Our Black Friday Sale is now live until Wednesday 30th November 2022! Apply a 15% discount to your cart in Store using promotional code: EBLACKFR22

Market Research In Action Learn methods and best practices to maximise your market research portfolio. See how our clients leverage our insights, read up on mistakes to avoid and discover tips to find the right combination of research methodologies and applications.

8 Ways to Identify Market Opportunities for Business Growth

11/22/2022
Andres Chehtman Profile Picture
Andres Chehtman Bio
Share:

Let’s face it. Growing a business is hard. From the pandemic to inflation and war, it’s become more challenging to thrive amid the upheaval.   

What’s clear: your company’s future success depends on your ability to determine which strategies will sustain growth.  

It takes considerable effort. But we’re here to help you get there.  

Before we get started, it’s important for you to have a deep understanding of your company's business direction, resources, strengths and capabilities. Complete visibility is key to making data-driven decisions. Then, you can evaluate the market and assess consumer needs and how they are being met by companies today. 

Now, let’s examine how to analyse these factors to ignite your next growth opportunity. 

Eight Analysis Types to Identify Market Opportunities

1. Consumer segmentation

Divide consumer audiences based on traits they share. This will help you target the right people in the most effective way.  

Consumer segments can be broken down by demographic and geographic variables like age, gender, place of residence, education, occupation and household income. Behavioural variables, such as lifestyle, attitude, values ​​and purchasing motivations can help you tailor your marketing efforts.  

Demographic variables estimate your number of potential customers. For example, a diaper producer will know how many children under three live in a certain country. Behavioural variables pinpoint purchase decision motivations including price, convenience, durability, design and sustainability. 

Demographic segments are constantly evolving. Today, Generation X and millennials are driving the labour force globally. If your business strategy involves targeting specific age groups, for example, it’s critical to tailor your tactics to their different needs. 

How do brands use consumer segmentation to reach new audiences?   

Aguas Danone, a bottled water company in Argentina, was looking for new product ideas to recover lost sales. The company identified two drivers behind non-alcoholic drinks consumption: health and flavour. While bottled water was perceived as healthy, it didn’t offer good taste. Soft drinks and juices tasted good but were perceived as highly caloric. This generated the idea to launch flavoured bottled waters Ser with great success. 

Bolivian dairy brand Delizia launched a Tradición line of limited-edition ice cream flavours that celebrate traditional cuisine. Nostalgia and local traditions motivate Bolivians, which formulated the idea to create a new line of products to target these consumers. 

Organisations that use consumer segmentation to tailor their narratives, marketing and products will sell more effectively.

2. Purchase situation analysis

The buying decision-making process is anything but straightforward. A multitude of factors can impact what, when and where consumers buy. You have to understand your customer’s buying patterns so you can alter your offerings to influence those decisions. Some questions to ask are: 

  • When do people buy our product or service? 
  • Is it when they need it? 
  • Where do people make the purchase? 
  • How do they pay? 

Look at distribution channels and payment methods, among others, to uncover your customer’s buying patterns. This will help you position your product towards their interests.  

Let’s dig into the retail sector as an example. Today, consumers expect speed and convenience. Retailers that understood these new preferences adjusted their business models to attract more customers. With quick commerce, brands started providing delivery in minutes and capitalised on consumers’ impulse purchases to reap the rewards.  

Gopuff, the instant grocery startup, used this trend to grow significantly. The company operates in 900 cities across the US, expanding into the UK in 2021 and France in 2022. 

Fintech players are also appealing to consumers who are strapped for cash. With rising inflation costs, alternative payment options like buy now, pay later are bringing in new revenue streams. Younger consumers have been the primary source of growth so far, but interest from older consumers has been increasing. 

Buying patterns can tell you a lot about your customers. Use this information to meet them where they are.

3. Direct competitor analysis

Direct competitors offer similar products or services. For example, Coca-Cola and Pepsi or Netflix and Hulu.  

Do comprehensive research on where your business stands in the marketplace. And know what other key players are doing to build a powerful competitive edge. Then, find out how they size up against your business.  

Critical questions you must ask are:  

  • Which brands are growing and why? 
  • What is their unique value proposition? 
  • How are they marketing their offerings? 
  • What competitive advantage do we have over them? 

Take IKEA for example. In 2022, they entered a new market, opening their first store in Chile. But before they decided to expand, IKEA did extensive research. Most likely looking at competitors like Sodimac who already had 74 outlets in the country.  

This type of analysis can make or break success. 

4. Indirect competitor analysis

Indirect competitors target a similar audience but sell different products that satisfy the same needs. For example, Coca-Cola and Tropicana or Netflix and Marvel comics.  

Analysing what companies are doing in substitute industries or categories can help improve your offerings and reach new audiences.  

Let’s look at airlines for example. Air carriers may look for opportunities in consumer segments currently supplied by other means of transport. Effective questions to ask are: 

  • How many people travel long-distance on buses and trains? 
  • What are the most in-demand routes? 
  • How much do travellers pay for their tickets? 
  • What is the occupancy rate of long-distance buses and trains? 
  • How can we persuade a current bus or train passenger to travel by plane instead? 

Similarly, producers of chocolate spreads should research sales of jams and honey to have a better notion of their competitive position within the whole sweet spreads market. 

This type of analysis helps establish competitive advantages against indirect competitors and can help businesses tap into a wider customer audience.

5. Complementary product and service analysis

You should monitor the performance of products and services that are complementary to your business.  

For example, sweet spreads and butter brands should analyse market trends in bread and savoury biscuits. And tomato sauce companies should capture data on the pasta market. 

