What Is Market Analysis?

Any business plan includes qualitative and quantitative analysis in assessing their market. And this assessment is called market analysis. Thus, it refers to the study of business market size, competition, its dynamics, consumer buying patterns, and economic environment. More so, the study is a documented investigation that not only informs but also formulates beneficial solutions and strategies. As these studies contribute significantly to market research, any real problem in the industry can be verified and solved.

A market research campaign confirmed that only 10% of 3,500 young girls enjoyed playing Lego.

Meanwhile, The Money Project – Visual Capitalist stated that there are around 60 big stock exchanges, with over $69 trillion total value, worldwide.

Moreover, The Money Project mentioned that the New York Stock Exchange (NYSE), per se, is bigger than 50 of the world’s smallest major exchanges.

Market Analysis: Why Is It Important?

Anyone craves for business growth, but it does not merely happen out of luck. Business owners strive to build wise strategies for being successful. With market analysis added to your plate, blind spots can be discovered. A lot of startup companies do not even last since the owners failed in addressing problems that must be solved. For example, results in an analysis report help you understand the market system and your potential customers. Hence, your company developed strategies to reduce risks and provide better products and services.

Furthermore, market analysis is not limited to one industry only. The example stated earlier about Lego is just one factor. The study applies to a restaurant, real estate, salon, and so much more. Plus, competition is part of the analyzing process. Knowing your competitors enables you to develop ways of standing out. Keep in mind that businesses differ. And that means the solutions for structuring business plans will vary as well. Maybe you seek funding for the meantime. Therefore, refer to the data inside the report if your company is capable enough to back up the amount.

What Are the Variables in Market Analysis?

Before we head to conducting market analysis, do you have ideas already about what is being analyzed? There are different variables used in the study which will be analyzed and evaluated. Bear in mind that you need to gather the right variables. Because even you provide excellent solutions to what you think is the problem, every variable used might not be the issue in the first place. And here are some examples of the variables to use for market analysis:

Customer Surveys: One known variable for researches is customer survey. And the conventional way to conduct it is through one-on-one interviews. To manage this process, prepare the right questions to ask first. Do you need their opinions about which consumers love the most from your coffee shop menu? Or perhaps, do you want to learn which meal from your restaurant menu is their least favorite? As much as possible, inquire about the relevant questions that will benefit your market analysis.Online Platforms: As many businesses go digital nowadays, take advantage of the online platform. Set up consumer questionnaires sent through email or social media instead of direct interviews. Gathering customer feedback can even be done through chat or video calls. Also, accept criticisms by encouraging clients to write reviews about your business online. The results they provided help you formulate a solution to make your company outshine other competitors.Product Trials or Feasibility Studies: Another approach involves experimentation. An example is when a perfume company sends out free samples of their recently released products to customers. Check their reactions after if they would approve of the new scents or not. Seeing their responses after using the product makes the research effective. And the most common example that uses this approach is anyone who belongs in the food industry. Consequently, taste tests work as trials.Direct Observations: If you need something more effective and more realistic answers, then consider a direct observation. In this case, you watch clients through live reactions or video recordings about their responses. However, be sure to ask for consent first in using direct observations. Maybe a customer does not want to be recorded for privacy reasons. While it is realistic since you see how consumers react or behave naturally, it can also be a time-consuming process.Focus Groups: A focus group consists of an arranged session within groups of individuals. It involves a moderator that discusses subject matters and Q&As. This activity helps gather essential information but can be challenging to organize. If you are confident that your company can manage its expenses, then proceed. However, startups and small businesses best get rid of this method for the moment.Credible Websites: There are some variables to analyze which other researchers and businesses already did. Maybe you need websites that contain the demographics, statistics, and national industry information that benefit your market analysis. To use other data, be sure to credit them. However, do not merely gather facts from random websites since you need to check their credibility as a source. Popular sites to visit are those that belong from the government, the media, and others with high domain authority.

