Market analysis is the method of tracking down information about your industry, niche, customers, and competitors in the same trade your business operates.
While it usually takes part of your business plan, a market analysis can be conducted on an ongoing basis to help small business owners make smart decisions, justify risks, and strategies to grow the trade.
Why you should write a market analysis
Small business owners often find the analysis ideal for huge companies because of the resources and stiff competition in the industry they find themselves in. However, a market analysis should be taken by all businesses despite their size. Even freelancers make a market analysis of their services and reach.
Spot your SWOT
A market analysis allows you to spot your strengths, weaknesses, opportunities, and threats (SWOT). Out of your SWOT analysis, you can make intelligent strategies on how to curb your losses with your business strengths. A SWOT analysis will also predict foreseeable trends and how to adapt to it.
If you see your income dripping or seeing your physical store closing soon, you can mitigate the risks by analyzing which factors in the market that led to it and prevents it from happening. Is there a surge of online shoppers and mobile users? Will you move your store online?
Plan your yearly objectives
You get to early plan your marketing strategy for the whole year (or up to five years) and make necessary adjustments if there’s a change in the market. Creating plans and contingencies help you achieve your marketing goals.
Define and refine your market
Your business should deliver its products and services according to customers’ needs at high-quality. This can be done by identifying, defining, and refining who these customers are and realistic assessment whether they’ll transact effectively in the market.
Know your competitors
Competitor analysis studies your rival’s marketing tactics, operations, and more. It lets you predict their activities enough to expect their actions and stay ahead of them. A market study can show potential competitors in line with your industry. This is to say that competitor analysis is a huge part of your market studies.
Components of a market analysis
A market analysis is a blueprint of your marketing studies that provide concrete evidence of opportunities, earnings, and risks your business can make. It also serves as a foundation to which your strategies will refer to. Often, market analysis deals with factors such as:
Industrial and environmental factors
These factors assess the industry and environmental conditions your business finds it in. Examples of these kinds of factors encompass political environment (business laws, foreign policy, etc.), economic environment (economic situation, economic policies, capital market, production, manufacturing, suppliers, retailers, business cycles, etc.), sociological factors (culture, labor, business operation, etc.), technological factors (use of equipment, research, and development, plant and production, etc.), and the legal environment (business and tax laws).
A customer analysis shows who your potential customers are, those who are loyal to your brand, and those who are simply interested in your brand waiting to purchase from you. Do you know your customers? Probably, not as well as you should have – if you’re like the rest of us. Customer personas help you get a better sense of your prospects. This makes it possible for you to adjust your marketing plans to various consumers with specific needs.
Competitor analysis is a method in which your business considers the strengths, weaknesses, opportunities, and threats of your competitor. Every day, huge companies are gathering data from their competitors. But the method is not recognized by small business owners as a profitable assessment. With competitive analysis, you can spot industry trends, study competitor’s audience, learn from competitor’s failures, and find potential partnerships.
How to do a market analysis
There are various formats to organize your analysis, and it’s all up to you. Many businesses often have a market study every 6 months, 3 months, or as short as two weeks. Not all of them follow the traditional format. As long as you include important facets and information on your business, you can have an outline that works for you.
For us, this is how we do our market analysis. You can try to follow our steps in getting a study done within your industry.
Define your objectives
Define a concrete reason to execute a market stud. For instance, you might want to create an analysis for industry opportunities, customer retargeting, or strategy review. Analyzing past failures or success allows you to generate action steps viable for your situation.
Look at real-time industry trends, data, and outlooks
For your market analysis, take account of where the industry is at the moment and where it’s heading. What are the trends in the industry? Is it going green, digital, or cashless? Make sure to have pertinent research, studies, and data to back up your insights.
Target market and the market in need
When creating a target market in mind, it pays to create a customer persona. Customer personas help you get a better sense of your prospects. This makes it possible for you to adjust your marketing plans to various consumers with specific needs. For instance, what are your consumer’s history, background, and experiences? It is crucial to acquire a comprehensive knowledge of your best customers and what makes them tick even if you start with a hypothetical guess.
Make a competitive analysis
Competitor analysis studies your rival’s marketing tactics, operations, and more. It lets you predict their activities enough to expect their actions and stay ahead of them. There’s nothing wrong taking a peek over your competitor’s activities. After all, you want to know what ticks your potential customers’ likes and dislikes. A little competition is good – unless you copied their exact marketing science and get framed for it.
Create a SWOT analysis
SWOT means Strengths, Weaknesses (internal factors), Opportunities, and Threats (external factors), and is used to assess business operatives. With SWOT, you get to understand how your strengths can combat threats. Also, you need to learn how you can do with your weaknesses and failings and learn from them.
Create a plan
After analyzing your market, create a plan that aligns with your objective in making market analysis. PurpleCow digital marketing has a range of articles to guide you when making a marketing plan. Take into mind that a lot of research should be done to understand your marketing industry.