Market analysis is the process of evaluating a product, service or industry to understand trends, competitive conditions and consumer behavior. Market analysis helps a business create and implement marketing strategies and gain competitive advantage.
For example, before launching a new product, a company may conduct market research to understand potential customers’ opinions, preferences and buying tendencies. This way, it can optimize the product and target the target audience more effectively.
What to Consider in the Market Analysis Process?
During the analysis process, many different factors and criteria are taken into account and included in the planning. The analysis is as important as the product or service to be offered. Some of the elements considered in this analysis are as follows:
Market Size: Market size refers to the total value or volume of a given market in terms of sales, revenues, units sold or other relevant metrics within a defined geographic or sector boundary. Determining market size is crucial for businesses to understand the potential opportunity and scope in a given market.
Growth Trends: Growth trends refer to the growth trends of a market or industry over a given period. These trends usually indicate the rate, momentum or direction of growth over a period. Based on these trends, businesses can shape their strategies, make investment decisions and direct their marketing activities.
SWOT Analysis: SWOT analysis provides guidance in strategic planning by assessing the strengths and weaknesses of the business, opportunities and threats in the external environment. This analysis can help the business identify competitive advantages, reduce risks and maximize strengths.
Target Customer Segments: Customer segment refers to focusing on specific groups of a market. These groups may have specific characteristics, needs or priorities. By identifying different customer segments, a business can offer customized products or services to meet the unique needs of each segment. Customer segmentation makes marketing strategies more effective because a customized approach can be offered based on the specific needs and preferences of each segment. This can help businesses increase customer satisfaction, improve products/services and increase market share.
Competitive Analysis: Competitive analysis is an assessment process to understand a business’s own market position, its competitors and the competitive environment in the industry. This analysis helps businesses understand their strengths and weaknesses, competitors’ strategies and the overall dynamics of the market. Competitive analysis guides businesses in making strategic decisions and identifying their competitive advantages.
Marketing Channels: Marketing channels are the different ways or methods a business uses to deliver its products or services to customers. These channels are used for the sale, distribution, promotion and customer communication of products. Each business can use different marketing channels or a combination of them to market its products or services in the best way. Determining which channels to use depends on factors such as target customer base, product characteristics, budget, marketing strategy and industry dynamics. Choosing the right marketing channels enables businesses to reach customers more effectively, increase sales and expand market share.
What are the Benefits of Market Analysis?
Market analysis, where results are obtained for understanding the targeted market and competitive advantage, provides important information for all businesses that are new to the sector or already in the sector. The information obtained as a result of the analysis includes critical directions in the positioning of the brand, product or service. In line with this guidance, companies can predict opportunities and casualties and take measures to address them before they even start.
We can summarize some of the benefits of market analysis as follows:
Understanding Customer Needs: Market analysis provides profound information about customer segmentation and needs. Thus, businesses can gain a competitive advantage by developing products or services in line with customer expectations. Understanding consumer behavior, their needs, preferences, and buying habits is fundamental to marketing strategies. Market analysis provides businesses with this information, enabling them to offer their products or services more relevantly.
Competitor Analysis: Market analysis is used to understand competitors’ strategies, market shares, products, and pricing. In this way, businesses can identify their competitive advantages and compete more effectively against their competitors.
Identifying Opportunities and Threats: Market analysis identifies opportunities and threats. Businesses can discover new market segments, focus on new product or service opportunities, or anticipate potential risks. This helps the business to set its goals and create a strategic roadmap. This analysis enables businesses to make more informed decisions by identifying their strengths and weaknesses, market opportunities, and threats.
Providing a Basis for Strategic Planning: Market analysis helps businesses shape their strategic plans. These analyses provide the basis for determining marketing strategies, product development processes, and marketing channels. The market analysis serves as a guide in determining marketing strategies such as product introduction, pricing, distribution, and promotion. When the right strategies are identified, it becomes more likely to attract and influence consumers.
Providing Support in Decision Making: Market analysis enables businesses to make data-driven decisions in their decision-making processes. These analyses help to make more accurate decisions by evaluating the effects of internal and external factors. Market analysis helps to predict market variability, trends and potential risks. This allows businesses to minimize their risks and react faster to market changes.
Gaining Competitive Advantages: Market analysis helps businesses identify their competitive advantages. In this way, businesses can emphasize their strengths and become more competitive in the market. Analyzing the situation of competitors and their position in the market helps businesses determine their own competitive strategies.
How to Conduct Market Analysis?
The analysis, which helps to recognize the market and understand customer needs, is completed by following certain steps in sequence. These steps contain results that will affect both the overall analysis and the next step.
The following steps can be considered for conducting market analysis:
- Identify Purpose: Clarify the purpose of the analysis. Determine which questions you want to answer and which information you need.
- Defining the Market: Define the market you are interested in. Take an overview to understand the key characteristics of the market, such as its size, segments, growth potential, etc.
- Data Collection: Collect the data you need. This includes obtaining information from sources such as market reports, industry data, consumer surveys, competitor analysis, etc.
- Competitor Analysis: Conduct competitor analysis to determine market share, strategies, strengths, and weaknesses.
- Consumer Analysis: Gather information on demographics, consumer behavior, preferences, needs and preferences to understand your target audience.
- SWOT Analysis: Identify the strengths and weaknesses of your business, and the opportunities and threats of the market.
- Review Trends and Changes: Analyze changing trends in the market, technology, and changes in consumer behavior.
- Analyze and Interpret: Analyze the collected data, interpret trends, and make your conclusions. At this stage, you can understand where the market is, where it is going, and where your business is positioned.
- Strategizing: Make strategic decisions based on the results of the analysis. Review or reshape your marketing strategies, product development processes, or operations.
- Regular Updating: Market conditions are constantly changing, so update and re-evaluate the market analysis regularly.
Market analysis may require a combination of both quantitative (numerical data) and qualitative (insightful data) information. This process helps your business gain a competitive advantage in the market and create strategies for long-term success.