What is Market Analysis?

A market analysis is a thorough evaluation of the target market for your company as well as the competitive environment in a certain industry. This analysis will help you predict the level of success you will experience when you showcase your brand and its products to customers in the market. 

Quantitative information about the size of the market you really want to deliver, prices consumers are ready to pay, revenue estimates, and qualitative information about the values, preferences, and purchasing intentions of customers are all included in a market analysis.

Your market analysis should reveal the following:

• Who your intended customers are
• Where, why, and how they purchase.
• The size of your target market.
• The amount of money customers are prepared to spend on your goods.
• The advantages and disadvantages of your rivals.

Synonyms of market analysis

• Market Evaluation
• Industry Assessment
• Market Research
• Market Study
• Competitive Analysis

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How to do a Market Analysis

This section covers the six basic steps of market analysis, along with the reasons behind each one and some questions to help you focus your research:

1. Research Your Industry

The main objective of market analysis is to understand your industry at large so that you can know how to enter it, spot trends, and compete with other brands.

Here are some key questions to get you started:

• How many companies are in this sector?
• What is the size of the market in terms of prospective clients?
• How much revenue is made in this industry?
• What industry standards apply to the way companies and customers conduct business?
• What outside variables, such as new laws and regulations, global events, economic and social development, and new technology, have an impact on how enterprises in this industry operate?
• In what aspects of the industry do you see room for innovation?

2. Investigate the Competitive Landscape

In order to attract potential customers in your target market, you will need to look closely at the brands you will be up against. Investigating your competition is another part of the market analysis process.

Here are the key questions to guide your process:

• Which companies in your sector are the most well-known? Who attracts more customers and establishes the trends?
• What are the value propositions, offers, and price points of these brands?
• Which platforms, technology, and sales strategies do these companies employ to build a customer journey?
• How do these companies engage and educate their audiences through content?
• What can you learn about these brands from consumer reviews? 

3. Identify market gaps

Market analysis helps you gain an understanding of how rival companies perform. By doing this, you can identify opportunities in the market, set yourself apart with your offerings, and become a leader in your field. Needs that the current brands aren't meeting are known as market gaps.  

Here are some key market analysis questions to help you identify gaps in the market:

• What effects will external factors like social change and new regulations have on the development of products and services, in accordance with the findings of your industry research?
• “What do you want or need that you currently can't find?” is a direct question to ask customers.
• In what ways do the goods and services offered by rivals fall short?
• With your skills and experience, how would you be able to produce better goods and services?

4. Define Your Target Market

You should be very particular about the type of clients you want. Identify the qualities that make a certain customer more likely to buy goods and services from you when defining your target market. Market analysis helps you discover your target audience.

These questions will help you do that:

• Which particular market sector within your industry can you effectively target in terms of potential customers?
• In terms of psychographics (beliefs, values, goals, lifestyle, etc.) and demographics (age, ethnicity, income, location, etc.), how would you characterise this group?
• How do they conduct their lives every day?
• What issues and difficulties do they face?
• What terms, expressions, notions, and ideas do customers in your target market use when interacting with your competitors or posting on social media to explain these issues?
• What characteristics and advantages do your offers have, and how will they meet the needs of your target market?
• Which marketing themes can you employ to show empathy and compassion while appealing to this target audience?

5. Identify Barriers to Entry

You must have a thorough understanding of the things that could hinder you from successfully entering the market. That is also a part of market analysis. Doing this will allow you to come up with a plan to deal with the potential obstacles. 

To identify access barriers, consider the following important questions:

• How much did it cost to launch your company's product development, technology, suppliers, patents, and certifications?
• Which legal obligations must you meet before launching?
• Which governmental, financial, and societal aspects might influence how clients behave and whether they buy your products?
• To gain the loyalty of their customers, how much do your leading competitors spend on advertising?
• What actions will be necessary to position your products as superior options in relation to value, cost, and simplicity of purchase? 

6. Create a Sales Forecast

Sales forecasting is the practice of projecting future sales. Making predictions for definite time intervals, such as the next three, six, or year, might prove beneficial. It allows you to make confident business judgments or obtain money from lenders and investors. 

Answer the following market analysis questions to create a sales forecast:

• Which goods and services are you planning to offer?
• Taking into account the size of your market and the habits of your intended audience, how many units do you anticipate selling in each increment of time?
• Which costs will you put on each good or service?
• How much does each offering's production and advertising cost?  

Calculate your sales forecast using this formula:

(No. of units to sell x price for each unit) – (cost per unit x No. of units) = sales forecast.