The market's ripe, the concept's solid, and you're ready to start crafting that Market Requirements Document (MRD). But wait…are you truly prepared? Reading this blog will also help you understand what exactly is an MRD. At the end we also briefly compare MRD and PRD. Finally you will find a few book recommendations as well after the conclusion.

Before you invest countless hours into an MRD that might miss the point, ask yourself: Can you confidently answer 16 critical questions that separate a game-changing product from a costly misstep? Your responses could be the difference between launching the next industry disruptor and burning resources on a solution in search of a problem. Let's explore these make-or-break questions that every PM should confront before putting pen to paper (or fingers to keyboard) on that MRD.

These questions cover various aspects of market understanding, product strategy, and business alignment. If you, as a product manager, are struggling to answer many of these questions, it likely indicates that more research and discovery work is needed before creating an MRD. On the other hand, if you can confidently answer most of these questions, it suggests you are well-positioned to develop a comprehensive MRD.

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I have identified seven key areas that will help you identify which areas are relevant to your industry. You can skip the area which is not relevant to you and move to the next area.

Market Understanding

Do we have a clear understanding of our target market?

• This question aims to assess whether you have identified and characterized your ideal customers. Your answer should include demographic information, psychographic traits, and behavioural patterns of your target audience.

• Consider using buyer personas or customer segmentation techniques to define your target market. Tools like empathy maps or jobs-to-be-done frameworks can provide deeper insights into your customers' needs and motivations.

Can we estimate the potential market size and growth rate?

• This question seeks to quantify the market opportunity. Your answer should provide numerical estimates of the market's current size and projected growth over the next few years.

• Apply the TAM-SAM-SOM model here:

  1. TAM (Total Addressable Market): The total market demand for your product or service

  2. SAM (Serviceable Addressable Market): The segment of TAM you can realistically target with your business model and geographic reach

  3. SOM (Serviceable Obtainable Market): The portion of SAM you can realistically capture in the near term

Do we have evidence of market demand for this potential solution?

• This question probes for concrete indicators of customer interest or need. Your answer should include data points that demonstrate a genuine demand for your proposed solution.

• Use techniques like customer discovery interviews, surveys, or analysis of search trends. Consider creating a minimum viable product (MVP) or landing page to gauge interest. Look at competitor traction or adjacent market data as indirect evidence of demand.

Problem Definition

Can we articulate the specific problem we're trying to solve?

• This question asks you to describe the core issue your product aims to address concisely. Your answer should be specific, focusing on the primary pain point or need you've identified in your target market.

• Use the problem statement framework. A good problem statement typically follows this structure: "[User/Customer] needs a way to [user's need] because [insight]." Consider using techniques like the "5 Whys" to dig deeper into the root cause of the problem.

  • Originally developed by Sakichi Toyoda, founder of Toyota Industries. The 5 Whys is a simple but powerful tool for cutting through the outward symptoms of a problem to reveal its underlying causes. It's used by repeatedly asking "Why?" (typically five times) to peel away layers of an issue, helping to identify the root cause of a problem.

  • While the "5" in 5 Whys is a rule of thumb, the actual number of "whys" can vary depending on the complexity of the problem. The key is to continue until you reach a cause that, if addressed, would prevent the problem from recurring.

Have we validated that this problem is significant enough to warrant a solution?

• This question prompts you to provide evidence that the problem is widespread, frequent, or impactful enough to justify building a product to solve it. Your answer should include quantitative and/or qualitative data supporting the problem's significance.

• Apply the problem validation process:

  1. Conduct customer interviews to understand the frequency and impact of the problem

  2. Use surveys to quantify the problem's prevalence in your target market

  3. Analyze existing data or industry reports that highlight the issue

  4. Create a "pain and gain" map to visualize the problem's impact and the potential value of a solution

  5. Consider the "Job To Be Done" (JTBD) framework to understand the underlying motivations driving the need for a solution

Product Strategy

Can we differentiate our proposed solution from existing alternatives?

• This question asks you to identify and articulate your product's unique value proposition. Your answer should highlight how your solution is different from and potentially better than existing options in the market.

