Behind every successful product lies a deep understanding of what your audience needs, and that's where the market requirements document (MRD) shines. In this article, we will explore an MRD, its key components, best practices, templates, and examples that will aid you in creating one from scratch. Let’s dive in.
What is a market requirements document?
A market requirements document is a type of technical documentation that outlines a potential market, including its size, existing competitors, and underserved customer needs. It provides a clear understanding of what features, functionalities, product metrics, and qualities are essential for success in the market.
An MRD typically contains the following sections, which we’ll explore in detail later in the article:
- Executive summary: High-level overview of the market opportunity, product vision, and purpose;
- Target market: Highlights the customer segment, market size, and customer challenges;
- Business objectives: Strategic and measurable goals, like market share and revenue targets;
- Buyer personas: Fictional representations of ideal customers, including customer journey mapping;
- Competitor analysis: Strengths, weaknesses, and market positions of competitors;
- Product overview: High-level product features aligned with market needs and business goals;
- Risk analysis and mitigation: Potential obstacles and strategies to address them;
- Success metrics: Criteria for measuring product success, like user adoption rates and NPS;
- Regulatory and compliance considerations: Legal and ethical standards for the product; and
- Budget and resource allocation: Financial plan for marketing, research, and product improvements.
An effective MRD bridges market insights with product strategy, guiding teams to build solutions that truly resonate with customers. This ensures that the software is relevant and valuable to its target audience and aligns with market demands, reducing the risks associated with product development.
Who develops the market requirements document?
While the MRD is written by a product or marketing manager, other stakeholders also make their input into the document. The primary contributors include the following.
A product manager often takes the lead in writing and maintaining the MRD. This expert compiles information from other contributors, defines the product vision and strategy, and aligns market needs with technical feasibility facilitating cross-functional collaboration.
A marketing team ensures the MRD accurately reflects market demands and opportunities. Marketing professionals contribute valuable insights through research and analysis, which help shape the requirements outlined in the document. They develop target personas, analyze trends, define positioning and messaging, assess the competitive landscape, and highlight unmet needs and market gaps that the product can address. In some cases, a marketing manager writes the MRD.
Sales and customer support teams provide direct feedback from customers, highlight user pain points and desires, give insights on gaps in the current business offerings, and share their perspectives on pricing and packaging. This input ensures the MRD reflects real-world customer needs and improves the product’s market fit.
Engineering and design teams assess the technical feasibility of the marketing requirements. They provide insights on technical constraints and limitations, define resources required to build the product and help set the implementation timeline.
Customers and end-users are engaged in surveys, interviews, and focus groups to better understand their needs and preferences.
Executive leadership representatives often review the MRD to ensure that it aligns with the company’s goals. Their final approval is typically required before product development begins.
When the MRD is created
The MRD is typically created early in the product development cycle. In organizations that follow the waterfall model, it is a solid, one-time document that lays the foundation for the product before coding starts.
In agile development, the MRD is shorter and continuously updated based on customer feedback, changing market conditions, and new insights gained throughout the development process.
Market requirements document vs product requirements document vs business requirements document vs user requirements document
There are other types of documentation needed for effective project and product management, including a product requirements document (PRD), a business requirements document (BRD), and a user requirements document (URD). Let’s learn the differences between them and how they overlap or depend on each other.
MRD vs PRD vs BRD vs URD
A product requirements document, usually written by a product manager, outlines the specific requirements for a solution based on the insights gathered from the MRD. It covers US guidelines, nonfunctional requirements, and functional requirements, which often come in the form of user stories.
More information is available in our detailed comparison of functional vs. technical requirements and functional and non-functional requirements. You can also watch a video on non-functional requirements.
A business requirements document is written by a business analyst and focuses on the business goals that a project should achieve. It provides the strategic context for why a product should be pursued and the expected outcomes, like improving customer satisfaction, increasing profit margins, or enhancing operational efficiency.
The BRD influences the MRD by determining which markets to target and ensures the features outlined in the PRD align with business objectives.
