Market analyses are the cornerstone of an impactful business. They’re used in a few different ways, for example if you were looking to build a start up and wanted to know what you need to do to become a competitor within your industry. Another example is when you’re looking for a gap in the market to create a new product or service, a market analysis can point you in the right direction of something most in demand.
But even if there isn’t anything specific to prompt one, it must be said that these analyses are incredibly useful for gaining insight into and keeping up to date with everything going on in the industry the business is based in — so it’s worth conducting one on a regular basis to gain insight into the industry through a variety of important questions:
- Who are my potential customers?
- What are my customers’ shopping and buying habits?
- How large is my target market?
- How much are potential customers willing to pay?
- Who is my competition?
- What are my competitors’ strengths and weaknesses?
- What have their challenges and successes been?
There are many resources out there each exploring a different way of conducting an effective market analysis. Each step within all analyses tackles a different aspect of the market that businesses need to consider in order to accurately place themselves in the industry, and we’ve compiled each aspect into a dedicated template for you to complete, and this blog can serve as a guide as you make your way through.
Market analyses are a cornerstone of an impactful business and should be conducted regularly to keep an accurate understanding of the industry in which you operate — take a look at our template to use our simple 6-step plan.
Step 1: Define Objectives
This is a crucial first step — you must ask yourself what are your objectives, both in conducting this analysis and as a business? These will define your success, however the business objectives can be drafts at this moment in time as they will be altered by the results of this analysis.
One thing to remember at this stage is to be thorough, as it will help you to gather the most information and you’ll be in a better place to insert yourself into the industry and achieve your objectives.
Step 2: Explore Industry Overview
In this you’ll find answers to a variety of questions:
- Who are my customers and target audience? (the two can be very different things)
- What size is my target market?
- How do they best interact with other brands in the industry?
- What are the significant behavioural trends you must take into account?
- What can I do differently to my competition for my unique selling point?
- Is there a gap for a product or service in the market?
- What is the average life-cycle of a product or service?
- How much growth is there for you in this industry?
- What are the operating regulations in the industry that you need to comply with?
You get the point. There is a lot of insight to be gained into your industry here, the challenges you can expect to encounter, as well as key techniques to overcome them. It is in this part where you define your customers and target audience, the feasibility for your place in the industry, and how much you can grow if you place your cards right.
Step 3: Define Your Place in the Industry
Now that you have explored the industry, you can start to create a plan to build up your brand, product or service in a way that slots right into it seamlessly. You’ll be able to develop your sales pitches, your marketing efforts, and your product and service development to fit in with the information you’ve already gathered — but be wary, keep these plans open to adaptability because we’re only half way through the market analysis as of now, and there is a lot more insight to be gathered that could effect this plan.
Step 4: Calculate Market Value
Market value describes how much your business is worth in an industry and the financial market. You can do this by using market capitalisation, which “refers to the total value of all a business’ shares of stock and measures what a company is worth on the open market, as well as the market’s perception of its future prospects”.
Or you can calculate it with your current stock share price — this is publicly available knowledge available on many websites like Bloomberg and Google Finance. With this information being public knowledge, you’ll be able to use this way to figure out comparable companies’ market values too, which you could use to help determine your own self-worth — but be wary with this tactic as you are liable to over or underestimating based on self-perception.
With there being a few ways of calculating market value, it’s worth doing your own research into figuring out which way is best for you before proceeding with this step.
Step 5: Identify Direct and In-Direct Competitors
Next is to take the information from the industry exploration and market value stages and use it to define who your direct and indirect competitors are. For use in this template, you can use the following definitions to fuel your search:
‘Direct’ competitors are those who offer the same types of product and service as you to reach the same goal; whereas ‘indirect’ competitors want to reach the same goal, but provide different types of product and service to get there.
You can also ask these questions to provide more insight as to both your and their standing in the industry, and what you can learn from your competition:
- What is the best and worst brand in the industry?
- What common challenges do you all share?
- What common tactics seem to work to overcome common obstacles?
Step 6: Define Your Brand’s Obstacles and Evaluate Objectives
Here, you’re evaluating your own place in the market alongside your competitors. This is the final step and allows you to bring all of your information together to get a clear look at your standing in your industry.
There will be similar questions to consider as in the steps before, but more specific to your business — you’ll be helped by step three when you defined your place in the industry, but use that as a base to better understanding, and use the information you’ve found in the steps four and five to alter this perception, making it more accurate with increased insight.
Evaluating your business objectives based on what insights you’ve generated is a valuable final step that will allow you to see if your original objectives were feasible, and if they can be improved upon, enhanced, taken further or dialled back in order to help the business stay competitive.
To download the 6-Step Market Analysis template, click here.
This article was originally published on the FlexMR Insight Blog and can be accessed here.