What makes a business successful?

Well, a good idea is a good start and some capital doesn’t hurt. But without an understanding of your competitive advantage, your business may never get off the ground.

A market analysis will help you answer important questions:

• Who will your product or service help?

• What are my strengths and how do I talk about them in terms of problem-solving for my audience?

• Where is my existing competition and who are they?

And competition isn’t as straightforward as it sounds.

Let’s take Facebook—on the surface a social network, but it doesn’t just compete with other social networks. They compete with anything that can steal your attention away from them because they prosper on time spent on the platform.

That means their competition includes anything from creepy, faceless mannequins on the shopping street—to the breaded scent of your nearby Subway sandwich shop.

You ready to learn, or create, your business’ competitive advantage?

Good, then keep reading.

How do you identify a market need?

The success of a business highly depends on its ability to provide useful solutions to an unfulfilled need. Think about the need for people to hail taxis from their handheld devices. An online store where people can find anything they need or a site that helps friends stay connected. Uber, Amazon, and Facebook each recognized a gap—and closed it.

Entrepreneurs get to know their markets-to-be through extensive customer and market research. As with other aspects of marketing analysis, you’ll require qualitative and quantitative surveys to get the right data.

But first, let’s start with the basics.

What is a market analysis?

A market analysis lets you dig into the nitty-gritty of a market in order to understand who you’re gonna reach, and how you’re gonna do it. Don’t confuse “who” for bland personas like Jane, early 30s, designer, lives in New York. Those are demographics. The real “who” contains true behaviors, wants, needs—and problems.

When you perform a market analysis, you chuck qualitative and quantitative data into a pan, and then whisk, stir, and season it, in order to get something tasty—information.

Because in business, information is power. That’s why market analysis works like a cheat sheet. Sure, it doesn’t give you a precise recipe, but it does offer guidance about what and how to communicate, and to whom. In other words, you’ll know more than just Jane, 30, NYC, uses Instagram.

How to conduct a market analysis

So, now that you got an idea of what it is, how do you actually do a market analysis?

Market analysis examples

Continuing with the idea of a road map, Choosing an efficient way to do your market analysis can save you a lot of time, resources, and sanity.

To get an example of a market analysis, we spoke to Andrei Vasilescu, CEO & digital marketing expert of DontPayFull. He shared his five elements of market analyses:

Market Trend

Choose a current and relevant trend in your business sector and seek to understand why it’s making the market people tick. This will help you deliver the right products or services to the right people, in a way that’s effective and genuine.

Market Size

You should properly measure the market size of competitors, target audience, and potential customers. That will help you determine where you can move in terms of quality, presentation, and price.

This is also the information you need to understand what your competitive advantage is so you can find the right product-market fit.

Market Growth

Investigate how the market is moving in order to determine whether it’s a clever idea to invest now or later.

Gain Potential

Find the saleability of your products or services in the market by analyzing the problems, needs and what these could look like in the future.

If Microsoft is about to deliver new technology that solves the same problem as your analog solution, maybe it’s best to reconsider. So get to know what problem your product or services face, and what solutions might be around the corner.

If there’s nothing like it around, try to figure out if more people will develop a need for this service over time.

Distribution

People don’t buy what they don’t know exists. So what is the fastest and most convenient distribution channel for delivering your products or services?

Tips & Tricks for Successful Market Analysis

Involve all key personnel from the start

You need to look at the market from every angle.

Important stakeholders include marketing, business development, sales reps, the finance team, and anyone else who can contribute to or make sense of and use the data.

Some people may have insights about your customers or competitors that you didn’t expect, so the more people the contribute the better the outcome.

Focus on barriers to entry

What stops someone from opening a shop next to yours and taking 50% of your business?

The answer to that question speaks to the advantage you have over current and future competitors. That’s your key to differentiation over the medium- and long-term.

Interact with people

Ask for feedback after people buy things from you. Run social quizzes. Embed forms in friendly emails.

Keeping the conversation flowing between you and you customers gives you a wealth of data to work from and keeps them primed for giving you feedback.

Market analysis seems like a daunting process. But think about the number of mistakes, setbacks, and challenges it can save you from. Ultimately, it’s about the survival of your business.