What does a Market Analysis Include?

In a market analysis, you will study the dynamics of your market, such as volume and value, potential customer segments, buying patterns, competition, and other essential factors. A thorough marketing analysis should answer the following questions:

• Who are my potential customers?
• What are my customers’ buying habits?
• How large is my target market?
• How much are customers willing to pay for my product?
• Who are my main competitors?
• What are my competitors’ strengths and weaknesses?

Benefits of Running a Marketing Analysis

A marketing analysis can assist in estimating income, lowering risk, and spotting new trends. A marketing analysis can be used during various phases of your company’s development, and it may even be advantageous to carry out one annually to stay abreast of any significant shifts in the industry.

Your business plan typically includes a thorough market analysis since it helps you better understand your target market and competitors. This will assist you in developing a more focused marketing plan. These are some other significant benefits of conducting a market analysis:

• Risk reduction: Knowing your market can reduce risks in your business since you’ll understand major market trends, the leading players in your industry, and what it takes to be successful, all of which will inform your business decisions. To help you further protect your business, you can also conduct a SWOT analysis, which identifies your business’s strengths, weaknesses, opportunities and threats.
• Targeted products or services: You are in a much better position to serve your customers when you have a firm grasp on what they are looking for from you. When you know who your customers are, you can use that information to tailor your business’s offerings to your customers’ needs.
• Emerging trends: Staying ahead in business is often about being the first to spot a new opportunity or trend, and using a marketing analysis to stay on top of industry trends is a great way to position yourself to take advantage of this information.
• Revenue projections: A market forecast is critical to most marketing analyses, as it projects the future numbers, characteristics and trends in your target market. This gives you an idea of the expected profits, allowing you to adjust your business plan and budget accordingly.
• Evaluation benchmarks: It can be difficult to gauge your business’s success outside of pure numbers. A market analysis provides benchmarks or key performance indicators (KPIs) against which you can judge your company and how well you are doing compared to others in your industry.
• Context for past mistakes: Marketing analytics can explain your business’s mistakes or industry anomalies. For example, in-depth analytics can explain what impacted the sale of a specific product or why a particular metric performed the way it did. This can help you avoid making those mistakes again or experiencing similar anomalies because you can analyze and describe what went wrong and why.
• Marketing optimization: This is where an annual marketing analysis comes in handy – regular analysis can inform your ongoing marketing efforts and show you which aspects of your marketing need work and which are performing well compared to the other companies in your industry.

Drawbacks of Running a Marketing Analysis

The drawbacks of running a market analysis pertain less to the method than the resources it requires.

• Market analysis can be expensive: If you’re unfamiliar with marketing concepts like market volume and customer segmentation, you might want to outsource your market analysis. Doing so can be great for your analysis’s quality but also leave a big dent in your budget. Narrow your market analysis to a particular group – perhaps current customers – to lower your costs.
• Market analysis can be time-consuming: Market analysis can take precious time away from more directly business-related tasks. You can analyze one area at a time – buying patterns or competition – to free up your day-to-day schedule.
• Market analysis can require extra staff: Some larger companies retain in-house market analysis staff, and you can follow their lead. Doing so, though, comes with all the usual costs of hiring a new employee. The question then becomes: Do you conduct your market analysis, outsource, or hire in-house? The more expensive options can often yield more meaningful insights.
• Market analysis can be narrow: The most successful market analyses use actual customer feedback, which analysts often get through customer surveys. These surveys may reach only a portion of your customer base, leading to an inaccurate sample size. The result is that market analysis may not fully detail your customers and what you should know about them.

Market Analysis vs. Conjoint Analysis vs. Sentiment Analysis

Conjoint analysis focuses on how customers perceive your products, whereas market analysis is more comprehensive and all-encompassing. Because surveys allow customers to communicate the elements driving their purchases openly, conjoint analysis often begins with a customer survey. The use of conjoint analysis in product testing is prevalent. This approach can provide information about product features, configurations, and pricing.

Sentiment analysis is a more qualitative way to determine how customers feel about your offerings than the number-driven market and conjoint research. It might reveal what aspects of your offers or purchasing procedure clients find satisfactory and frustrating. Additionally, you can explore more intense emotions like rage, urgency, and intention, or you can unearth insightful criticism. While conjoint analysis is essentially a part of market analysis, it is still a valuable tool when used in conjunction with it.

How to Conduct a Market Analysis

While conducting a marketing analysis is not a complicated process, it does take a lot of dedicated research, so be prepared to devote significant time to the process. These are the seven steps of conducting a market analysis:

Determine your purpose

You can perform a market analysis for various reasons, such as analyzing your competitors or learning about a new market. Whatever your motivation, it’s critical to establish it early on to stay on course. First, determine if your goal is external, such as obtaining a business loan, or internal, such as enhancing your cash flow or business operations. Your goal will determine the kind and volume of research you conduct.

Research the state of the industry

Draw a thorough picture of your industry’s current situation. Include the apparent direction of the industry using measures like size, trends, and expected growth, and provide ample evidence to back up your conclusions. You can also perform a comparative market analysis to identify your competitive advantage in your particular market.

Identify your target customer

It would be a waste of effort to pique everyone’s interest in your product because not everyone will become a customer. Instead, determine who will most likely want your product by conducting a target market analysis, then concentrate your efforts there. You should be aware of the size of your market, the demographics of your clientele, their origins, and any factors that might affect their purchasing choices. Examine the following demographic characteristics to do this:

• Age
• Gender
• Location
• Occupation
• Education
• Needs
• Interests

During your research, you might consider creating a customer profile or persona that reflects your ideal customer to serve as a model for your marketing efforts.

Understand your competition

To succeed, you must be thoroughly aware of your rivals’ advantages, disadvantages, and market saturation, as well as what sets them apart. Make a list of your primary rivals first, then analyze each one using the SWOT method. Next, order your list of rivals by degree of hazard and select a deadline for performing recurring SWOT evaluations on your most dangerous rivals.

Gather additional data

When conducting marketing analyses, information is your friend – you can never have too much data. Your data must be credible and factual, so be cautious of where you get your numbers. These are some reputable business data resources:

• U.S. Bureau of Labor Statistics
• U.S. Census Bureau
• State and local commerce sites
• Trade journals
• Your SWOT analyses
• Market surveys or questionnaires

Analyze your data

To make sense of the data, you must analyze it once you have gathered as much as possible and confirmed its accuracy. Sort your research into areas that make sense, including those related to your goals, target audience, and competitors.

These are the main elements your research should include:

• An overview of your industry’s size and growth rate
• Your business’s projected market share percentage
• An industry outlook
• Customer buying trends
• Your forecasted growth
• How much customers are willing to pay for your product or service

Put your analysis to work

It’s time to put your market analysis to use after you’ve generated it. Examine internally how your business can benefit from the research and conclusions you have obtained. To facilitate the sharing of your study with lenders, if you performed your analysis for outside parties, arrange your data and research into a simple document to read and understand. To stay on top of your market, save your data and research for your upcoming study. You might also want to try setting up a yearly calendar reminder.

Making Market Analysis Easy

Go ahead to assist you in conducting if you have the time. Hiring an inside specialist or outsourcing your study is typically worth the investment if you don’t have the time. A key component of running a successful business is knowing who to target and how which your study will help you determine.