‘indeed 2 Career Guide ~ Career development > How To Do A Market Analysis in 7 Steps (With Tips) How To Do A Market Analysis in 7 Steps (With Tips) By Indeed Editorial Team Updated December 14, 2022 Published March 9, 2021 The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and Insights to deliver useful tis to help guide your career journey o Building a business plan is crucial for companies in any industry and an accurate market analysis is a key component of that plan, Market analyses can keep companies competitive and profitable by helping them create a strategy for growth through research and planning, When you use the results of an analysis, you can reduce risk, show expertise in a certain market and strengthen a company's financial standpoint. In this article, we discuss what a market analysis is and how it can benefit a company, and we explain how to do a market analysis to help you grow your business,Get the latest trending stories, job search tips, career advice and more Subscribe What is a market analysis? Market analysis is a quantitative and qualitative appraisal of a particular market and determines the viability ofa business or product. I's a worthwhile exercise that gathers detailed information about an industry, including its size and value, customers and their buying patterns and competitors and their offerings, You can determine strengths and weaknesses or opportunities and hazards through market analysis, and it's a way to get clarity about a product, company or industry to make informed decisions. Here are some questions to consider when building your market analysis + Who are my potential customers for this product or service? + What ae the shopping and buying habits of these customers? + How much are potential customers willing to pay for this product or service? # How big is my target market?+ What is my direct and indirect competition? + What are the strengths and weaknesses of my competition? Depending on the size of a business, a company may choose to conduct market analysis on its own or hire a firm with experience in the field to conduct the research. Related: What Is a Market Analysis? @ Benefits of a market analysis There are many benefits of doing market analysis in business, whether you'e starting a new company, looking to grow an existing one and enter additional markets or introducing another product to your inventory. Overall, market analysis can forecast how a product or company may perform and guides short- and long-term business decisions. Market analysis can also help a company: + Develop a viable product or service: Market research and analysis can help you figure out what customers want, and you can shape your product or service to match market demands. For example, a painting company may discover more of its customers want interior painting services than exterior and focus their advertisements intentionally. + Provide a solution: Market analysis can be a smart way to learn the problems facing a customer base and then create a solution. For example, a plumbing manufacturing company learns many customers get clogged drains, soit designs a dualfunction drain stop and hair catcher for everyday use in bathroom sinks. + Save time and resources: You can save time, energy and resources by planning out a product, service and strategy using Insights from market analysis rather than manufacturing a device before knowing if it's something customers want. + Set accurate pricing: Market analysis can help determine the right price point for an item. For example, a winery finds that more customers buy multiple bottles of wine when listed for under $10 rather than its initial $12 price. + Defeat the competition: Market analysis can clarify what makes a company different fram the competition to attract customers and sales. For example, an auto repair shop may draw more business by offering free loaner vehicles tocustomers for use while doing service repairs. + Reduce risks: Understanding market research and analysis can help give a company insight into customers and industry conditions to reduce risks, including financial losses from production or manufacturing costs, advertising or misconceived offerings. + Secure funding: A business plan with strong market analysis can show lenders you know the industry and can influence sales and profits, which can help secure funding and investors for a business. * Save for the long term: Time spent doing market research and analysis early can lead to future savings, sales and opportunities. Related: 7 Types of Business Plans @ How to do a market analysis Here's how to perform a market analysis in seven steps: 1. Set the purpose of the study Determine the purpose of your market analysis first. Itcan be for internal needs, like improving business operations or cash flow &, or external needs, like attracting investors or securing a business loan, Other examples of market analysis purposes include: + Exploring new business locations or additional offices * Testing new products or services + Starting a new business venture * Researching price points + Reviewing past successes or setbacksRelated: Target Market Analysis: What It Is and How To Make One @ 2. Get the industry outlook ‘Add a section of your market analysis. You can include an overview of your industry size, trends, projected growth or market saturation with data and statistics. Highlighting this research shows due diligence to investors, lenders or business partners and can explain whether an industry is worth the time and money. Related: Fundamental vs. Technical Analysis: What's the Difference? 2 3. Focus on target customers Find your target market of customers by learning their needs, interests, demographics, politics, personality and buying patterns. This can help you focus on attracting these customers and advertise to them explicitly. You can identify different customers, referred to as market segmentation, and create personas based on market analysis insight by looking at attributes like: * Age * Income * Gender * Location * Occupation * Education level © Marital or family status + Buying behaviors and trendsA potential customer base can change as a company grows, so it's important to revisit the target market periodically and ensure it stil fits the business needs. Related: What Is Market Segmentation? 2 4. Study the competition Compile a list of competitors and determine their strengths and weaknesses, whether they pose a risk to the business or find out what they don't have that the company you work for can provide. Research their offerings, location and advantages or disadvantages in the market to focus your products or services and gain favor from customers. For example, 2 landscaping company may discover none of its competitors use green energy machinery, so after investing in battery- operated tools, it can market itself as a sustainable option to environmentally conscious customers. Related: SWOT Analysis Guide (With Steps To Perform and Examples) 5. Gather additional information A strong market analysis includes relevant, factual and impartial data, and the more available, the better insights the business can gather. Consider surveying current customers through email or online platforms to ask about customer satisfaction on price, services, quality and convenience or to get their thoughts on promotional materials, how they heard about the company or if they share referrals with family and friends. Larger corporations may hold focus group studies for target audiences to gather this kind of information. Be sure to include any regulations or government restrictions in your market analysis. You can find a lot of material through these sources: + The Bureau of Labor Statistics » The Census Bureau * State and local commerce websites+ Trade journal articles ‘» Target market surveys or questionnaires Related: What Is Market Share? (With Definition and How To Increase) @ 6. Analyze the findings (Once your market analysis is complete, review the findings. Organize the research into sections and analyze how to apply the insights to business decisions, forecasted sales, cash flow cycles, customer spending habits and more. Here are some suggested ways to categorize your findings: + Industry overview of size and growth rate + Projected market share percentage + Forecasted growth + Pricing for goods and services * Discount offerings for customers + Buying trends and market segmentation * Cash flow projections Related: How To Analyze Market Research in 6 Steps % 7. Take action Use the findings to make the company more efficient, competitive or profitable For example, ifthe study reveals a product's retail price is too low, consider adjusting itor if analysis shows your target audience is stay-at-home moms rather than college students, alter your advertising campaign. A successful market analysis plan leads to action from its results, and the data becomes valuable when it influences decisions with measurable impact.Related: Exploring 7 Methods of Market Analysis 2 Do you need help with your resume? Yes No Tips for market analysis Market analysis varies based on products, company and region. Consider these tips in your own study: + Think like the customer. Look at your offerings from the eyes of a consumer to best understand what they lke to purchase and why and then apply it to your market analysis. * Use the internet. Online searches can provide vital information about competitors, and the internet is useful to research other related data and industry statistics. + Add visual elements. Include charts and graphs to illustrate important data and numbers found in your market analysis. Visual presentation can provide variety in the document and help others understand the material more easily. Is this article helpful? Yes! 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