A user requirements document, written by the product manager, is centered around the end user’s needs and expectations for a product. It translates user requirements into actionable insights for the product team and keeps the user’s voice at the center of the development process ensuring the product delivers a seamless user experience. The URD is usually written based on the information in the MRD and PRD.
Market requirements document template with examples
There’s no singular way to structure an MRD. We gathered the main sections and components to give you a general idea of this document. To bring the MRD to life and make it more practical, we’ll use the example of a SaaS collaborative platform targeted at global teams with remote employees.
Executive summary
The executive summary opens the MRD with a high-level overview of the market opportunity, proposed product vision, and purpose. It outlines the market need, the primary business case, the target audience, and expected outcomes, setting the stage for the detailed sections that follow.
Example: The demand for tools that cater to remote work has increased by 200 percent in the past three years. Global teams face challenges like time-zone misalignment, inefficient task coordination, and poor communication. Our platform addresses the demand for cross-time-zone collaboration by offering task management, real-time communication, and AI-driven workflow optimization, empowering teams to work seamlessly across borders.
Target market
The target market section defines the specific group of potential customers your product aims to serve. Details in this section include:
- market category or the space your product competes in. You can set it very focused (cloud collaboration tools) or at a broader level (business tools);
- market size defining the total number of potential customers for your product category and the revenue they can generate;
- key customer segments that are likely to use your product;
- customer challenges your product will address. For example, “Remote teams struggle to coordinate tasks effectively, leading to missed deadlines.”
- marketing channels you’ll use to communicate with your target market (email campaigns, social media platforms, etc.)
Example: The target market for our SaaS platform includes mid-sized to large businesses with remote teams. These companies, typically with 50-500 employees, face coordination challenges with distributed teams across different time zones. Our marketing efforts will focus on LinkedIn, targeted email campaigns, and industry webinars.
Business objectives
The business objectives define the strategic, measurable goals the software aims to achieve, such as revenue growth, market share, user acquisition, etc. This section ensures the product aligns with the company’s overall business strategy.
Example: The objective of the SaaS collaborative platform is to achieve $5 million in annual revenue within the first 18 months by attracting 1,000 business customers, each with an average subscription rate of $5,000 annually. We will also secure a 5 percent market share of the remote collaboration tools market by targeting companies with global teams.
Buyer personas
Personas are fictional representations of ideal customers. You can build them using tools like HubSpot’s Make My Persona and SEMrush Persona.
To enhance the personas, consider including customer journey maps that illustrate how users discover, engage with, and convert through the product. These maps detail the key stages, including:
- awareness — how the user becomes aware of the product (e.g., ads, social media, referrals);
- engagement — steps the user takes to explore the product (e.g., visiting a website, downloading a resource, reading reviews); and
- conversion — the final action, like signing up for a trial, booking a demo, or completing a purchase.
Example: Rachael, a 40-year-old team lead at a global consulting firm, struggles with coordinating tasks between team members in different time zones. She needs a platform that allows for real-time communication and task tracking and first hears about the product through a LinkedIn ad. Interested, she visits the website, reads a few customer case studies, signs up for the newsletter, and later books a demo to explore the platform’s AI-driven workflow tools. The platform's ability to streamline communication and integrate with tools like Slack and Zoom is a key factor in her decision to adopt the solution for her company.
Competitor analysis
The competitor analysis section outlines the strengths, weaknesses, and market positions of other players in the space. Thorough competitor analysis will help you understand your primary competitors, their offerings, what differentiates your product from theirs, their market share, and the opportunities to capture a portion of their audience.
Example: Competitor X offers a similar collaboration tool but lacks advanced AI capabilities, making it less efficient for managing large teams across multiple time zones.
Competitor Y focuses primarily on small teams and lacks scalability, while Competitor Z is more expensive with a complex user interface that’s difficult for non-technical users.
Our platform differentiates itself by offering a user-friendly interface, scalable solutions for mid to large-sized teams, and AI-driven workflow automation that optimizes communication and task management.
