The Complete Guide to Market Analysis
Market Analysis looks at a market to understand it's threats and opportunities. This article offers the complete guide to Market Analysis and outlines what to research and how to find the data.
A professional football team does not just get to the ground, put their kit on and start playing. They have spent the last week understanding the opposition, their strengths and weaknesses and practicing moves to take advantage and prevent them doing what that they want to do themselves. Long before they need it, they collect, or scout information to maximise the chances of winning and isolate any tactics they are going to use. Also, they have a referee, so it is essential to know the rules of the game. Otherwise it's an early bath.
In the business world, Market Analysis provides you with the same sort answers to these questions. Expect Market Analysis to provide your organisation with a great deal of information to maximise performance, and provide a better chance of connecting with your customer and smashing your competition out of the ground. So why do so many businesses go into the game without scouting the opposition and know where the playing field is?
What is Market Analysis?
A successful business really does need an excellent understanding of the landscape they work in. This understanding includes research on customers and competitors. Market Analysis is the process of researching your market to understand your threats and opportunities you will face, as well as know why prospects and clients like (or dislike) your products or services. Market Analysis includes some of the following:
- Industry cost structure – What's the fixed and variable costs of your offering? Can you break these costs down to the product or regional level?
- Market size and competitive analysis – How big and competitive is the market? And who are you are your competitors?
- Demographics and segmentation – Who are you currently and will be selling to? What are the sub-categories within your market? Are you able to develop more product lines or service offerings?
- The growth of the market – What are the past and current industry growth indicators? Will this growth continue?
- Market trends – Is the market changing? And what's needed to be done to keep moving forward?
- Market profitability – What are the aspects of your market sector that affects potential profitability? How attractive is your market and what's the expected margins?
- Distribution channels – Looking at your current and possible future distribution channels. How will these distribution models affect your business?
Why conduct Market Analysis?
Market Analysis has to be an integral part of your business plan. And as soon as you have a better understanding of your market, you will then be in a good place to put a plan together to beat your competitors and get more customers. Building a map of your landscape will enable you to see the best route open to you and optimise the aspects of your business you control. Such as marketing's 4Ps:
Product — Make sure your work improves in line with current market trends, what your competitors are up to, the markets you want to compete in and what you consider a success.
Price —Understand your industry costs and market profitability and that of your competitors. So that you can set the best price for shareholders and customers.
Place — By an understanding of the distribution models, along with your excellent market knowledge, should highlight new sales, distribution, new agent production opportunities.
Promotion — To effectively reach different demographic and geographic segments, you need to have alternative marketing strategies.
The Complete Guide to Market Analysis data sources
Use several primary and secondary sources and quantitative and qualitative methods.
Secondary research is research publically available information. You will be able to find industry data, results in historical surveys and industry analysis. You will have to do a lot of digging and bringing many sources together to answer your questions. However, you need to understand the origins, biases and demographics of any secondary information. But it will provide your primary research with some context. And remember, everybody publishes something online for a reason. Work that out and your research will develop even further.
Surveys are the traditional way of quantitative market research and the simplest to do. Conducted face to face, on the phone or online, they can work very well, provided you can get recipients to complete them. You have to spend time perfecting the questions. Survey Monkey and the like are free, but if you have resources use paid versions.
Although inward-facing and perhaps containing many biases, your sales data and CRM should provide you with fascinating insight. Who is buying, what are their age, sex and location? What makes them buy? And how do they buy?
Another great source are your customer service and sales teams, account managers. In fact anyone else who has contact with any of your customers will provide great front line qualitative insight. And even down to the delivery driver who puts a box of your stuff into a reception.
Inviting your customers into a focus group and asking them open questions will achieve more qualitative insights into your research. Expect to gain an even greater understanding of your offering and brand.
Competitive Analysis can be developed by looking at the social aspects of your online business advertising such as social media, PPC, organic search and keywords etc.
Looking at what's trending in your market sector will help you understand where the market is moving to and what segments are the current trends. Listening to what your peers and potential customers are saying online will also assist you in understanding your audience better. Social media research reveals an alternative audience group allowing you to be able to segment via psychographics, demographics, location and many others.
Understanding your market will allow you to isolate areas of potential improvements to make to your offering, competitor weaknesses, and more knowledge of your customers and prospects so you can improve your marketing to them. Market Analysis is designed to look at a market to understand it's threats and opportunities. This article called the complete guide to Market Analysis outlined how to research and find the data.
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