Market analysis is the cornerstone of any business plan. It allows you to understand the potential of a market and guide your roadmap to capture the best opportunities. In short, it tells you where to play, and how to win.
A market analysis helps you prepare strategies for your product or brand, know how much you could sell, who your competitors will be and where you should position your brand.
3 Easy Steps to Do A Market Analysis
To do a simple yet effective market analysis you can start by answering these questions which can give you a better understanding of the market potential.
These three components provide a good first step to understand your target market.
To estimate the size of the opportunity, you want to know how big your market is and even more important, how much it will grow in the next couple of years. Answers to the following questions are key.
- What is the market size? Is your business within the multimillion-dollar industry or is the market size limited for some reason?
- Are sales in your market rapidly growing or are they declining?
To learn who the current players in the market are, you need to research your competitors. Companies always want to increase their market share so they are all competing for a bigger piece of the pie.
Some things you will want to know about your competitors are:
- Who they are and how many there are?
- What are their strategies?
- What is their positioning?
- How is their portfolio different from yours?
- How are they performing in terms of sales?
Where are your customers and where do they buy?
Understanding how consumers buy your product or service will help inform your strategy. Are they going to supermarkets, specialty stores or are they buying online?
In today's world, consumers want instant gratification. If your product or service is not easily available they will never buy it.
On the other hand, you might want more reach and be present on many channels, or you might be a niche brand that will perform better in specific channels.
Where to start?
These questions are important because they can help you avoid costly mistakes and make sure you are pursuing a good opportunity. They will help you find the best strategies for your company.
Remember, market analysis helps you define where to play and how to win. In today's market place everyone wants to grow. Give yourself the best possible advantage by completely understanding your target market.