Product overview
The product overview section translates market opportunities into high-level product features that align with business goals and meet customer needs. It doesn’t go into the product’s features and technical specifications in detail. Instead, that information is documented in a PRD.
Example: Our SaaS collaborative platform includes features like real-time messaging, AI-driven task prioritization, video conferencing integration, time-zone management tools, customizable workflows, file sharing, and integrations with existing enterprise systems. These capabilities enable global teams to work efficiently across borders and time zones.
Risk analysis and mitigation
The risk analysis and mitigation section outlines potential obstacles related to entering the market and proposes strategies to address these challenges. It identifies risks like market saturation, competition, changing customer preferences, regulatory changes, or economic downturns that could affect the product's successful introduction.
Example: A potential risk is the fast-evolving market for remote collaboration tools, with competitors constantly introducing new features. We plan to mitigate this risk by focusing on continuous product innovation, with regular updates to our AI-driven features and an active user feedback loop. Another risk is the challenge of customer adoption among teams already using other collaboration tools. To address this, we will offer free migration assistance and a 30-day trial period to help users transition smoothly.
Success metrics
Measuring success is vital, and the metrics section establishes measurable criteria like user adoption rates, revenue targets, and customer satisfaction scores. A mobile app might track metrics like daily active users, user retention rates, in-app purchase conversion rates, and Net Promoter Score (NPS), which assesses the likelihood of a customer recommending your product to others.
Example: The SaaS platform's success will be measured by key metrics, including a target of 100,000 monthly active users, a 30% increase in user retention within the first year, and a Net Promoter Score (NPS) of 50 or above. We also aim for a 5 percent conversion rate from trial users to paid subscriptions and will track daily active users to assess engagement levels.
Regulatory and compliance considerations
The section ensures the product adheres to industry-specific regulations and meets legal and ethical standards. It outlines compliance requirements and necessary certifications. The SaaS collaboration solution would detail data security standards and relevant ISO certifications, among others.
Example: Given that our SaaS platform will be used globally, compliance with data protection regulations like GDPR and CCPA is critical. The platform will adhere to these standards by implementing end-to-end encryption for communications and offering data storage options that comply with regional laws. We will also pursue the ISO/IEC 27001 certification to demonstrate our commitment to information security.
Budget and resource allocation
The section covers the marketing-related costs and resources needed to introduce the product to the market successfully. It includes the budget for market research activities, analytical tools, and branding efforts. The section also outlines expenses for advertising campaigns, promotional events, and sponsorships.
Example: The initial budget for marketing the collaborative platform includes $500,000 for digital marketing campaigns across LinkedIn, Google Ads, and industry webinars. We will allocate $200,000 for customer support and onboarding resources, ensuring that new users have a seamless experience during the trial and implementation stages. Also, $100,000 will be set aside for product improvements based on user feedback.
Market requirements document best practices to follow
It’s not enough to know how to create an MRD from scratch. There are best practices to follow when writing one. Let’s explore some of them.
Involve stakeholders early. Collaborate with cross-functional teams from the start to reduce the likelihood of conflicting priorities later.
Encourage version transparency. Implement version control systems with clear documentation of changes. The system should include a changelog that tracks revisions, who made them, and why.
Document decisions and rationale. Keep a record of key decisions and the reasoning behind them, as this provides context for future updates. For example, if a feature is deprioritized, note why and when the decision was made.
Leverage visuals for clarity. Use data visualizations like diagrams, charts, and graphs to complement the textual content. It will enhance comprehension and reduce confusion, especially in data-heavy sections like target market and competitor analysis.
Develop a writing guideline. Consistency is key. Establish a writing guideline that specifies the document’s structure and formatting, your company’s tone and style, and other standards that must be followed.
Review, revise, and finalize the MRD with stakeholders. MRDs are living documents that evolve based on stakeholders' feedback and as market conditions and business priorities change. Constantly update the requirements based on the input received and double-check that all its sections are in sync with the product’s purpose, market needs, and business goals. Consider hosting it on a shared platform like Confluence or Notion for easy collaboration.