In our UX/product development field, it is very helpful to distinguish clearly between the kinds of strategic investigations that should precede user research, and the user research step itself. It is additionally helpful to be clear how strategic investigation and user research differ drastically from all kinds of market research. This is important for anyone in the product-development field because these early steps are formative and this type of inquiry is commonly mistaken for market research, which has a different and incompatible purpose and methodology. It is also important for potential clients engaging in user research or market research to understand these distinctions, because they are particularly confused about this and their products and services are the ultimate victims of the confusion.

First, a fundamental question: What is a company? A company might be said to be a vehicle to connect providers to recipients to satisfy their inadequately-satisfied desires in return for various business benefits, whether it be to do God’s work, or profit. Products and services are the means by which recipients get satisfaction. Enter product development, center stage.

User Research is the investigation into who those categories of users are, what they want, to what degree, how well satisfied by competitors, and what opportunities there are to satisfy them better. Unlike market research, it is primarily interested in the fundamentals of unmet desire, not customer trends. Trends are only important to the degree they predict the degree of unmet desire (generally, as a function of competitors and alternatives), or predict certain characteristics about how such desires could be best met (e.g., cell phone penetration for a service that would best be delivered via a cell phone).  Most importantly for understanding the strengths and weaknesses of market research for product development, no good research or prediction of trends can be done until a sound understanding of user aims has been completed, because, otherwise, you don’t know what to look for, what questions to ask, or how to evaluate the answers.

A trend is only important relative to the unmet desire it affects. Most market research lacks these conceptual prerequisites, and this is the single biggest reason that market research is usually a poor guide to product development. In the absence of sound understanding of these prerequisites, the market research discipline flails around trying reason from the frequency distribution of trends it can discern because of their popularity or “trend-iness”, which often gets dumbed-down to easy things to measure, such as frequency by demographic characteristics. This type of research usually has little relevance for understanding the true aims of your customers and how well they are accomplishing them, and so offer little or no help to the product manager.

The discussion above distinguishes user research from market research. What, then, is this beast that I call “strategic investigation”?

Neither user research nor market research call the type of company “vehicle” into question. They do not question its capabilities, or its selection of who it thinks its customers really are. It does not question the company’s position in the transactional chains that it participates in, or evaluates alternatives. This is what strategic research does.

For example, suppose I am in the travel agency business in 1995 and I want to translate my ticket-booking services online. This is a natural thing to want to try to do: lower transaction costs, increase customer reach, while taking advantage of the cost structure of my business (the margins charged by travel agents). User research would not detect the following problems (I throw these in as examples, not necessarily reflecting the true history of the online travel industry):

1. The travel agent business model is an intermediary in a transactional chain between passengers and airlines that is based on the difficulty for those two sides to do business together easily by themselves.
2. The Internet makes it possible for those two sides to get together without you, so they have motive to wipe you out and pass on the savings to themselves, lower prices, and make more money
3. The systems on which your ability to do business depends is owned by giant consortia of airline companies, such as Sabre. Thus they have the means and opportunity to wipe you out.
4. The airline industry had not made many moves in this area, but industry pundits are talking about it, but estimate it is maybe 1-3 years off. (Travelocity was founded in 1996, by Sabre Holdings).
5. The advantage would be temporary, until the opportunity for “arbitrage” expired as a result of eventual market efficiencies, say in 10 years.

Now, consider doing User Research armed with this information. Would you do it differently? Your client might have asked you to look specifically for the strengths and weaknesses of the online travel agency model, not simply try to translate your services online to cut costs and scale. For example, you might focus on more than just ticket sales, but expand your service offering to include decision-support for vacations and conferences, or focus on last-minute travel, which most of the travel sites, thinking of themselves as just clearing houses for tickets, still don’t consider. Further, you would be fairly confident that it is almost inevitable that the airlines are going to find a way to dominate this market (as they do now with Travelocity and Orbitz), and you could make the right technology choices and business partnerships to make yourself a favorable acquisition target when the airlines come knocking, as they did, to figure out the easiest way to reap the advantages of the Internet and contain the competition. And, finally, you might decide never to attempt this project in the first place, but shift out of the industry altogether, which would have been an excellent business decision for many travel agencies.