Market analysis is a thorough assessment of a market within an industry. The market analysis is not a complicated process, but it does take a lot of dedicated research. Therefore, be prepared to devote significant time to the process.
It’s important to have a skilled research team dedicated to this process for the sake of efficiency. What are the benefits of running a marketing analysis? explains why it’s important and beneficial to carry out marketing analyses often.
There are seven steps to conducting a market analysis:
Determine your purpose.
Whatever your reason, it’s important to determine it right away. This will help keep you on track throughout the process. Start by deciding whether your purpose is internal or external. Your purpose will dictate the type and amount of research you will do.
Research the state of the industry.
In your research, include where the industry seems to be heading based on factors such as size, trends, and projected growth. Ensure to have plenty of data to support your findings. Also, trying a comparative market analysis can help you find your competitive advantage within your specific market to enable you to stay ahead of the competition at all times.
Identify your target audience.
Decide on who is most likely to want your product using a target market analysis. Once this is determined, focus your efforts there. Always remember that not everyone is, or will be your customer! And that is completely okay. During your research, you might consider creating a customer profile that reflects your ideal customer to serve as a model for your marketing efforts.
Understand your competition.
Start by listing all your main competitors. Thereafter, go through it and conduct a SWOT analysis of each competitor. SWOT is simply a Strength, Weakness, Opportunity, and Threat analysis. Rank your competitors and continue to run analyses on them depending on the most threatening.
Analyze your data.
Now make your data useful by analyzing it. Make sure you verify your data as factual and correct. Organize your research into sections that make sense to you, but try to include ones for your purpose, target market, and competition.
Put your analysis to work.
Once you’ve created a market analysis, it’s time to make it work for your business. Internally look for areas where the analysis’ information can be vital in the growth and development of the business.
If you conducted your analysis for external purposes, organize your research and data into an easily readable and digestible document to make it easier to share with lenders.