Learn what a market analysis is, how to perform a market analysis, and the steps to conduct your market analysis.
It’s easy to say that market analysis can help you introduce new patterns in your business style, identify how to position your business better to be competitive, and teach you how to serve your customers even better.
Undoubtedly, understanding your customers is the key to your success, no matter what your company size (startup or a market leader!)
But what do you mean by conducting a market analysis? Indeed, it might seem boring or overrated, packed with numbers and detailed data.
That’s why we are here! First, we will define what a marketing analysis is, as well as why you need one. Also, we explore what you need to develop practical research, a crucial part of your business plan.
Eventually, be ready to break down the steps you need to take to do so.
What is a Market Analysis?
A market analysis is a process businesses use to assess the feasibility of a new product or service, aiming to determine whether there is a need or opportunity for the product or service in the marketplace.
Simply, we can define it as a detailed assessment of your brand’s target market and the competitive landscape within your industry.
Also, the market analysis includes demographics, economic trends, and buying habits. It also looks at the competition and potential customers. With that in mind, a market analysis is a critical step to provide information that will help companies make decisions about whether to enter a particular market.
Or in other words, this analysis will let you project how much success you can expect from introducing a new product or a whole brand to your customers within the market.
So, to build your market analysis, be ready to study the dynamics of your market, such as the size of the market you are willing to penetrate.
Also, you will need to identify the potential customer segments, the value you will add for your customers, the prices your target is willing to pay, and forecasted revenues.
Thus, a thorough market analysis should answer these questions:
- How large is your target market?
- What are your customers’ desires?
- What are your customers’ values?
- What motivates your customers to buy?
- What are your customers purchasing habits?
- Who are your main competitors?
- What are your competitors’ weaknesses and strengths?
- What are your direct or indirect competitors?
- What is the economic status of your market in terms of regulation and barriers to entry?
In short, it’s a qualitative and quantitative examination of the current market.
Pro tip: depending on your business size, you may choose to perform market analysis on your own or hire an agency with experience in the field to research on your behalf. If you need help making your decision, just drop us a line, and we can handle this together.
Why Perform a Market Analysis: Key Benefits
After defining a market analysis, which is basically an appraisal of a particular market to answer the concerns of the variability of a business or product, we need to uncover how your business can benefit from it.
Or what does it mean for you as a business owner?
Here is the deal:
- Building a well-targeted market analysis will help you understand the volume and value of the market, your potential customer segments and their buying patterns. Otherwise, you’ll have big trouble when developing your products.
- Define how to position your competition and overall environmental conditions because you have a firm grasp on what you have and how to expand it.
- Introduce a product that truly fits your customers’ needs. You will be able to tailor something that seems the only reasonable choice for your target.
- Determine strengths and weaknesses or hazards and opportunities through the market, which will help you make an informed decision.
- Spot trends in your industry that you can benefit from to design something never comes to your mind. That will help you stay ahead in business and atop your market.
- Analysis of your competitors will help you differentiate your business.
- Minimise the risks and costs of pivoting an existing business or launching a new one. Reducing risks also comes by identifying the fierce competition and exploring the industry’s leading players.
- Forecast your revenues and any future numbers and characteristics in the market. Because you know it’s all about being ready for unexpected events. This report will give you an idea of the profits allowing you to mandate your business plan and budget.
- Design a well-structured SWOT analysis.
- Pivot your business to go in different directions.
- Analyse failures and successes. If you know how to perform a market analysis, you can explore why this product didn’t work or even why this campaign has been booming.
- Optimise your marketing activities for the sake of your business success.
- Introduce new market segments and know precisely how to reach them.
- Set your benchmarks or key performance indicators (KPIs) because it is hard to gauge your business success outside of an accurate number. That’s what market analysis lies in. You can evaluate your company’s performance and how you react compared with others in the market.
- Monitor your marketing performance based on clear criteria.
Takeaway: Understanding how to perform the market analysis is a worthwhile exercise. You will invest time and money to gather detailed information about your industry, customers’ buying patterns and your competitors’ offerings. So, take it seriously. Then, take a deep breath and discover how to perform a market analysis.
But before you uncover how to perform a market analysis, you may come across similar terms that might seem to have the central concept or embrace the same steps, just like market research, marketing strategy, and marketing analytics.
- Market research: is a process of gathering information about consumers or businesses. It can be used to learn about new markets, to understand what products or services are most popular, or to identify potential customers. Market research can be conducted online, through surveys, focus groups, or by observing customer behaviour.
- Marketing strategy: A marketing strategy is a typical plan that helps a company or organisation reach its marketing goals. It can attract new customers, grow sales, and increase brand awareness. You can design many marketing strategies, but some common elements include identifying your target audience, setting objectives, and creating a budget.
- Marketing analytics: is the process of collecting and using data to make decisions about your marketing campaigns. By understanding your customer’s behaviour, you can figure out what’s working and what isn’t and adjust your strategy accordingly. Marketing analytics can track all sorts of things, from website traffic to conversion rates to social media engagement and landing page sign-ups. By analysing this data, you can better understand your customers and what they want.
All of them are focused on maximising the return-on-investment ROI.
Important: You can perform a market analysis at several stages of your business. You might need to conduct one every 6 months to keep up to date with major changes in your market. You can choose to run one every year. What matters is how much data you have and how you can make the best of it.
How to Perform a Market Analysis
While designing a market analysis is not as complicated a process as it sounds, you need to set significant time aside and invest in dedicated research.
But you know it’s all about preparation.
