Market analysis and market study are complex but crucial processes for every business, whether big or small.
In this complete guide we will help you understand what is market analysis, how to implement and write one and why you need it for your company.
In pochi punti:
- 1 What is market analysis
- 2 When do you need to do it?
- 3 What you will know after a market study
- 4 Four steps to conduct your market analysis
- 5 How does any of it help your business?
- 6 Market analysis and market study: what’s the difference?
- 7 Reaserch and marketing
- 8 A market study step by step
- 9 Professional figures in market analysis
- 10 In conclusion
What is market analysis
First things first: what’s the definition of this analysis inside a business plan? It’s the process of gathering qualitative and quantitative informations about the industry you’re working into.
Whether you are founding a start up or submitting your company to new investors, this is a key tool in your business plan. You should know your industry’s market inside and out, both from the stakeholder and from the customer’s point of view.
When do you need to do it?
If you are thinking about making a market analysis (or have some professionals do it for you), you will need to understand why it’s so important. This is actually a feasibility study for your company, whichever it is.
So you definitely need it if you want to know if and how your business is going to be successful. Let’s say you are opening a new company, or going on your own as a freelance professional.
You need to evaluate your possibilities, spot your points of strenght and weakness and find the most useful way to take advantage of them.
Other situations that require a market analysis
Even if your business is already working, you may require a market analysis research. This is useful when you want to launch a new product or service or when you need to acquire new customers or investors.
Also, periodically re-evaluating your market study is important in order to better understand what’s working and what’s not. Therefore, you will be able to adjust your strategies, gain new confidence and refresh your business plan.
What you will know after a market study
Once your market reaserch is completed, you will have answers to the most important questions in a business’ life.
Such as who are my customers? What are my company’s strenghts and weaknesses? Who could be interested in being a stakeholder? How can I increase my sells? and more.
This will lead you to grow a small business or keeping a big one successful and relevant in the insdustry.
Four steps to conduct your market analysis
Your goal here is to assess the size of the market, the segmentation of its potential customers, your competitor’s bussiness plans and more. Here are four essential steps to follow:
- industry overview;
- target market;
- pricing and forecast.
Let’s look at them in detail in order to create your most efficient market analysis.
This is your first step in a market analysis research. Your purpose here is to understand the industry you are entering from an investor’s point of view.
You should ask yourself several questions about the size, trends and buying patterns of your specific field. This will lead you to know if there’s a space for you in the market, what other companies are doing right and wrong and how to compete with them.
An example of market analysis in this phase is estimating the value of your business plan. You can do that on your own or hire a specialized company or professional figure to help.
Target market analysis
This is the phase of market analysis research in which you create your potential customer profile. Of course, you should identify at least a couple of different ideal clients.
Lead your investigation through a series of parameters: location, demographic, behaviour, buying trends. You should understand and segment your ideal audience in detail. This way, your business plan will be customized on their peculiar features.
Market analysis involves a detailed study of your competitors. Which other companies are working in the same field as yours? Are they addressing the same target?
These are your direct competition and you should watch them closely. What kind of marketing startegies are they using and are they successful at that or not? Find their weaknesses and use them to your advantage.
Try to understand your indirect competition too. This concept refers to other companies which are offering alternative solutions to the problem you are solving. An example of market analysis in this sense is, for a food blog, every publication about recepies and restaurant reviews such as online specialized magazines.
Pricing and forecast in market analysis
This is the last step in your basic market analysis research. You should think about your pricing both from a speculative point of view and a marketing startegy.
Of course your product or service’s price should be higher than your overall costs. But think like your clients too: they will surely associate a higher price to a higher quality, but if it is too much they will turn to your competitors.
Go back to your first step: what’s the overall market value and industry overview? Answering this question, you should be able to create a strategy that revolves around high price and luxury services or, on the other end of the spectrum, low price and affordability.
How does any of it help your business?
Why should you conduct such an intense and difficult task? Because of the central role of market analysis for a business plan. You can reduce risks and optimize your marketing campaign after a careful market analysis.
Here are some benefits of using this tool:
- Risk reduction. Your market analysis will help you understand the industry and protect your investment in a new company;
- Stakeholders attraction. A careful investigation of the market will give potential investors the right impression of you: a rational and successful business owner;
- Targeted products and services. Understanding your market and your potential customers means knowing what they need from you. Therefore, you will be able to provide the most targeted and specific service possible.
- Marketing optimization. If you conduct a market analysis periodically, you can evaluate your points of strenght and weakness and use them to your advantage. Think of the endless marketing possibilities!
Market analysis and market study: what’s the difference?
When we talk about market research, there can be a little confusion about the correct terms we use. While market analysis is the broad exploration of an industry or a niche, market research is more specifically focused on target customers. Let’s make an example.
A fashion company wants to launch a new product: shoes. They will need to make a market analysis about the shoes industry at large, taking in every trend and competitor strategy. But they will also make a market study specifically focused on their loyal and potential customers.
Are they loyal to the brand and ready to buy a new product? What are their habits in terms of online vs. physical shopping, which influencer are they going to listen to, are they more susceptible to mobile marketing or traditional advertising?
A more detailed scheme
In order further understand what we mean with the terms “market analysis” and “market study”, here is a simple scheme that comes in handy. It has been taken from the simplicable.com definition of the two terms.
|Analysis of an industry, sector, market or niche
|Analysis of target markets and customers
So you see, while the broader marketing analysis is certainly useful for your business plan and a feasibility study, market study reaserch is the foundation for marketing strategies.
Reaserch and marketing
A market study is essential to implement the best marketing strategy. Deeply understanding your customers is actually crucial to better understand what they need and how you can provide it.
Think about your social media strategy or your influencer marketing campaign. How can you make them as succesful as possible without knowing your clients’ habits, preferences and behaviours?
A market study step by step
Just as we did for market analysis, a market research also has got some steps to follow carefully.
- Define your goals. As always when talking about business, you need to have precise, measurable and plausible goals to obtain in a set amount of time;
- Find your market research sources. They can be primary sources (such as questionnaires and surveys) or secondary sources (such as articles, statistic analysis and researches from third parties);
- Analize your data. You need a method or system to collect and analyze your data points. This could be easier if you hire a specilized company or professional figure;
- Implement your research. After conducting your market study, you need to use the results to increase your success as a business.
Tools you can use in market research
As we said, you can collect your data points from different sources. Among the most important ones you’ll find your website’s insight data; SEO and SEM statistics; direct interviews and surveys sent to your customers.
You can certainly do this all by yourself, but you’ll need a clear and deep knowledge of statistics, data analysis, and every tool available on the web. So why don’t you ask for help?
Professional figures in market analysis
The professional workers in this field are called market reasearch analysts. They can work in companies or as freelancers, and always have a good grasp on specific fields and industries.
To become a professional analyst you need to study hard: most of them have math or statistics degrees as well as specializations in marketing, economy and high finance.
Who to hire and how much will you spend?
If you need a professional market study research, you should invest in a good company providing the best analysts out there. This can lead you to spend from 1.000€ to several thousands more, depending on your company’s scale and needs. Consider the median annual wage for market research analysts is $63,790.
Nevertheless, we demostrated that having a good market analysis is very important for your business so it’s definitely worth the investment. With the right guidance you can increase your sells, attract new investors, branch out to new markets and customers. In the end, you will improve your buisiness enormously.
Now you know everything you need about market study and its benefits for every company. Whether your business is huge or a small start up, this is a tool worth using at the very beginning.
Then you’ll need to re-evaluate your studies every once in a while in order to keep your company successful. Keep on reading Mailsenpai’s news and tips about marketing, business and more.