What is market analysis? And how can it help you grow your brand and identify market needs? Get the lowdown with our market analysis cheat sheet. Now grab a coffee.
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.
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.
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.
So, now that you got an idea of what it is, how do you actually do a market analysis?
Would you give an archaeologist a shovel, tell her to just dig, and hope for a t-rex in your backyard?
Likewise, if a market analysis lacks context and direction, it’s gonna lack results. So get the brain trust together and find, identify, and write down your desired outcomes. And don’t forget to note down how you’re getting there and what to do when that day comes.
If you’re looking to identify opportunities in a particular sector, fixate your eyes on industry size, trends, and growth rates.
If it’s to learn more about your customer base, you’re better off looking into brand awareness, buyer decision making, upcoming tech, and so on.
Identifying goals in advance lets you know what to look for. Plus, when it comes to collecting data, a.k.a. learning, (especially writing your survey questions), your strategy will have both its feet on the ground
The data you collect are only as good as the people and places you get them from.
Should an app developer do beta testing on people who can’t tell an iPhone from a Nokia?
Should a high-society clothing brand ask beet farmers about their shopping habits?
In research, it’s always important to be open to the unexpected in your data. Who knows—maybe you’ll find that baby boomers are really into your idea of poké sushi tacos. However, a well-defined audience will help you collect data faster and make analysis a breeze.
Be sure to come up with an idea of who you need to speak to, or where you’ll gather your data before you get started.
Market analysis works best when you have a whole lot of data to work with. This is what’s really going to help you identify barriers to entry, position your brand, and develop a marketing strategy and other critical elements
Whatever you’re looking for has probably been looked for at some point in history. Maybe not down to every jot and title, but ballpark.
And since you need a ton of data, you shouldn’t limit yourself to primary (first-person) research, but complement it with what’s already available.
It’s time to call in your best friend, Google.
She’ll get your balance sheets, sales figures, analytics, customer service calls, scientific articles, company histories, and much more. And they’re all there to please you.
Also, online and offline resources like population survey data, white papers, and case studies can give you the pulse of the market.
These are some ways you can structure the data collection for market analysis.
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:
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.
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.
Investigate how the market is moving in order to determine whether it’s a clever idea to invest now or later.
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.
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?
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
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.