What is a market requirements document (MRD)?
A market requirements document (MRD) is a document that describes the overall market opportunity — the size of the market, the types of customers you will target, and competitors in the space. It helps product managers consolidate market research so you can succinctly explain what customers want and need from your product or service.
An MRD is often confused with a product requirements document (PRD), but they have distinct purposes. While an MRD defines what customers need and how the product will provide this, a PRD describes how the product should actually be built. Think of the PRD as a guide for broader cross-functional teams (such as design and engineering) to understand what the product should do. Because the MRD informs the PRD, you should create the MRD before the PRD — this ensures that the product team clearly understands customer needs before defining actual product requirements.
Who creates the MRD and why is it important?
There are so many ideas for new products and services. It can be challenging to know what to build next. But it is your responsibility as a product manager to define and prioritize which problems to solve. While product managers typically own drafting an MRD, you will likely collaborate with the product marketing team since this document is rooted in market and customer research.
Writing up an MRD before investing time, money, and resources can help reduce waste. By validating the market need and evaluating the other solutions that are available, you can align the team on what you are building and why it will benefit customers. Once you determine that an opportunity is worth pursuing, you can use the MRD to give an overview of what is required to succeed — so you can move forward with the work that is aligned with your product strategy and most impactful for your customers.
How should you structure an MRD?
Product managers typically create an MRD in the early planning stages of a new product launch. But shifting market trends and evolving customer needs are constantly presenting new product opportunities, so it is a good idea to revisit the MRD periodically. This is especially helpful when you are planning a big product enhancement and want to confirm market and customer needs.
Traditionally, teams using waterfall and phase-gate development methodologies rely on MRDs to capture a deep understanding of customers' needs. A waterfall approach emphasizes upfront documentation, and the MRD is one document you can create before the actual work begins. Some agile product development teams also craft MRDs, but they typically write a short version to summarize market needs before writing more detailed user stories and investing additional effort.
A strong MRD should articulate the opportunity you are pursuing and what potential customers need. While some teams find MRDs to be outdated, the exercise of thinking through the market opportunity is useful even if you are not completing a formal MRD. You can download an MRD template to get started quickly or create your own document. If you opt to create your own MRD, here are seven key areas and questions you will want to address:
What problem are you trying to solve?
Provide a concise report of your findings, assumptions, and suggestions. The executive summary can be thought of as a miniature version of the entire document.
What makes your product or service unique?
Your vision should represent the core essence of your product. It should set the direction for where your product is headed or the end state for what your product will deliver in the future.
How big is the opportunity or market size?
Detail the specific market size and document the assumptions and facts that validate and justify the market opportunity.
Who are you solving the problem for?
Create a persona for each possible person related to the market opportunity and planned solution.
What alternatives currently exist?
Your competitor analysis should focus on detailing how customers are solving the problem today. Understanding all the different options available to your prospective customers helps you differentiate your offering and establish a competitive advantage.
What functionality must be included to solve customer needs?
Write out the operational characteristics and the working capabilities required of the solution. Avoid detailed design and development specifications. Instead, outline the solution from the customer's perspective by describing what they wish to accomplish.
How will you measure success?
The information in this section should be connected to your business model. Consider how the company will generate income from your new product or how a new feature will affect pricing. With the details you include here, everyone can understand the key metrics you are measuring.
Challenges with the MRD
The traditional method of long-form MRDs can be a lengthy process. In a waterfall approach, the MRD must be finalized before any work can begin. And often, by the time it is finished, the information in it has become a bit stale. If you write a new MRD for each release, you may need to manually update and share it each time — this can be time-consuming.
That is why many teams use purpose-built product management software to work faster, iterate, and collaborate in real time with cross-functional colleagues. With a tool like Aha! Roadmaps, you can define a vision, capture personas and competitor data, write user stories, and link the work to your strategic goals and initiatives. You can also use strategic planning templates (such as an MRD template) to save time and create consistency. This creates a more agile approach to building products because all of the information is easy to access and the entire team can stay focused on market and customer needs.
Whether you choose to write a detailed MRD or find a more lightweight approach, it is important to articulate why customers want your product or feature, who the solution is for, and what will be required for it being successful. Then you can turn your attention to the next step — defining how your new product or feature should be built. To do that, you can use a PRD template to make sure you capture the right details.
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