So, this section is limited to how to perform market analysis in handy steps, including what you can do in each step and some questions to guide your research direction and gather the best reflection.
Step 1: Set Your Goal
Before even saying, “I guess we need to perform a market analysis!” you must determine your goals. Many reasons might drive you to establish this analysis. For example, let’s assume you want to enter a new market; it’s a sufficient reason to perform a marketing analysis. Or you might want to gauge your competition or optimise a new service.
Whatever your reason, it’s important to clarify it immediately to keep you on track.
Start by answering these questions:
- What do I really want right away?
- What is the ultimate purpose of this analysis?
- Is my goal internal, like generating cash flow or improving business operations?
- Is my purpose external, like understanding competitors or seeking a business loan?
You will save years of pain by writing down your answers because your purpose will dictate how much research you will do.
Tip: Your market analysis can have several purposes, but you should define only one top of them.
Step 2: Go deeper into your industry
There is a general rule in the market “Don’t assume!” Assumptions will lead to disasters. You might find yourself broken at the end.
It would help if you here mapped a detailed outline of your current industry. The primary purpose of this step is to understand the market at a large scale so that you can identify how to enter it, introduce trends, and compare what you have to other brands.
On paper, include where the market seems to be heading by optimising metrics like projected growth, trends, and size. You can depend on plenty of data online and offline to enhance your findings.
Tip: this step will be helpful if you’re seeking a comparative market analysis because you will be able to spot your competitive advantage within your niche.
Here are questions that will back you on the track to gathering the most relevant information:
- How many businesses offer similar products or services?
- What statistics can you compile about your industry, like Office for National Statistics?
- Are there any other professional associations you can depend on?
- What is the size and volume of the market — number of potential customers?
- Is this industry going to expand or shrink? (such as telesales and customer service, you know bots will take charge of a significant part of it)
- What external factors have affected how businesses run in this industry, including new technologies, economics and social change, buying habits, world events, and laws?
- How much revenue does your industry generate?
- Are there any standards in this industry you should consider in terms of companies and consumers?
- What are threats in the industry you should focus on?
- Are there any opportunities to grow and innovate within the industry?
Step 3: Well, Understand Your Audience
Because simply not everyone in the world will be your customer. Getting everyone interested in your offering might waste time, energy, and money.
Instead, do your research to decide who you will serve and then focus your efforts there.
To do so, answer these questions to illustrate your optimal customer persona:
- Who is the most likely to want your product?
- What are their demographic factors, like gender, location, age, occupation, education, needs, dreams and interests?
- Where do they come from?
- What might influence their purchasing decisions?
These will help you understand your market volume as well.
Tip: During this step, you might consider creating your customer persona or profile that reflects your idyllic customer to set out a model for your marketing activities.
Step 4: Explore Your Competitive Edge
After taking a broad look at the industry, this step will intensify your efforts to have insights into your enterprise.
To be successful, you need to catch a glimpse of your competitors, including their market saturation, strengths, weaknesses, advantages, and what they do differently.
That’s how you can investigate your competitive landscape to spot brands you’ll be competing against in the upcoming days.
Your goal here is to find a way to attract potential customers to your target market.
These questions will ease your mission:
- What are your main competitors? (We recommend going through a SWOT analysis of each competitor for more insightful analysis)
- What are the most well-known brands in your industry?
- Who is so good that they can set the trends and grasp the attention of customers?
- What do other businesses have that you don’t?
- What would lead a customer to choose your business over others?
- What would lead a customer to choose another business over yours?
- What are these brands’ offers, value propositions, and price points?
- What sales tactics, platforms, tools, and technologies do these brands use to reach their customers?
- What do people say about their brand?
- What can you learn from brands’ customer reviews?
- How do these brands use conduct to influence, educate and engage an audience?
Tip: eventually, you need to put yourself in your customer’s shoes. Then you can rank your competitors’ list from most to least threatening. It’s also important to update your SWOT analysis of your competitors from time to time to explore who is expected to be the most threatening soon.
Step 5: Spot any Market Gaps
It’s an excellent time to define market gaps and develop your offerings to help you stand out.
And when we’re talking about market gaps, we need to learn how to fill your brand.
For example, in the kids caring industry, you might find there is no application to offer you the service of someone taking care of your baby when you’re out, in which case you could develop an app to fulfil this need.
Tip: to do this step beautifully, you should take your information as your friends. You can never have too much data. The more, the better! However, having a credible and factual source is essential because it’s all about numbers. So get stuck with the reputable data resources only, whether external such as GOV.UK or trade journals or internal, like your SWOT analysis and surveys.
How to identify these gaps? Let’s see!
- What will external factors like new laws and social change be for updating products and services?
- How do competitors’ services and products fall short?
- Ask your potential customers: What do you want that you can’t find?
- In what ways can you provide a product and service to fill the gap in the market?
Takeaway: these questions can be designed in a questionnaire or survey targeting your potential perspectives.
How Can Profiletree Help You?
Because you need to see palpable efficiency improvements, your business needs a component consultant to help you decrease your YoY and increase revenues.
That’s what you will absolutely receive from our partnership.
Our clients are our investors. So your success means a lot to us. Seeing how far you two have come brings us the most pleasure.
That will never happen without understanding how to perform a market analysis, a vital component of any business plan in nearly any industry.
To help you on your way to creating an effective one, we will work together to provide you with data and insights to deliver the best well-optimised analysis that will help you define your objectives, where you will go, and what you should expect.
Our team comprises a diverse and talented group of writers, analysts, researchers, and subject matter experts equipped with all available tools to help guide your success journey.
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