During the Market Research phase, you gathered facts. During the Market Analysis phase, you will analyze those facts to understand better your customers, competition, and industry you operate in.
When conducting a market analysis, you should cover the following three angles:
- Industry analysis to assess the general industry environment in which you compete
- Target market analysis to identify and quantify the customers that you will be targeting for sales.
- Competitive analysis to identify your competitors and analyze their strengths and weaknesses.
Conducting an industry analysis is usually easy because market reports for industries are readily available on the Web. Find out the industry’s size, how it is segmented, and who the big players are.
Three commonly used methods for performing industry analysis are:
– Competitive Forces Model (Porter’s 5 Forces)
– Broad Factors Analysis (PEST Analysis)
– SWOT Analysis
To find out more on each of the three above methods, read our Industry Analysis post.
Target Market Analysis
No one can afford to market to everyone. Defining a target market allows you to focus your marketing dollars on the market that is the most likely to buy from you.
Your target market analysis should answer who, what, when, where, why, and how. Find out who your potential customers are by defining their age, gender, ethnic background, education, occupations, and income levels. What are their lifestyles, attitudes, interests, hobbies, aspirations, and needs? When are they going to buy in terms of seasons, days, or hours? Where do your potential customers live, work, shop, hang out? Why would they purchase from you rather than the competitors? How do they search, find, select and buy?
You must get a comprehensive understanding of where you are positioned within the competitive landscape.
Who are your direct competitors?
What is their market share?
What are their strengths and weaknesses?
Who are your indirect competitors?
What products and services do they offer?
How do they market their products?
How do they price their products and services?
Where do they stand in terms of the use of technology?
What are they doing right?
What other products and services can be substituted for yours?
Where will you position yourself in terms of size, price, quality, or other? What makes you unique?
A good article on competitive analysis can be found at https://blog.hubspot.com/marketing/competitive-analysis-kit.