Market Analysis in Seven Easy Steps
The critical sources have misguided large numbers of people with real insights of market analysis. Market Analysis is a term we use to analyse market on different factors. These are those factors which directly or indirectly influence the market.
Several market factors are key areas for product sales, business growth, profitability and expansion.
First of all, let us understand that the whole market does not comprise the target audience. So in order to be more strategic with our goals, we need to be more specific with our target audience.
In this blog we will see the important market factors which can make or break a business. So before moving ahead I would like to share short information with you.
There is multiple market factors involved in business. And here we are considering those factors which apply to every business.
Market Analysis is also done for different specific goals and each considers different factors. But here we have a common specific goal so we will consider the general marketing factors.
Here are these factors to address the market consideration of every business:
-Identify Your Target Customer
-Divide Market Into Segments
-What Influences Your Target Customer?
-Market Pricing – Effective Pricing
-Channelize Your Distribution Model
-Identify and Analyze Your Matket Competition
Identify Your Target Customer
As we talked before that the whole market may not be our target audience. So let’s go in deep to understand much about your target audience.
-Target customers are those specific audiences we have to pay attention and connect them with our business.
-Every character, behaviour, lifestyle of our target audience will have impact on our products.
-As business deals with multiple products, so it is important to identify the niche market for every specific product.
-While identifying your potential market, you will be able to create best product according to their lifestyle and traits.
Divide Market Into Segments
Markets are very large and complex. Why not divide it into small segments?
We will be able to differ out our target audience from complex market by dividing them into segments.
The major points to divide market into different segments are:
-On the Basis of Demographic Segmentation:
-Whether your target audience is a newbie, a kid, a teenager, or a young man?
-Are you targeting school students or the professionals? What will the occupation of your target audience?
Demographic factors relates to the different structure of populations. It also includes religious beliefs, family status, income, gender and more related terms.
-On the Basis of Geographical Segmentation:
Which location are you going to target?
At what level are you planning to circulate your business? Are you going to operation in whole country, or in multiple states or specific state?
The geographical segmentation is linked to the geographical factors such as city, state, country, climate, and population density.
-On the basis of Psychographic Segmentation:
Psychographic segmentation relates to psychological factors which predict the behaviour of a customer.
It includes factors such as such as lifestyle, attitude, beliefs, and interests.
-On the basis of Behavioural Segmentation:
Many customers are more elastic to changes in product prices. On the other hand, there are people who value brand loyalty and quality more than price.
There are people who purchase on special occasions only. Whereas there are people who purchase items regularly.
Behavioural segmentation deals with the buying behaviour or habits of customers.
What Influences Your Target Customer?
Figure out what are the factors which influences your target customer? What makes them buy their product?
-Is it the income which motivates them to purchase products?
-Is it the increase in technological development which creates a new demand?
Example: People are crazy about new gadgets. They try to buy as soon as they can. Many ecommerce brands launch pre-marketing and pre-booking campaign to target customers.
-Societal Status: Many people buy products to maintain social status. They may not require it but purchase it to maintain social status.
-Is it the quality which matters them the most? Or is the pricing which attracts the customers?
There are many more driving factors which can influence your customers. While knowing about these factors you will be able to create an effective marketing strategy.
Market Pricing - Effective Pricing
How to price your products?
-The product prices must be considered keeping in mind the market pricing. In a dense and competitive market, we cannot decide the price of products.
So we need to depend upon the usual market price.
Other than the market pricing, we need to consider these two factors:
The purchasing capacity of the target audience: What’s the income of our target audience?
The willingness to purchase: How much a customer is willing to invest to buy such products?
What values the product adds in your target audience: People pay for the values they get! So consider pricing your products in terms of values you deliver.
Channelize Your Distribution Model
How to deliver your product to the target customers? What are the effective ways to channelize your products?
-Think how and where you will market your products? Identify how your target customers are purchasing the similar products?
-Are they visiting the stores to buy the products? Or purchasing it online?
Example: People are more comfortable to purchase book online than visiting a bookstores. But the same doesn’t apply to electric products.
Many people want to check the products on store before making a purchase. So they are more comfortable in buying it from physical stores.
-If you are getting more probabilities of online customers, then switch your business online.
-Online Distribution will be easier than online distribution. If you are getting heavy orders from particular site, then consider shipping your products to their store hubs. Like Amazon Fulfilment Centres. The orders will get shipped directly and you don’t have to worry about it.
-If you are using offline distribution, then consider offering distribution rights to popular store of an area. This will make your products more available regionally with less cost.
Identify and analyse your market competition
A market competition is also one of the most important market factors. This may largely impact your product sales and business growth.
-When you analyse your competitor, you become able to deal with them using the right strategies.
Here is what I’ll suggest you to do:
-Identify your top competitors at different levels. If you are dealing at regional level, then consider focusing much on regional level competitors.
-If you are expanding your services in whole country then focus on country level competitors as whole.
-Do SWOT Analysis of your business as well as of your competitors.
Sometimes laws make difficulty of entries in some industries. There are many different legal processes to set up different business.
Setting up a website development companies is much easier than setting up a restaurant.
There is no exclusive registration to set up a website development company. You just gave to register your company and apply for various taxes related registrations.
But what if you have to set up a restaurant?
Here are legal requirements for setting up a restaurant:
-Register your company
-Complete all the tax related registration
-Register your trademark
-Get certificate from Fire Safety Officer. You need to follow the fire safety guidelines before applying.
-You must want to play some music to make a best environment for customers. So you need to obtain “Music Rights License” for the same.
-You have to obtain acceptance from the local Mayor or Municipality Department for setting up your restaurant.
+other legal requirements for partnership, building, and more
There are other business areas too which are more difficult to operation. Setting up a Pharmaceuticals business is also a complex process. So figure out the legal requirements which fall in your business. Also consider the costs to obtain such licenses.
So finally we have figured out how to do market analysis. If you have anything to share, you can let me know in the comment section.
A management enthusiast, an avid reader and a traveller. The world is a beautiful place so I keep travelling, spending time between nature, on the riverside and gaining new experiences.