You can conduct a market analysis for various reasons. It could be to understand the growing or declining demand for specific products and services. It gives an insight into the changing habits of individuals. Hundreds of products of the same category have inundated the market, each with its unique selling proposition. This helps you gauge the prevailing competition, market competitor or competitors, their products, pricing and their edge over others.
Every industry analysis is different from the other. If you are into the retail space, your analysis will include understanding the size of the retail market where you wish to step into. The product range is marketed and anticipating profit margins. The same will differ for an industry which is in footwear or hospitality.
You have to assess your needs and, based on that, establish the purpose of your research. A thorough research strategy will assist you in identifying your target clientele. You will have to collect all relevant data from details like the volume of business conducted to details like turnover and number of competitors.
Once you have the data, you have to draw a parallel between them and your business plan. A good market and demand analysis of where you have the edge over the others will help you chart a business plan that will enable you to market your products and services profitably.
Did you know?
The market analysis aims to determine the attractiveness of a market and understand its evolving opportunities.
What Exactly Constitutes A Market Analysis?
At the start, let's understand what is market analysis and how it can help you. Proper market analysis gives you an insight into which new or unique services or products can help you set up a profitable business. To understand the marketplace dynamics, you have to analyse what kinds of goods and services satisfy customers and how your business can make a difference. The concept of market analysis involves collating essential data about a specific market in the industry. A market analysis helps you understand various details before making a foray into the same space. You get a complete idea about:
- Your probable and potential clients
- Their purchasing and consumption habits
- The size of the market you wish to make a dent into and capture
- The amount of money your target clients are ready to pay
- The strengths and weaknesses of your competitors in the same market
- What makes you different from them
- What you should do to grab a more significant share of the market.
Conducting A Proper Market Analysis
The best method to conduct a proper market analysis are as follows:
Focus On The Purpose Of Your Analysis
Is it for internal or external purposes? The former includes improving your business to increase revenues, and the latter includes your attempts to procure assistance in financial loans.
Understand the current operating scenario of the industry. Get an understanding of the volume of business conducted, the futuristic trends that could impact it and the growth and profit margins. Organise the data you collect and then approach investors. They will get an idea of the inherent value of the industry.
Understand The Requirements Of The Targeted Customers
Every detail about the targeted audience will help you plan better. You have to understand the demographics in detail, their diverse interests and what they are looking for. Customers tend to evolve with time, and you have to make a consistent analysis to understand if they still fit into the zone of your targeted clientele.
Study Competition Minutely
You have to collect data on all your competitors and understand your strengths versus weaknesses. Study trade magazines and e-commerce websites, conduct market surveys and collect data from focus groups.
An Astute Analysis Of Data
Study the data and findings in detail. These will help you to:
- Understand the growth rate of the market
- How much percentage you will be able to capture
- The purchasing habits
- What should be your pricing, and what discounts can you offer
- An understanding of your cash flow projection
- Initiate action based on your analysis.
- Try to study how you can better your business offerings, make your business processes more efficient and earn more profits.
- Draw a plan to approach financial institutions and financial lenders.
How To Conduct A Market Analysis
The benefits of conducting a market analysis are manifold. A well-planned market analysis will help you reduce the risks involved in your business, help you understand what new trends are emerging and help you project a proper revenue cycle. A well-organised market analysis is essential to every business, whether new and on the verge of operations, existing or established. You must:
- Understand which needs of the target clientele you are not meeting. Analyse if your products and services are going to fulfil those needs. You must find out what consumers like about your products at a soft launch. Every piece of information will help you refine your targeted clientele.
- Understand who is already selling what you intend to sell?
- You may consider your product a novelty, but competition could already have invaded the market space with an alternative model.
- Understand the hindrances or hiccups you can face as far as the pricing and distribution of your products are concerned. Try to increase the value addition of your product to create higher entry barriers for competition. Find out the additional investments required. This will give you an edge over them.
- Understand the potential of the market size. The market may be small, but if it promises potential, you can set foot into it. If it is of a massive size but has indicated slow signs of growth, you can step in with a valuable strategy.
Also Read: Salary of a Business Analyst in India
- Understand the policies that your competitors implement based on demographics. Strategise your distribution processes accordingly. Create distinct and effective strategies for online and offline business plans.
- Understand the existing pricing policies that exist in the prevailing market space. You will have to analyse which competitor has the market share at what pricing policy.
- Study competitors' targeted clients and demographics in detail. Find out who your competitors are targeting and the grounds for targeting specific consumers. Is it by age, gender, income or other factors?
- Find out the total number of competitors and who is the most dominant in the marketplace, and why?
- Find out clients' responses towards offers, discounts, a decrease in price or a slight price increase.
- Study the territory of your competitors' sales – Is it more brick and mortar, or is it purely online or a combination of both in different ratios. You must try to understand which platform can be more economically viable. Brick and mortar stores are expensive for every new business.
- Forge distribution alliances that are promising assure you of increased demand and healthy profits.
- Study your competitors' marketing strategies and create one which they will find challenging to emulate.
- Finally, study the features of your product well. What are the areas where you stand to excel? Is it quality, durability, range or price? Find the gaps between your business and that of competitors to understand if you can bridge the same and how you will do it. Try to figure out where you can provide more value to your targeted consumers.
- Create a plan of possible innovations after understanding emerging trends. Fulfilling the needs of the customers should take priority above all else.
- Facilitate ease of buying all your products. In non-availability, create a mechanism that will help you meet their requirements speedily.
The details of this article help you understand the importance of market analysis. This is very crucial for every new and existing business enterprise. It reveals various factors that could be disruptive, changing consumer behaviour patterns in purchasing goods and services and the growing need for innovation. An appropriately conducted market analysis is an effective tool that helps you strategise and position yourself in a commanding situation in the marketplace. Every business has to consistently conduct a market and industry analysis to understand the dynamics of consumers' changing likes and dislikes across genders and age groups.