“Authentic marketing is about knowing what to make rather than selling what you make. It is the art of discovering and understanding customer demands and developing solutions that provide customer satisfaction, producer profitability, and stakeholder advantages.”
It is pretty lengthy but a worthy piece of advice!
Before you begin building your product, it is essential to understand the difference between market and product requirements.
Even though we regularly use these terms interchangeably, they are very different.
In this blog, I will explore their differences, how you can identify each, and why understanding the distinction is essential.
Without a clear market requirement document, the product development team will be unable to move forward on their assigned project.
What happens when the market changes and the product needs to change?
This blog will look at the difference between product requirements and market requirements.
Read to learn more!
What Are Market Requirements?
A market needs document (MRD) is a document that summarises the real market opportunity, including market size, client kinds, and competitors in the field.
It assists product managers in combining market research to communicate what customers want and need from their product or service.
An MRD is a strategy document that is still in its early stages. It should stay high-level, with just brief strategic discussions of the features you propose in the “How we tackle the challenge” section.
After your team has agreed to continue with the product, you should create extensive discussions of each feature and the user stories that go with them.
Although an MRD and a product requirements document (PRD) are commonly mistaken, they serve different objectives.
A PRD outlines how you should produce the product. In contrast, an MRD defines what customers need and how it will supply it.
Consider the PRD as a roadmap for broader cross-functional teams (including design and engineering) to grasp what the product should accomplish.
Since the MRD informs the PRD, the MRD should be created before the PRD to ensure that the product team understands client demands before specifying actual product requirements.
In simpler words, a market requirements document, often known as an MRD, is a strategic document.
The product manager or product marketing manager creates this document to assist outline the market’s requirements or demand for a given product.
An MRD usually includes information about the product’s vision, competitive environment, business analysis, and revenue opportunities. In addition to all this, it also includes a list of features or, at the very least, high-level feature categories.
Market requirements are the needs, wants, and expectations of the consumers. Therefore it is essential to know what these are to create a product that will appeal to them.
It also includes things like customer demographics, industry trends, and competition.
Companies usually use market research to gather information about these factors.
For identifying the market requirements, the business leader or entrepreneur needs to be able to ask themselves a few key questions.
- How does my product meet their needs?
- What are their desires?
- What do they expect from my product?
This knowledge will help you understand what you need in your marketing strategy and how you are going to be able to get your message across.
Who Writes the Market Requirements?
Product managers often create MRDs during the early planning stages of a new product launch.
However, because changing market trends and evolving customer needs always bring new product options, it’s good to examine the MRD regularly.
Why Are Market Requirements Important?
There are numerous new product and service concepts. Knowing what to create next might be difficult.
However, as a product manager, you must determine and prioritize which problems to solve.
Product managers are usually in charge of writing an MRD. However, you’ll most likely work with the product marketing team because the basis of this document is on market and consumer research.
Creating an MRD before investing time, money, or resources will help you save time, money, and resources.
You may align the team on what you’re building and why it will help customers by confirming the market requirement and reviewing the competing solutions available.
Once you’ve decided that an opportunity is worth pursuing, you can use the MRD to provide a high-level overview of what’s needed to succeed. This will help you focus on your consumers’ most relevant work and align with your product strategy.
How Should You Structure a Market Requirements Document?
The market requirements document is a tool that can help you and your team plan the development of a product or service.
It enables you to define what you are trying to achieve by documenting the problem, your goals, and the project’s scope.
The market requirements document should include:
- The problem statement: What is the problem?
Assume you discover that specific user personas have trouble combining data from numerous databases and apps.
Since their organizations have never purchased apps designed for this purpose, these analysts have had to assemble and analyze data manually.
It makes accessing the business intelligence they need to make informed decisions challenging and time-consuming for their businesses.
- A list of goals: What do you want to achieve?
The scope of work: How big will this project be?
Your vision must reflect your product’s fundamental essence. It should establish the future path of your development or the final state of what your product will deliver.
- In this market, who are the buyer and user personas?
Non-technical business analysts in large enterprises will be the users.
Large-enterprise business managers who want data reports from their teams and IT executives who typically acquire software solutions for their firms will be the buyer personas.
- How will you determine your success?
This section’s content should be related to your business model.