By performing this kind of research, you’ll be able to:  

  • Understand how your customers use your product in conjunction with others 
  • Detect new needs, opportunities and threats 
  • Develop new offerings or redesign your products 
  • Sell more effectively 

Let’s say a company producing alternative fresh ground coffee pods is looking to grow. It’s important to get sales data on pod coffee machines like Nespresso and Dolce Gusto to estimate their own market potential. 

Trends in complementary markets should be considered when making investment decisions. Use this information to guide your product innovation strategy and gain more market share.  

6. Diversification analysis

To diversify or not to diversify, that is the question. 

If your company has reached a high level of maturity in your current market, doing a diversification analysis will help you understand how and where to grow.  But you must have the right skills, resources or business models to successfully expand into new categories. 

Begin by analysing any sectors that could benefit from your offering. Then, understand that industry’s growth potential and the competition. Look at the market sizes, shares, growth rates, unit prices, per capita sales and brand positioning. And ask these important questions before making the decision. 

  • Do you have the capacity and tools to diversify? 
  • Do you have applicable resources in other industries and could gain economies of scale? 
  • Will diversifying dilute your brand reputation? Should you use a new brand in the new industry? 
  • Do the potential financial benefits outweigh the risks? 

Take British investment firm easyGroup for example. The firm uses a diversification strategy for long-term business growth, extending the “easy” business model. easyGroup first created easyJet, a low-cost air carrier. But has now extended its business model across various other industries like FMCG, entertainment, e-commerce and technology. And in some cases, even created competition for easyJet by developing easyBus and easyCar. This gives consumers various options to travel while bringing in new revenue streams.  

Diversification is a high-risk business development strategy. But when it’s done successfully, it brings in more customers, income security and consistent demand.  

7. Foreign market analysis 

If your company operates in a mature or saturated market, exploring other countries could help you achieve your financial goals. 

Markets in different countries grow at different paces due to disparities in economic development and local habits. Knowing the evolution of per capita consumption of a given product in each country can serve as an indicator of the maturity of the product's life cycle. Understanding the size of the market and its competitors will help estimate the business potential. 

You should also investigate consumption habits in more developed countries. For example: 

  • What is the percentage of people who use a smartphone to pay for their purchases? 
  • What is the market share of private labels in a certain industry? 

These questions can help indicate the potential of your product or service in your own country. On the other hand, it may lead to innovation in your current market. 

8. Environmental analysis

Don’t forget to analyse external factors that could impact your business. This includes economic situations, geopolitical events, changes in regulations, technological and scientific developments and environmental factors like climate change. Paying attention to these elements will help you assess market attractiveness and create winning strategies. 

Take robotics and automation for example. These technologies are disrupting markets while becoming more affordable and widely used. Companies like Google, Microsoft and Nike invested in these uncharted areas with innovative business models. But it’s not just these big brands looking into this opportunity. In fact, 42% of businesses globally said they plan to invest in robotics and automation in 2022. 

Scientific developments may bring new competitors. In 2020, Singapore became the first country to allow sales of cell-cultured meat. The likelihood of further markets joining suit has intensified since then, as has the activity of major meat companies in the space. Cell-cultured meat is likely to be a significant part of future diets. 

Changes in a country's regulatory framework can impact your business too. But those that stay ahead of these threats, can turn them into effective new ways of working. For example, Latin American governments started requiring companies to include black labels on product packaging when it has high amounts of calories, sodium, sugar and saturated fats. While this may be a headache for some food and beverage brands, players that use it as an opportunity to invest in healthier alternatives could reap the rewards.  

In times of high inflation, monitoring the market can help you redefine your pricing strategy. For example, price increases of sunflower oil were much higher than increases in prices of other types of edible oils in 2022. This forces companies that use sunflower oil to make a choice – either switch to an alternative oil or increase the price of their product to strengthen profit margins. 

Doing this type of analysis should be ongoing. Situational factors change every day. But this research will help you stay resilient amidst volatility. 

Next steps 

Using a variety of analyses will help your business gain a holistic view of opportunities and create long-term strategic business plans.  

Once you identify an opportunity, quickly develop a value proposition, plan the commercialisation chain and estimate costs, revenues, cash flows and financing needs.  

Remember: not all market opportunities identified will succeed. That’s why successful companies invest in different types of research and analysis before moving into a new market and making changes to a product.  

To minimise the costs of failed opportunities, test your new product, service or business model in controlled areas. But, there are some risks to pilot testing because it alerts the competition about your strategy. Remember, the risk must outweigh the cost of failing on a global scale.  

Now, are you ready to spot your next market opportunity? We’ve got you covered. Our global team of analysts can provide insights to guide your business strategy. Chat with one of our experts to learn more.  

Editor’s note: This article was originally published in June 2017 and has been updated. 

See Passport in Action

Interested in more insights? Subscribe to our content

Latest Insights

Top 5 Product Innovation Mistakes to Avoid

Alison Angus 15 November 2022

Building a Sustainable Strategy: A Guide for Business Leaders

Euromonitor International 14 November 2022

The Value of Trust in a Brand

Euromonitor International 10 November 2022

Shop Our Reports

Consumer Health in India

During the initial months of 2022, India experienced a third wave of COVID-19, which nonetheless, was less severe than other previous waves in the country.…

View Report

Beiersdorf AG in Beauty and Personal Care

Beiersdorf AG is a German multinational manufacturer with a well-established global presence across various beauty and personal care segments. Western Europe…

View Report

Vitamins and Dietary Supplements in Latin America

Sales in Latin America went into decline in real value terms in 2022, although this was understandable, given the strong growth seen during the pandemic,…

View Report
Passport Our premier global market research database with detailed data and analysis on industries, companies, economies and consumers. Track existing and future opportunities to support critical decision-making across all functions within your organisation Learn More