• Use a competitive analysis framework like the Strategy Canvas or the Blue Ocean Strategy's Four Actions Framework (Eliminate-Reduce-Raise-Create). Consider creating a feature comparison matrix to represent your differentiators visually. Also, think about your product's unique selling proposition (USP) and how it addresses unmet needs in the market.

Can we explain/justify how this product aligns with our company's overall strategy and goals?

• This question prompts you to demonstrate how your proposed product fits into the bigger picture of your organization. Your answer should show clear links between the product's objectives and the company's strategic direction.

• Apply the strategic alignment model. Consider using tools like:

  1. OKRs (Objectives and Key Results) to show how the product contributes to company-wide goals

  2. The BCG Matrix to position the product within the company's portfolio

  3. A strategic roadmap that illustrates how this product fits into the company's long-term vision

Do we have enough information to make a preliminary assessment of the product's feasibility?

• This question asks whether you have sufficient data to evaluate if the product can be developed and launched successfully. Your answer should cover technical, financial, and operational aspects of feasibility.

• Conduct a preliminary feasibility study, considering:

  1. Technical feasibility: Can we build it? Do we have the necessary technology and skills?

  2. Economic feasibility: Is it financially viable? Consider using a rough ROI calculation or break-even analysis.

  3. Operational feasibility: Can we integrate this product into our current business processes?

  4. Market feasibility: Is there a viable path to market?

Customer Insights

Do we understand our potential customers' willingness to pay?

• This question asks you to gauge how much value customers place on your solution and what they're willing to spend. Your answer should provide insights into potential pricing strategies and the perceived value of your product.

• Consider using these methods to assess willingness to pay:

  1. Van Westendorp's Price Sensitivity Meter: A survey technique that asks customers about acceptable price ranges.

  2. Conjoint Analysis: Helps determine how customers value different product features and price points.

  3. Price Laddering: A qualitative technique to understand psychological price thresholds.

  4. Benchmarking: Compare your potential pricing to similar products or services in the market.

  5. Early adopter interviews: Discuss pricing with potential early customers to gauge their expectations and budget constraints.

Have we gathered enough customer feedback to inform our product direction?

• This question prompts you to assess whether you have sufficient customer input to guide your product decisions. Your answer should demonstrate that you've engaged with potential users and incorporated their needs and preferences into your product planning.

• Apply various customer feedback collection methods:

  1. Customer Development interviews: In-depth conversations with potential users to understand their needs, pain points, and desires.

  2. Surveys: Quantitative data collection to validate hypotheses about customer preferences.

  3. Usability testing: If you have a prototype or MVP, observe how users interact with it.

  4. Focus groups: Facilitated discussions with small groups of potential customers.

  5. Beta testing: Early release to a limited user base to gather real-world feedback.

  6. Social listening: Monitor social media and online forums for unprompted customer opinions.

• Use frameworks like the Kano Model to categorize customer needs (Must-have, Performance, Delighters) based on the feedback you've gathered.

Stakeholder Alignment

Have we identified the key stakeholders who need to be aligned on this product direction?

• This question asks you to recognize all the important parties who have an interest in or influence over your product's success. Your answer should demonstrate a comprehensive understanding of who these stakeholders are and why they matter to your product.

• Use stakeholder analysis techniques:

  1. Power/Interest Grid: Map stakeholders based on their level of influence and interest in the product.

  2. Stakeholder Salience Model: Categorize stakeholders based on their power, legitimacy, and urgency.

  3. RACI Matrix: Identify who is Responsible, Accountable, Consulted, and Informed for different aspects of the product.

• Consider both internal stakeholders (e.g., executives, sales, marketing, engineering) and external stakeholders (e.g., customers, partners, regulators). Don't forget about often-overlooked stakeholders like customer support or operations teams.

Have we established a clear communication plan to keep stakeholders informed and engaged throughout the product development process?

• This question prompts you to outline your strategy for maintaining stakeholder alignment over time. Your answer should describe how you'll keep stakeholders updated, gather their input, and manage their expectations throughout the product lifecycle.

