Whether you are just starting a business or strategically looking ahead, you should be conducting a market analysis at least once a year – markets are always changing and your business should have a clear picture of its playing field.
So, first, let’s talk about what a market analysis is exactly.
Merriam-Webster defines Market Analysis as, “a phase of marketing research conducted to determine the characteristics and extent of a market”, which probably answered all your questions on this subject… no need for us to break it down further, right?
Just in-case that was as clear as mud, let’s take a more in-depth look.
A market analysis is a valuable business tool that can be used when determining the most suitable market for your industry, and the risks and benefits of operating in a specific market – whether your business is currently in that market or is considering entering a new one.
The objective of a market analysis is to know your market, and determine if the market is large enough to build a sustainable business.
Successful businesses have extensive knowledge of their customers and their competitors. Conducting through market analysis will make you more aware of how your clients (potential or current) will react to the products or services you are selling.
But how do you conduct a market analysis? What questions should you be asking?
The goal of a market analysis is to equip yourself with the information necessary to make informed business decisions.
Consider the following when conducting a market assessment:
Demographics & Segmentation
Always try to divide your target market into useful slices or segments.
Determine the size of your target market, and approach the assessment accordingly. Depending on the size of your target market, you may want to divide it into different segments. This is important if you or some of your competitors will only focus on certain segments.
Determine the number of potential customers.
Determine the potential value of the market.
It is important to understand the potential value of the market in question.
Define and assess your potential customer.
Every market assessment will be different, because every business is different. You may need information from your local chamber of commerce, government statistics commercial statistics, or just some good old fashion internet research. Make sure your information is sound, you don’t want to be making important business decisions based on bad information.
Not all the information you need will be publicly available, you may have to hire a business consulting firm like Morris Interactive to assist you.
Know your target market.
Determine the type of customers you target within the market.
Know the needs of your target market.
This includes drivers of demand for your product/services. Be sure to highlight drivers that your competition has overlooked – this is what sets your business apart.
Know your competitors.
By knowing and being able to explain your competitor’s positions and describe their strengths and weaknesses you can develop your marketing position.
Barriers to Entry
What barriers exist that will prevent or create road blocks to entry or further success in your chosen market?
What prevents another company from entering the same market and taking 50% of your business?
- Does your project require a substantial investment?
- Do you require hi-tech or expensive tech to launch into the new market?
- Do you have current brand recognition? If not, will you need to invest in marketing to compete?
- What regulations or licensing to you need?
- Access to resources
- Do you have exclusivity with suppliers, proprietary resources?
- Access to distribution channels
- Do you have exclusivity with distributors, proprietary network?
Market Assessments are the bare necessities to set your business up for success, to end up on top, and become the king of the proverbial jungle.
Whether you develop the market assessment internally or outsource it to a business consulting firm like Morris Interactive’s LINK Market Services - make sure you are staying on top of your current market or entering a new one with your eyes wide open with a sound market assessment.