How to Conduct Market Analysis

As you know that market analysis investigates the attractiveness of an industry market, you can form two objectives. First, know your market. And second, prove to investors and audiences that your market is enough to become a sustainable business. To make that work, handle the process right. So how do you manage that? Simply follow these steps on how to conduct market analysis:

Step 1: Review the Industry and Demographics

How much do you know your market? Put it to the test by reviewing the basic business metrics—size, growth, trends, and the like. If you are used to business plans where you research your industry, then don’t end there. With market analysis, you learn more about your customers, competitors, and so forth. Hence, it is more than just your business. You may view from reliable sites about current statistics and graphs as your basis. For example, smartphone sellers would want to know if smartphones are still in demand or not.

Step 2: Determine Your Target Market

Next, explain further about your ideal customers. While on the process of analyzing, you slowly recognize consumer behavior and types. And market segmentation exists when you identify various types of customers. If you want to cater to everyone by using a general scope, then you do not clearly know your target market. Be more specific. Take the manager of a footwear company, for example. Do not think that you target everybody since we all have feet. If you realize that most of your buyers come from men indulged in sports, then produce more sportswear shoes for men.

Step 3: Monitor Your Competitors

Did you check how your competitors handle their ads or social media campaigns? You might realize after investigating that they are slowly capturing your market share. This idea explains why you need to be aware of who you are up against in the industry. With competitive analysis through SWOT analysis, it will be easy to determine the business’ strengths and weaknesses. Apply securities in the stock exchange, perhaps. It is known that there are approximately 60 major stock exchanges globally, with a total value of around $69 trillion. If competitors are common in small major exchanges, then compete by dealing with securities that are greater than 50 of the smallest major stock exchanges through NYSE.

Step 4: Analyze the Results from Variables

Recall those examples of variables stated earlier. Interpreting the data follows whether you used surveys, product trials, or any other model. You do not simply guess solutions anyway. Thus, focus on understanding the outcome. But the problem with many elements to report and analyze is when the data is all over the place. Indeed, you might spend a lot of time to gather data. Yet, you still need to be careful in analyzing it. Aim to organize everything collected instead.

Step 5: Figure Out the Pricing and Sales Forecast

Other aspects of understanding market analysis are pricing and sales forecast. When you talk about the price, think of more than just what a product or service costs. Instead, what message do you think will be delivered to your customers when they see the price. Moreover, deciding on the price also concerns the quality. There is no point in increasing product prices without even giving a better quality to such items. Another concern is forecasting sales. How much do you expect to sell after? Think of future circumstances by applying analytics to be prepared.

Step 6: Formulate Competitive Strategies

Last is the part that businesses look forward to the most. This segment involves developing new strategies to improve operations in the market. Your company might benefit from the competitive pricing of services or new marketing plans via branding, campaigning, and others. The challenge here is to evaluate which solutions help the market the most. Even so, stay on track for the progress. Check if following the formulated strategy is going well or the other way around.

FAQs

What is the difference between analysis and analytics?

Both analytics and analysis play a crucial role in research. But the two can often be mixed up by researchers and analysts as they spell almost the same. However, the easy way to understand their difference is that one refers to the past while the other is for future terms. The analysis concerns from previous results, particularly with what happened in the market. Meanwhile, analytics looks forward to predicting results and forming strategies in the future.

What is the market trend?

Market trends refer to the movement or direction of a financial market over some time. The two common trends are the bull and bear market. The bull market signifies an upward direction to the financial market. On the other hand, the bear market notes a downward movement.

What are the elements of marketing?

The elements of marketing are known as the 7Ps. They are the product, price, place, people, promotion, physical, and process. And these seven elements work altogether in accomplishing the marketing objectives and strategies.

Why do we need to analyze and criticize our business market? Many people might say that every critic is a genius. That is because they can penetrate deeper into what the results from business-driven data mean. Although you need not be an experienced critic, the least you could do is try. With all the information you gathered from this article, you are more than equipped to ensure your market continues to operate from a financial standpoint. So before building strategic plans, be sure you haven’t skipped conducting market analysis.