• Develop a stakeholder communication plan:

  1. Stakeholder Communication Matrix: Define the type, frequency, and method of communication for each stakeholder group.

  2. Information Radiators: Use tools like product dashboards, Kanban boards, or regular status reports to make product progress visible.

  3. Feedback Loops: Establish mechanisms for stakeholders to provide input, such as regular review meetings or feedback sessions.

  4. Change Management Principles: Apply techniques to help stakeholders understand and adapt to the evolving product vision.

• Consider using collaboration tools (e.g., Slack, Microsoft Teams) or project management software (e.g., Jira, Asana) to facilitate ongoing communication and transparency.

Business Planning

Can we outline the key success metrics for this product?

• This question asks you to define how you'll measure the product's success. Your answer should include specific, measurable indicators that align with your product and business goals.

• Use the following frameworks to develop your metrics:

  1. AARRR Framework (Pirate Metrics): Acquisition, Activation, Retention, Referral, Revenue

  2. OKRs (Objectives and Key Results): Set ambitious objectives and define measurable key results

  3. Balanced Scorecard: Consider metrics across multiple perspectives (Financial, Customer, Internal Process, Learning & Growth)

  4. North Star Metric: Identify one key metric that best captures the core value your product delivers

• Consider both leading indicators (predictive of future success) and lagging indicators (measuring past performance). Ensure your metrics are SMART (Specific, Measurable, Achievable, Relevant, Time-bound).

  Examples might include:

  • User acquisition rate

  • Customer Lifetime Value (CLV)

  • Monthly Recurring Revenue (MRR)

  • Net Promoter Score (NPS)

  • Churn rate

  • Feature adoption rate

Do we have a general idea of the timeline and resources required for this product?

• This question prompts you to provide a high-level estimate of the time, people, and budget needed to bring this product to market. Your answer should give stakeholders a realistic expectation of the investment required.

• Use these project management and estimation techniques:

  1. Product Roadmap: Create a high-level timeline of major milestones and releases

  2. Story Mapping: Break down the product into user stories and arrange them to visualize the development process

  3. T-Shirt Sizing: Use relative sizing (S, M, L, XL) to estimate effort for different components

  4. Three-Point Estimation: Provide optimistic, pessimistic, and most likely estimates for time and resources

  5. Resource Allocation Matrix: Outline the types and quantities of resources needed across different phases

• Consider using techniques like the Cone of Uncertainty to communicate that early estimates are likely to be less accurate and will be refined over time.

  Remember, at this stage, you're aiming for ballpark figures rather than precise estimates. Be sure to include buffer time for unexpected challenges and iterate on these estimates as you gather more information.

  Your answer might include:

  1. Rough timeline for development phases (e.g., 3 months for MVP, 6 months to market-ready product)

  2. Team composition (e.g., 2 developers, 1 designer, 1 product manager)

  3. Ballpark budget range

  4. Key dependencies or constraints that might affect the timeline or resource needs

Risk Assessment

Have we considered potential risks or challenges in bringing this product to market?

• This question asks you to identify and evaluate potential obstacles that could impede your product's success. Your answer should demonstrate a proactive approach to risk management, showing that you've thought through various scenarios.

• Use these risk assessment techniques:

  1. SWOT Analysis: Identify Strengths, Weaknesses, Opportunities, and Threats related to your product

  2. Risk Matrix: Plot potential risks based on their likelihood and impact

  3. Failure Mode and Effects Analysis (FMEA): Systematically analyze potential failure modes in your product or process

  4. Scenario Planning: Develop multiple scenarios of how the market and competitive landscape might evolve

  5. Pre-Mortem Analysis: Imagine the product has failed and work backwards to identify potential causes

• Consider risks across various categories:

  • Market risks (e.g., changing customer needs, new competitors)

  • Technical risks (e.g., scalability issues, integration challenges)

  • Operational risks (e.g., supply chain disruptions, resource constraints)

  • Financial risks (e.g., unexpected costs, longer time to profitability)

  • Reputational risks (e.g., privacy concerns, negative press)

Do we have a preliminary understanding of the regulatory or compliance requirements in our target market?

• This question prompts you to consider legal and regulatory factors that could affect your product. Your answer should show awareness of relevant regulations and how they might impact your product development and go-to-market strategy.

