What is a market analysis
A market analysis is a tool to understand your customers better. With it, you should be able to learn critical aspects of your target audiences. As an entrepreneur or business owner, you naturally want to know who your buyers are. Yet, there’s also a need for essential details. That includes how much money a target market is willing and able to spend as consumers. It also entails what the competitor environment is like, and many other questions you might be asking yourself at this time. A good market analysis template can help, but we’ll try to address all of those and more as we answer the question of “What’s a market analysis?”
To better define what a market analysis is, consider it a study of how a specific market works. Beyond that, this research needs to help you understand distinct behaviors within a particular industry. Fundamentally, though, a market analysis done right is vital to avoid risks. And it also helps specific pieces of an analyzed sector stand out over others.
Before you engage in producing one of these studies, remember to set a goal for it. Doing so will help gear your search in the direction that best suits you and your company. For example, you might be looking into a new market to evaluate the risk of going into it. That would be different from looking at a market to generate new business opportunities. Or you may solely need it to comprehend your potential consumer behavior. Whatever your reason for a market analysis might be, clarify it even if it’s just for yourself. It’s best to do that before you start one.
There are 4 primary sections to any market analysis, which are:
Let’s now cover these in detail to tackle the question of “What’s a market analysis?”
This section is mainly a description of the target market’s situation. You look into businesses such as yours and determine the trend for it.
This step is important because the better you know the state of the market in which you’ll find yourself operating, the more able you are to determine your strengths, weaknesses, needs, risks, threats, and more. It’s also relevant as it’ll show potential investors that you’ve done a thorough research and that you know the area you’re handling.
Because of the above and to make your research worthwhile, add the size of your chosen industry in this section, its potential for growth, any trends you can identify, and assess its sustainability.
The target market section might sound redundant. Rather than a generalized view, which is your analysis as a whole, this section is all about understanding your potential customers.
For it, you’ll need to find out what their demographics are. To do so, consider your potential consumers’ age, gender, income level, occupation, and other essential characteristics. Think about what makes them who they are and why they stand out in their behavior for you in some way.
Could you get to know what they like and dislike? Know their passions as much as distastes. What they connect to and that from which they deviate. Then, couple these facts with knowledge on how much they’re willing to spend on a product or service, yours especially.
Something to remember here is that you might have several target markets at once. If that’s the case, then you need to go into what’s called market segmentation.
Briefly, a segmentation of a market is a process through which you’ll be dividing your potential consumer into segments or groups. And that division happens based on your clients’ diverse traits.
As we said, a target market can consist of people who have different characteristics. For it, you need to group those who are most likely to respond in a similar way to specific marketing strategies. These should be groups of people who share interests, needs, or locations, for example.
Also, keep a constant eye on your target market, as it might evolve with time. That’s why it’s always a good idea to revisit this every so often.
A tremendous competitive analysis sheds a bright light on competitors’ disadvantages. That should work to your advantage, and it should be of use to your business and your products.
Answer questions here through the analysis that confidently tell you, for example, how soon you should enter the market. It should also respond with information on those who offer similar products. And you should be able to find out what your competitors do very well.
Main aspects to include here are:
All of these categories will be vital to help you be as successful as possible.
The forecast or projections section is relevant, but it might not always be the most accurate. Go for your most educated guess possible.
At this point, you want to think about pricing. In that sense, remember that high prices should equal high quality during the entire sales experience you’re giving your customers.
Be realistic, yet don’t sell yourself short. Especially whenever you estimate your market share.
The best way to get valuable information is to go straight to the most relevant variable of this scrutiny, which is your customers.
In trying to answer “What’s a market analysis?” take into account that there are many ways you can gather said data. However, your sources for it need to be the most accurate and reliable for a successful exercise.
Check the census bureau, the U.S. Small Business Administration (SBA), or similar entities in your location. If you’re out of the US, there should be similar organizations to scout and ask.
Rely on trade journal articles for reliable sources, for example. All in all, the goal of your market analysis is to keep an eye on any blind spots and to be well-prepared.
Business presentation templates are tools that should make life easier for those needing to create a business presentation.
We recommend that you rely on an existing market analysis template for this particular topic on which we’re wrapping up. Not only do templates give you structure, but they also speed up what you need to achieve.
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This is a functional model you can use to create your own formulas and project your potential business growth. Instructions on how to use it are on the front page.