Understanding your customer base is one of the first key steps to business success. Not knowing who your customers are, what they want, and how they want to get it from you, your business may have a hard time devising an effective marketing strategy. This is where market analysis comes in. Market analysis can be a time-consuming process, but it is simple and easy to do yourself in seven steps.
What is market analysis?
Market analysis is a thorough assessment of the market in a given industry. You will examine your site’s market dynamics such as size and value, potential customer segments, purchasing patterns, competition, and other important factors.
What are the benefits of conducting a marketing analysis?
Marketing analysis can reduce risk, identify emerging trends and increase project revenue. You can use marketing analysis at several stages of your business, and even doing it every year can be beneficial to keep abreast of any major changes in the market.
Detailed market analysis will usually be part of your business plan as it allows you to better understand your audience and competition. This will help you build a more targeted marketing strategy.
Here are some other major benefits of doing a market analysis:
- Risk Reduction: Knowing the market can reduce risk in your business as you will have an understanding of major market trends, major players in your industry, and what it takes to be successful, all of which will impact your business decisions. To further protect your business, you can also conduct a SWOT analysis that identifies strengths, weaknesses, opportunities, and threats for your business.
- Targeted products or services: You are in a much better position to serve your customers when you have a good understanding of what they expect from you. Knowing who your customers are, you can use this information to adapt your company’s offer to the needs of your customers.
- New Trends: A business advantage often means being the first to spot a new opportunity or trend, and using marketing information to stay abreast of industry trends is a great way to position yourself to take advantage of that information.
major benefits of doing a market analysis
- Revenue Forecasts: Market forecasts are a key part of most marketing insights as they represent future numbers, characteristics, and trends in your target market. This gives you an idea of the profits you can expect, allowing you to adjust your business plan and budget accordingly.
- Benchmarking: Assessing business success beyond pure numbers can be difficult. Market Intelligence provides benchmarks or key performance indicators (KPIs) that you can use to evaluate your business and how well you are doing compared to others in the industry.
- Past Mistakes Context: Marketing analytics can explain your company’s past mistakes or industry anomalies. For example, in-depth analytics can explain what influenced the sale of a certain product or why some data behaved this way. This will help you avoid making these mistakes again or experiencing similar anomalies as you will be able to analyze and describe what went wrong and why.
- Marketing Optimization: This is where the annual marketing analysis comes in handy – regular analysis can inform you about your current marketing activities and show which aspects of your marketing need to be worked on and which are doing well compared to other companies in your industry.
What are the disadvantages of conducting marketing analysis?
The following disadvantages of conducting market analysis are less related to the method itself than to the resources it requires.
- Market analysis can be costly. If you’re unfamiliar with marketing concepts like market size and customer segmentation, you can outsource a market analysis. This can be beneficial for the quality of the analysis, but can also result in large budget losses. Narrow your market analysis to a specific group – perhaps existing customers – to keep costs down.
- Market analysis can be time consuming. Market analysis can take valuable time on business related tasks. You can analyze one area at a time – say, buying patterns or competition – to free your agenda for the day.
- Market analysis may require additional personnel. Some of the larger companies have their own market analysis staff, and you can follow their example. However, doing so comes with all the usual costs of hiring a new employee. Therefore, the question arises: do you conduct market analysis yourself, do you outsource it or hire yourself? More expensive options often provide more meaningful information.
- Market analysis can be narrow. The most effective market analysis uses real customer reviews that analysts often receive through customer surveys. These polls can only get to a part of the whole Your customers and what you should know about them.
Market analysis vs conjoint analysis vs sentiment analysis
While the market analysis is broad and comprehensive, the aggregate analysis focuses on how customers value what you offer. Surveys are often the backbone of aggregate analysis – surveys are a great way for customers to share the finances that drive their purchases. Product testing is a very common use of conjoint analysis. This method can provide insight into pricing and product features and configurations.
Sentiment analysis goes beyond the number-driven market and combined analysis to determine how customers rate your offering in terms of quality. It can show what your customers are happy and dissatisfied with with your offer or purchase process. You can also go into deeper emotional territory like anger, rush, and intentions, or you can dig up descriptive feedback. It is a great tool to use along with market analysis while conjoint analysis is almost included in market analysis.
How to conduct a market analysis
Conducting a marketing analysis is not a complicated process, but requires a lot of dedicated research, so be prepared to spend a significant amount of time in the process.
Here are the seven steps to doing a market analysis:
1. Define your goal.
There are many reasons why you are conducting a market analysis, such as evaluating your competition or understanding a new market. Whatever the reason, it’s important to define it right away in order to stay up to date with the entire process. Start by determining whether your goal is internal – such as improving your cash flow or business operations – or external, such as applying for a business loan. Your goal will dictate the type and amount of research you do.
2. Investigate the state of the industry.
Map a detailed outline of the current state of your industry. Take into account where the industry is going by using metrics such as volume, trends and projected growth, with lots of data to back up your results. You can also conduct a comparative market analysis to help you find a competitive advantage in a specific market.
3. Identify your target customer.
Not everyone in the world will be your customer, and trying to get everyone interested in your product would be a waste of your time. Instead, use your target market analysis to decide who is most likely to want to receive your product and focus your efforts on it. You want to understand the size of your market, who your customers are, where they come from and what can influence their purchasing decisions. To do this, look at demographic factors such as:
During your research, you may consider creating a customer profile or persona that reflects your ideal customer to serve as a model for your marketing efforts.
4. Understand your competition.
To be successful, you need a good understanding of your competitors, including their market saturation, what they do differently, and their strengths, weaknesses, and market advantage. Start by listing all of your major competitors, then go through this list and do a SWOT analysis of each competitor. What does this company have that you don’t have? What would make the client choose this company over yours? Put yourself in the customer’s place. Then prioritize your competitors’ list from the most threatening to the least threatening and schedule a regular SWOT analysis of your most threatening competitors.
5. Collect additional data.
Information is your friend when you do a marketing analysis – you can never have too much data. It’s important that the data you use is accurate and to the point, so be careful where you get the numbers from. Here are some reputable business data assets:
- Bureau of Labor Statistics
- US Census Bureau
- State and local trade sites
- Professional magazines
- Own SWOT analyzes
- Market research or surveys
6. Analyze your data.
After gathering all the information about the Contract Knob and confirming that it is correct, you need to analyze the data to make it useful for you. Organize your research into sections that make sense to you, but try to include them in your goals, target market, and competition.
7. Put your analysis to work.
Now that you have your market analysis in place, it’s time to make it actually work for you. Look internally for a place where you can use your research and results to improve your business. Have you seen other companies doing things that you would like to implement in your own organization? Are there ways to increase the effectiveness of your marketing strategies?
If you have done an analysis for external purposes, organize your research and data into a readable and digestible document that can be easily shared with lenders.
Save all information and research for the next analysis and separation market analysis yourself, go for it – this tutorial will help. If you don’t have time, it often pays off to hire your own expert or commission an analysis. Your analysis will help you figure out who and how to target your ads – and that’s a huge part of your business success.
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