Do you have a new business and are working on brand recognition? Do you have a growing small business or an established, large company that you wish to keep successful? Regardless of its size, your business needs market research and analysis. These two are the core of any marketing or business plan you’ll ever create – or pursue.
What Is Market Analysis?
Oxford’s Learning Dictionaries have a very simple definition for this:
“The activity of gathering information about conditions that affect a marketplace”
This is a much-simplified version of what market analysis encompasses, but it tells you exactly what you can expect from the hard work you put into it. In other words, this is a process that helps you understand the market trends, your audience, your competition, and other market variables like preferences and behaviors.
There’s a lot you can learn if you perform a market analysis. You get to learn about the current size of the market, which companies are your competition and which are not, as well as which trends you should follow to promote growth.
Business News Daily lists several questions to which market analysis will give you answers:
- Who is your target customer?
- What’s the size of your target market?
- What are their buying habits?
- How much would they be willing to pay for your product or service?
- Who’s your biggest competition?
- What are their weaknesses and strengths?
How to conduct a market analysis
There are plenty of reasons why business people opt for market analysis. According to EdwardLowe, proper market analysis helps you understand the market you’re competing in, allows you to enter into new markets (or gain market share), and offers accurate and helpful data for your business and marketing strategies. Lastly, you need this data to produce an analysis report, a document that your team can use to optimize their work.
But, before you can use this data, you need to obtain it first? How can you do this?
A super-fast solution: use a quality template
If you’re a newbie at this, have limited time, or need some assistance, you might want to use a template – but only use a quality one. Creating a market analysis template with AskaTest is an excellent opportunity to learn about the size of the market, uncover new strategies for growth, and perform competitive analysis. You just need to sign up to the Attest platform and you can draft the survey questions to target your audience in minutes. With 7 pre-created question types and a highly powerful survey builder and analyzer, you can simplify everything.
Steps of a deep market analysis
Whether you’ve decided to create your custom report or use a template to ease the process, you still need to conduct the research. Here are a few steps that you need to take to make this happen.
1. Industry research
Where’s the industry headed? What are the trends in it right now? To start analyzing the market, you need to learn as much as you can about your industry first. For this step, you need metrics like trends, size, as well as projected growth.
Keep in mind that you’re not performing market research, but researching the industry instead. In other words, your goal is to learn about your competition, not your consumers.
Creating an overview for the industry shows people within your company, as well as partners and investors, that you understand who you’re competing with. It’s also amazing for your business’ growth – it helps you understand if the demand for your products will grow, how many options consumers have on the market, and what you can do to become one of the best competitors.
Plenty of tools can assist this part of your research. For example, you can use Statista or your country’s official websites with industry data available to source some numbers for your industry and learn more about its current situation.
2. Target market research
Now it is time to research the consumer i.e. perform market research. This research is not only based on who already buys from your business but on your target audience also i.e. the people who are most likely to join your consumer database.
Do you know who your target customer is? This might not be the same as your ideal consumer, the person you’d think would be most interested in your product. You need to perform research to find your buyer persona, the people who are most likely to be interested in what you’re offering.
This is where you group different customers into segments and use elements such as demographics, market size, location, behaviors, trends, psychographics, etc.
3. Research your competition
When you performed industry research, you learned a lot about the companies that exist in your industry. They aren’t all your competition – some just operate in the same industry, but offer entirely different products and solutions. In this step, you need to perform an analysis of your competition.
More specifically, you need to focus on businesses that are your competition and find out their weaknesses. You can exploit those weaknesses in your marketing strategies and use them to reel people to buy from your company. You can also use their strengths to strengthen your own business.
When performing such analysis, consider the following:
Your direct competition: companies that offer the same or similar products and services
Your indirect competition: people with alternative products or solutions to the same problems that you’re aiming to solve
You don’t want to copy the qualities of strong competition. If you want to thrive in a market, you need something unique and special. Yes, you should use this data to learn and grow, but above it, all, make sure that you stand out.
4. Figure out the pricing
Based on all the data you’ve collected, it is time to set the pricing. It should be more than what you’ve invested and enough to cover your expenses, as well as leave a profit. But, it should also be something that your buyer persona can afford, something competitive but not too low, and something that fits the quality you’re offering.
5. Do some forecasting
Lastly, it’s time to create a forecast that allows you to understand what you can achieve in the future. Think about how much you can sell based on the data you collected. Compared to that, how much will the overall market capture? Your forecast should be as realistic as possible. Based on it, you can build your business and marketing plans, track and analyze your progress, and make new goals for the future.
Sources for market analysis
There are different ways to collect the data you need for market analysis. Most of them can be set into two categories: primary and secondary. You can use a mixture of sources of a wide variety.
For primary research, use sources like surveys, focus groups, your employees’ insight, sales data, as well as social intelligence. Social intelligence is easily accessed these days. You can discover trending topics based on social media research and share of voice analysis alone.
For secondary research, use publicly available, ready data. You can find such data on official government sites, surveys published by research or consultancy firms, and stat-rich websites on the Internet.
Why perform the market analysis?
Market analysis can be highly beneficial for your business. It can reduce risk, help project revenue, and identify growing trends. You can use this at any stage of your business from its beginning to its most established stage. Many companies conduct one such analysis every year to keep to date with major changes in their market.
This is usually a part of your business plan, but it doesn’t necessarily have to be. You can perform it separately even while already working on an older business plan. Some of the biggest benefits of conducting a market analysis include:
Reduced risk: By knowing things about your market, you can eliminate or predict risks for your business. When you know who the main players are and what they do, what people request and what is trending, and what it takes to be more successful, you can form better business decisions.
Staying ahead: Emerging trends are very useful when you make investment and marketing plans for your business. Being the first to spot opportunities on the market puts you ahead of the competition, and can often change your business significantly.
More targeted services/ products: When you know what your customers are looking for, you are in a much better position to offer it to them. You’ll know which SEO strategies to use, how to approach the target audience, and how to appeal to their specific needs.
More accurate revenue projections (and market optimization): Most such analyses have market forecast as the key component or goal. A revenue projection tells you what to expect and how to adjust your strategies to meet those expectations.
A quality market analysis can benefit any business and in many ways. Ideally, you should conduct regular analysis and make sure that you’re always informed about the latest trends, needs, and expectations on the market.