• Apply these approaches to assess regulatory requirements:

  1. Regulatory Landscape Analysis: Research and map out the key regulations affecting your industry and product type

  2. Compliance Checklist: Create a preliminary list of compliance requirements you'll need to meet

  3. Expert Consultation: Engage with legal experts or regulatory consultants in your industry

  4. Competitor Analysis: Research how similar products have addressed regulatory challenges

  5. Regulatory Impact Assessment: Evaluate how potential regulations might affect your product features, timeline, or costs

Consider various types of regulations:

• Data privacy laws (e.g., GDPR, CCPA)

• Industry-specific regulations (e.g., HIPAA for healthcare, PCI DSS for payments)

• Consumer protection laws

• Intellectual property regulations

• Environmental regulations

• Import/export regulations for international markets

Remember, at this stage, you're not expected to have a comprehensive compliance strategy, but you should show awareness of major regulatory considerations and their potential impact on your product plans.

Your answer might include:

• Key regulations you've identified as relevant

• Potential compliance challenges specific to your product

• Initial thoughts on how regulatory requirements might affect your product design or go-to-market strategy

• Plans for further investigation or expert consultation on regulatory matters

Pre-conclusion

While I was new to this concept, I was unsure whether the MRD is just a strategic concept that the PM follows or if it is something material and tangible that is handed over to stakeholders. Another doubt I had was what sets it apart from the PRD. After reading a few books and some blogs, here are my understandings and learnings:

An MRD (Market Requirements Document) is a tangible document, similar to a PRD (Product Requirements Document), but with some key differences:

1. Purpose:

   • MRD: Focuses on market needs and business justification

   • PRD: Details specific product features and functionalities

2. Audience:

   • MRD: Primarily for internal stakeholders like executives, marketing, and sales teams

   • PRD: Often shared with development teams and engineering managers

3. Timing:

   • MRD: Created earlier in the product lifecycle, before detailed product planning

   • PRD: Follows the MRD and goes into more technical detail

4. Content:

   • MRD: Includes market analysis, customer needs, business case, and high-level product vision

   • PRD: Contains specific feature requirements, user stories, and technical specifications

While the MRD is a strategy document, it's not just a concept. It's typically a formal document that product managers create and share with stakeholders. However, the exact format and level of detail can vary depending on the organization and product type.

Conclusion

The MRD serves several important purposes:

1. Aligns stakeholders on the market opportunity and product direction

2. Provides a foundation for more detailed product planning

3. Helps secure buy-in and resources for product development

4. Guides the creation of the PRD and other downstream documents

In some organizations, especially those practicing more agile methodologies, the formal MRD might be replaced by a lighter-weight document or even a series of collaborative discussions and artifacts. However, the core elements of market understanding and product strategy that an MRD captures are still crucial, even if they're not always formalized in a single document.

Next, I will write a blog on how to write an MRD, how to write a PRD, and what considerations should be made before writing a PRD. So, stay tuned and follow me on LinkedIn to stay updated.

Book Recommendations

1. "Inspired: How to Create Tech Products Customers Love" by Marty Cagan This book doesn't focus solely on MRDs, but it provides excellent insights into product management practices, including market requirements gathering.

2. "Crossing the Chasm" by Geoffrey A. Moore This classic book focuses on marketing and selling high-tech products, but its insights are crucial for creating effective MRDs.

3. "The Four Steps to the Epiphany" by Steve Blank This book introduces the Customer Development methodology, which is highly relevant to creating market-driven requirements documents.

4. "Product Roadmaps Relaunched" by C. Todd Lombardo, Bruce McCarthy, Evan Ryan, and Michael Connors While focused on roadmaps, this book provides valuable insights into translating market requirements into product strategy.

5. "The Lean Product Playbook" by Dan Olsen This book focuses on lean product development practices, including techniques for understanding market needs and documenting requirements.

6. "The Mom Test" by Rob Fitzpatrick While not specifically about MRDs, this book offers invaluable advice on how to talk to customers and gather genuine insights, which is crucial for creating effective MRDs.

Mustafa Saifee

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