What is market analysis and how do you conduct it?

by | Nov 8, 2023 | Market Research

What is market analysis & how do you conduct it?

Go from blind-folded to starry-eyed

Astronomy is interesting. Although it covers everything beyond the Earth’s atmosphere, it also bursts the romanticised bubble of stars.

Sure, they’re pretty and sparkly. Some even shoot across the horizon, initiating involuntary wish-making. But in reality, stars are luminous celestial objects composed mainly of hydrogen and helium and they emit light and heat through nuclear reactions in their cores. That’s an unromantic mouthful, isn’t it?

Point is, humans tend to euphemise complicated concepts and shrug them off as luxurious, irrelevant, or insignificant. We do this with environmental degradation, using terms like “sustainability concerns” to describe deforestation, pollution, and habitat loss.

Many business owners and leaders do the same thing with market analysis, regarding it as an expensive, time-consuming, and optional marketing tool when it’s actually a critical part of understanding your market.

If you don’t understand your market, how will you know if your product, strategy, or brand is viable?


What is market analysis?

Market analysis is a specific type of data analysis that focuses on the trends, customers, competitors, and opportunities in a particular industry or market segment. It’s a detailed assessment of your business’s target market and competitive landscape, giving you a projection of the expected success when introducing your brand and products to consumers.

The process usually involves qualitative methods, like surveys, interviews, focus groups, and observation, to collect data from customers and competitors.

Market analysis aims to get insights and recommendations for marketing strategies, product development, pricing, promotion, and distribution.


Why is market analysis important?

It helps you to:

  • Segment your market and target your ideal customers based on their needs, preferences, and behaviour.
  • Differentiate your products or services from your competitors and position your brand in a way that appeals to your customers.
  • Evaluate the demand, supply, and pricing of your products or services and optimise your marketing strategies accordingly.
  • Anticipate and adapt to market changes and challenges.
  • Innovate or improve offerings based on customer feedback and market gaps.

In other words, without market analysis, you’re entering the market blind-folded.


How to conduct market analysis

In other words, without market analysis, you’re entering the market blind-folded.

  1. What’s your goal? Do you want to understand customer behaviour, assess competitors, or find new growth opportunities? You must understand the point you’re trying to prove, disprove, or explore. Astronomers don’t just look at a star and say, “Yup, that’s another one,” and draw another tally mark. They choose specific celestial objects and study them meticulously.
  2. Get the data Get it, and make it relevant to your goal. Surveys, social media, industry reports, and government data can help you to understand market trends, consumer demographics, competitor information, and historical information.
  3. Segment your market Did you know that although stars look like sparkly dots, they vary in size, colour, brightness, temperature, and lifespan? Same goes for your customers and market. Divide your market into segments to focus on specific customer groups or geographical areas where new opportunities go to hide.
  4. Analyse competitors Believe it or not, the sun has a lot of competition. Stars may be millions of kilometres away, but they’re there and play a significant part in our solar system. Study your competitors and examine their strengths, weaknesses, market share, product offerings, and customer base.
  5. Identify patterns Astronomers constantly monitor the sky for signs of asteroids and comets, using historical data and science to measure the likelihood and impact of them hitting the Earth. Analysing customer behaviours, market fluctuations, and emerging trends can help you to anticipate changes, make informed decisions, and prepare for a market asteroid.
  6. Put blood, SWOT, and tears into it Dad jokes aside, a SWOT analysis (strengths, weaknesses, opportunities, and threats) categorises internal and external factors affecting your business. It provides a comprehensive view of your market dynamics, allowing you to be more adaptable and flexible to changes.
  7. Inform your decisions Astronomers don’t thumb-suck studies; they use their observations to plan future research. Use your data analysis to your advantage and adjust your marketing strategies, products, and expansion plans based on the data.
  8. Monitor, adapt, and repeat The solar system changes constantly – and so does the market. Regularly monitor your industry and revisit your analysis so you can adapt when new stars (opportunities) and meteor showers (threats) emerge.


Don’t forget about pricing and forecasting

Best price, happy customer. Base your pricing on the value you provide, the cost you incur, and the demand you face. You’ll also want to project the expected sales volume and revenue over time.

Pricing techniques include:

  • Cost-based: Production cost plus your desired profit margin
  • Value-based: The perceived value of the product or service to customers
  • Competition-based: Looking over the fence and doing it better
  • Demand-based: Considering the demand and elasticity of the offerings

Sales forecasting methods include:

  • Historical data: Using past sales data to project future sales
  • Trend analysis: Relying on stats to identify patterns
  • Market search: Conducting surveys, interviews, or experiments to estimate customer demand
  • Expert opinions: Asking industry analysts, consultants, or salespeople to take a guess

Not Galileo? Neither are we. But at InteractRDT we do know a lot about market and data analysis. Give us a call.

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