Consider how your new product will create revenue for the company or how a new feature will affect pricing.
Everyone can comprehend the essential metrics you measure with the information you provide here.
The first step in communicating and negotiating with product development is documenting market needs.
Regarding product development, skipping this phase puts you at a considerable disadvantage.
You may also not know you’ve gone off course until it’s too late.
What Are Product Requirements?
If you wish to address the new challenges, you will need to adjust your business strategy and improve the customer experience to succeed in the future.
Finding and maintaining a balance between operations, resources, and market needs is difficult but necessary for success.
Businesses must improve their product development processes to stay competitive,
When the product criteria are determined, understanding the client’s demands is a critical step in product development.
If you don’t grasp the customer’s needs early on, it’s possible that adjustments may be required later in the project when incorporating them will be challenging.
Furthermore, as the project proceeds, the cost of adjustments grows.
Aside from the consumer’s needs, the product’s requirements encompass all of the functions, features, and behaviors required to be efficient, easy to use, safe, and affordable.
Put another way, any function, constraint, or other property is required to meet the user’s needs.
Product requirements can be anything from:
what the product should do
what it should look like
who should you market it toward
how you can manufacture it, and more
Product requirements are specifications that define the features and functions of a product. Usually, a group of people who knows about the industry and want to see their idea come to life creates them.
They identify customers’ needs and wants, ensure that the product meets customer expectations, and help develop a product that companies can manufacture with relative ease.
Developing these requirements typically involves gathering information from potential customers, getting feedback from focus groups, conducting surveys, and analyzing competitor products.
Usually, the documentation of product requirements is in a formal specification document that lists all the particular product or service requirements.
Who Is Responsible for the Product Requirements?
The product managers write product requirements and are responsible for defining the customer needs and then figuring out how to meet them through their products.
A written formal document is shared with the team, including developers and designers. These people will use this document as a blueprint to create their work.
Some companies also have product managers who specialize in writing documentation for their products, so they would be responsible for writing the requirements.
The Product Requirements Document Must Include the Following:
The product requirements document is an important document that you should create before the product development process begins.
The paper covers all the necessary information about the product and its features.
- Product name
- Target audience
- Product description
- Features of the product
- Development timeline
What Is the Difference Between Market and Product Requirements?
MRD and PRD (Market Requirements Document and Product Requirements Document, respectively) are interchangeably used by all!
Both texts, however, are meant to serve unique and distinct purposes.
The format of a market requirements document can be different. Word documents, specialist software, wikis, and spreadsheets are among the most frequent forms.
You can determine the amount of paperwork required by:
- The size and scope of the targeted opportunity
- Company expectations
PRDs, on the other hand, are meant to provide the depth required for the development team to comprehend the capabilities, functionality, and features needed to satisfy the market demands stated in the MRD.
In other words, a robust PRD sufficiently defines the breadth and scope of the product capabilities so that the development team not only knows what to produce and how to build it.
Rather than agile, the traditional use of market requirements documents is in waterfall and phase-gate development approaches.
It is essential to collect a detailed description of clients’ market requirements.
A brief market requirements document is an efficient technique to gather and understand market demands. You must do this before crafting user stories and churning out features as quickly as possible in Agile product development.
A part of the product requirements document must explain why the customer requires the product.
If you’re not going to create a market requirements document or a product requirements document, make sure you have a thorough conversation and agreement with your team regarding the product’s context — why would your consumer desire it.
Discuss the open market and customer demands and how the product characteristics will meet those needs.
The product requirements document goes along with the market requirements document (PRD).
Many organizations skip over the market requirements document and go straight to the product requirements document because they are so excited and pressured to create the product quickly.
When defining requirements, you shouldn’t focus on the product or market first, but instead, focus on the problem.
You should start with “Given a problem that this market has, define the features the software should have to solve it.”
The distinction between market and product requirements is one of the most important concepts you should understand when designing new products.
This concept is so vital that, without a thorough understanding of these two types of requirements, you could devote substantial resources in design and development to products that are nice-to-haves rather than must-haves.
Most consultants in this area have at least one horror story about the inappropriate use of product requirements. Scenes like the project lost all sense of direction due to confusion between market and product feature sets are common.
To avoid this outcome, remember that there are two broad requirements: common across all products and those unique to each product.