks puts up a restaurant just anywhere without knowing the market? Successful businesses know the market inside and out.

Already overwhelmed? Don’t be. With some guiding principles and strategies, you will be able to assess the market for your app.

On your mark, get set…

Set your starting point. Are you aiming to follow an app store trend or do you want to find a narrower niche to target? This decision will guide your research and lead to defining your target audience.

App Store trends

See what is trending in the stores to see how your app idea fits with current popularity trends, especially if you want to reach a wider, broader group of people. Outside the app stores, Google Trends is the tool of choice.

The main sources here will be Top App Charts in iTunes, Top Grossing, Top Paid and Top Free. These are region-specific and change often so adjust your search to your market and don’t just check once and assume you have all the info you need. Frequent and regular charts monitoring is important if you are going for a broad market.
Top Grossing is a peek into what is successful in a particular category when it comes to in-app purchases and other revenue streams.

In Top App charts, we can see that Lego “branded” games are popular. We can see that other games know the times WHEN people play games with Toilet Time.

Trend anticipation
If you’ve got your sights on going global, then the global charts by Apptrace could provide an overall perspective of top apps globally by category.

Another source of global trends is Google Trends. It shows the popularity on a more generic scale, not specific to apps. Narrowing to specific time frames and categories can optimize the results. Other filters like those for mobile devices and “exact match” will narrow the research even further. The available CSV file of the results will give you a full list not shown on-screen.

Part of broad market research is the consideration of seasonal and newsworthy non-app trends, such as holidays, sporting events and entertainment releases. Topics like the World Cup and the release of the next Hunger Games movie can create spikes in searches for related terms. If you know the regular trends,and can predict future ones, you can anticipate riding the popularity bandwagon all the way to the bank.

Know what is going on in your related industries through websites that are already on top up of the up-and-coming, like movieinsider.com for the film industry, for example.

Initial marketplace assessment: How big is your pool?
How targeted is your audience? Will your customer pool be wider and more generic, highly specific, or something inbetween? Is it a narrow “sniper” niche or more of a broad “bomb”blast radius? These are decisions about strategy that you will need to make to best position your app.

Don’t forget that broad doesn’t mean untargeted; your market –no matter the size – still represents a subgroup of people by gender, interest, and age. In addition to those factors, add in location, income, ethnicity and marital status as well as hobbies, lifestyle and behaviours. This will begin to round out your target consumer.

Refining your user profile
You start with a general idea of your user and their interests. Then you need to know their habits –when do they use their device and which social media sites do they use? Is email a big part of their communications – as for business people rather than youth or children?

What about websites, forums, and podcasts? Essentially you want to know WHERE and WHEN your user can be found.
By the end of your research, you will have built up a user profile that becomes the face or avatar of your target user to whom you will tailor your marketing campaigns.

Misleading micro-niche
Assuming that a narrowly targeted niche is unprofitable is a common misconception. In reality, a product that caters to a more specific market tends to have higher conversion because those that find your product see that it is exactly what they need.
A more targeted niche usually justifies a higher price point as well. The money-making potential is definitely there.
In any business, the target market needs to be well-defined and in the micro-niche even more so.
Note: You can target a niche with the product itself and/or with localization. For example, by tailoring the in-store marketing (metadata) of a GPS app to a specific region, you can narrow the market and turn up the level of interest of the targeted audience that see an app specifically for their area.

Competition

On one hand, the fact that apps with similar concepts exist validates your idea and shows that there may be traction for your idea. On the other hand, if the current players have an established reputation and megabucks as backing, the likelihood of successfully competing with them is slim. It will depend on how many of the top category apps are “unbeatable” and how many have some potentially weak spots that you can exploit.

And this is not information that Sensor Tower or another ASO tool’s difficulty score can estimate. To understand your real competition accurately and in-depth, the competitors will need to be analyzed individually. Take a look at your competitors’app features, app weaknesses (check bad reviews), who they are targeting, quality of in-store marketing (icons & screen shots) and quality/amount of additional marketing. Find their weaknesses, and crush them!

Real world validation
Traffic and ranking numbers on a screen can tell you part of the story, and for more in-depth analysis you can go direct to the potential end user to ask them about the problems they need solving, their interests and passions(depending on the type of app you’re considering).

You can ask business owners about problems they would pay to solve or parents about issues with current children’s apps. The goal is to identify what their “pain points” are or needs that are currently not being fulfilled.

You can do this consumer-direct research to get ideas (brainstorm) or to check the viability of an existing idea. However, when you have the attention of industry experts it may be better to leverage their time with a more open, “I value your opinion” approach, rather than asking only about one idea. You may be able to pique their interest by tapping into their egos a bit.

Clues to end user needs are found not only in the end user themselves, but also in the people they trust, like bloggers and leaders in the topic area. The owner of a parenting blog would know well what problems parents face and they may also be willing to review your app and test it once developed, giving you a marketing channel.

That being said, you shouldn’t base your decision making solely on consumer opinions unless the rest of your research supports it. Unless you’re asking a huge number of people to get a range of opinions, you may be biasing the result you get.

To sum up: After deciding on the market research principles, whether trend- or niche-based, you can then define your audience, check the competition, and do some in-depth consumer research. This should put you on the right track for market research success