A thorough market analysis is an assessment of the market in a particular industry. These analyses can be very beneficial to your business, as they reduce risk and help you make better decisions. It can be time-consuming to conduct a market analysis, but you can do it yourself in just seven simple steps.
Follow the steps in this guide to perform a market study for your business.
What is included in a market study?
You will analyze the market dynamics, including volume, value, customer segments, purchasing patterns, competition, and other factors. The following questions should be answered by a thorough marketing analysis:
- Who are my customers?
- What are the buying habits of my customers?
- What is the size of my target market?
- What is the price range that customers are willing to pay for your product?
- What are my main competitors?s
- What are the strengths and weaknesses of my competitors?
What are the advantages of a marketing study?
A marketing analysis reduces risk, identifies emerging trends, and helps project revenue. A marketing analysis can be used at different stages in your business. It can also be useful to do one annually to stay up-to-date with major changes to the market.
Your business plan will often include a detailed market analysis, which gives you an in-depth understanding of your target audience and your competition. You can then build a targeted marketing strategy.
Here are a few other benefits that come with conducting a market study:
- Reduced risk: By knowing your market, you can make better business decisions. You’ll be able to identify the major trends in your industry and where the key players are. You can conduct a SWOT Analysis to help protect your business. This will identify your strengths, weaknesses, and opportunities.
- Products or services that are targeted: When you know what your customers want, you can better serve them. You can tailor your offerings to meet the needs of your customers when you are aware of who they are.
- Marketing analysis: Using a marketing study to keep up with industry trends can be a good way to make sure you are able to capitalize on this information.
- Market forecasts are a crucial part of marketing analyses. They project future trends, numbers, and characteristics in your target market. You can then adjust your budget and business plan to reflect the expected profits.
- Benchmarks for evaluation: It is difficult to judge the success of your business based on pure numbers. Market analysis can provide benchmarks, or key performance indicators (KPIs), against which your business can be judged and how it compares to other companies in the same industry.
- Contextualizing past mistakes: Marketing Analytics can help explain past business mistakes or anomalies in your industry. In-depth analytics, for example, can explain why a product’s sale was affected or a certain metric performed as it did. You can avoid repeating the same mistakes or encountering similar anomalies by analyzing and describing what went wrong.
- Marketing optimization: An annual marketing analysis is useful for guiding your ongoing marketing efforts. It can show you what aspects of your marketing are working well and which need improvement.
What are the disadvantages of conducting a marketing study?
The following drawbacks are less about the method than they are about the resources required.
- Market analysis is expensive. Outsourcing your market analysis is a good idea if you are not familiar with concepts like market volume or customer segmentation. This can improve the quality of your analysis, but it can also be very expensive. Reduce your costs by limiting your market research to a specific group, such as current customers.
- Market analysis can take a lot of time. Market analysis can be time-consuming and take away time from other tasks that are more directly related to your business. To free up time, you can focus on one aspect at a given time.
- Additional staff may be needed for market analysis. You can learn from larger companies that have in-house staff for market analysis. Hiring a new employee comes with the normal costs. It is then a question of whether you will conduct your own market analysis, outsource, or hire an in-house analyst. The most expensive options often provide more valuable insights.
- Market analysis can be narrow. Market analyses that are most successful use feedback from actual customers, which is often obtained by analysts through customer surveys. The surveys might only reach a small portion of your customer base and therefore produce an inaccurate sample size. Market analysis can lead to a lack of information about your customers.
Market analysis.
Conjoint analysis is a more focused approach to market analysis, focusing on the value of what you are offering. The surveys are the foundation of most conjoint analyses. They allow customers to express what motivates their purchasing decisions. The application of conjoint analysis is most often for product testing. This method can provide insights into product pricing, features, and configurations.
Sentiment analysis is a qualitative analysis that goes beyond market and conjoint analyses to determine how customers feel about your products. You can see what your customers think about your products or the buying process. You can also delve into more emotional terrain, such as anger and urgency, or dig up descriptive feedback. This is a useful tool that can be used in conjunction with market analysis.
How to perform a market study
Although conducting a marketing study is not difficult, it requires a great deal of research. Be prepared to dedicate a significant amount of time to this process.
Here are seven steps to conducting a market study:
1. Decide on your purpose.
You may want to conduct a market study for many reasons, including to assess your competitors or to better understand a new marketplace. It’s crucial to identify your purpose as soon as possible to ensure you stay on track.
Decide whether you want to improve your Cash Flow or your business operations. Or if your goal is external, such as obtaining a loan for your business. The type of research and the amount you do will depend on your purpose.
2. Do some research on the industry.
Create a detailed map of the state of your sector. Include the direction in which your industry is heading using metrics like size, trends, and projected growth. Use plenty of data to back up your findings. You can also perform a comparative analysis of the market to find your advantage in your particular market.
3. Identify the target audience.
It is not possible to reach everyone on the planet. You would waste your time trying to make everyone interested in your products. Use a target-market analysis to determine who will most likely want your product, and then focus your efforts on them. You need to know your market size and who your customers are. Also, you want to know where they’re from and what influences their purchasing decisions. Consider demographic factors such as:
- Age
- Gender
- Location
- Work – Occupation
- Education
- Needs
- Interests
You might create a persona or customer profile that represents your ideal client to use as a guide for your marketing.
4. Understanding your competitors is important.
You need to know your competitors well in order to be successful. This includes their market saturation and what they do differently from you. It also includes their strengths, weaknesses, and advantages in the market. List all of your competitors and then conduct SWOT analyses on each one. What is it about that business that you lack? What would make a customer choose this business over yours instead? Imagine yourself as the customer.
Next, order your competitors in order of most to least threat, and set a deadline for conducting regular SWOT analysis on your most dangerous competitors.
5. Additional data can be collected.
You can never have enough data when conducting marketing analyses. You should only use data that is factual and credible, so you need to be careful where you obtain your figures. Here are some reliable business data sources:
- U.S. Bureau of Labor Statistics
- U.S. Census Bureau
- Local commerce and state sites
- Trade journals
- SWOT analysis: Your own SWOT analysis
- Market surveys or questionnaires
6. Analyze your data.
You need to analyze your data after you have collected all the relevant information and verified its accuracy. You can organize your research in sections that you find useful, but also include those for your target market, your purpose, and your competition.
Your research should focus on the following main areas:
- Your industry’s growth rate and size are summarized.
- The projected market share of your business
- A look at the industry
- Trends in customer buying
- Your growth forecast
- What is the price that customers will pay for your service or product?
7. Use your analysis to improve your business.
It’s now time to put your market analysis into action. Look for ways to use your findings and research within your own business. Do you have any ideas for your business that you would like to incorporate from other businesses? What are some ways you can make your marketing more effective?
If your analysis was conducted for an external purpose, you should organize your data and research into a document that is easily digestible and readable to make it easy to share with lenders.
Keep all your research and information for your next market analysis. Consider making a calendar note each year to stay on top of the market.
Easy market analysis
This guide can help you if you’re able to do the analysis yourself. It is worth it to hire an expert in-house or outsource your analysis if you do not have the time. Your analysis will allow you to determine who and how to target, which is a key part of success.
