How to do a market analysis?

Market and competitiveness analysis is an element of the company’s business plan that aims to better understand its sector. This to guarantee the success of the investment.

The concept includes studies on the potential consumers of a product, the economic scenario, the competitors in the segment and the suppliers.

Marketing analysis helps to develop the  marketing plan  , allowing to define some fundamental characteristics of the offer, such as:

  • Quality
  • Price
  • Forms of distribution
  • Image that you want to associate with the company.

This study allows the company to better position its products and services, a fundamental factor for success.

Market analysis is not a one-time event, occurring only during the business planning stage or in preparation for a new launch. It has to be done continuously.

In other words, the company needs to be updated on every movement in the sector. Both to identify new opportunities and to protect against potential threats.

The fundamental point to do a good analysis is to gather as much information about the market in which the product or service is offered or will be offered.

However, the amount of data collected is not the only determinant. The entrepreneur must also be aware of the quality of the data collected, which must be provided by reliable sources relevant to the business and management plan (PNG).

Analysis sources

There are two types of sources for doing market analysis. Those that are used more systematically are secondary sources, due to their greater ease of obtaining.

The  secondary sources  consist of data provided by institutions, governments, universities and industry associations, among other organizations. This group also includes reports published in newspapers and magazines.

In general, secondary sources are prepared surveys, which include graphs, tables and statistical data on the specific market and the economy in general. Collecting and selecting this scattered data is the first step in market analysis.

To supplement secondary sources, the entrepreneur may find it necessary to work with  primary sources  . That is, collect the data for analysis. The most common way to do this collection is through market research.

Components of the market analysis.

Regardless of the type of font you will use, a good market analysis should include some essential components, according to several authors:

Scenario analysis

This is the most complete point of the analysis. It consists of collecting general information about the segment in which it operates and about the situation of the economy as a whole. For example:

  • How many companies operate in this sector?
  • Is the sector growing?
  • What are the main difficulties at the moment for those who work in this field?
  • How is the credit supply currently?
  • What are the expectations for the country’s economy in the coming months?

Consumer profile

To launch a new product or service or modify the strategies already adopted for its commercialization, it is necessary to know who the current or future consumers are.

Consumer market analysis needs to determine what the expectations of these customers are. In addition to how much they are willing to pay, the degree of satisfaction with the products offered by the competition and what they think can be improved in relation to similar products and services to which they have access.

To evaluate the customer, it is necessary to detail who will buy the product. As if that consumer had access to it and the reasons that motivate the purchase. For that, it is necessary to answer some questions, such as:

  • Where does the consumer live?
  • How much earn?
  • How old is he?
  • Are you male or female?
  • What are you buying this product for? How do you use it?
  • How do you find out about new product launches?
  • How do you choose what to buy?
  • Do you buy online or do you prefer to go to a store?
  • Do you prefer to pay in cash or do you need financing?

The type of question to answer also depends on the type of business sector.

For example, knowing the length of winter in the region where the consumer lives may not be that important to a bank. However, it can make a difference for a beauty salon that offers cosmetic services or for an ice cream brand.

Provider profile

Just as important as knowing who will buy the product or service is researching who the potential suppliers are and how they work.

This study helps the company to learn about new material options and to compare the prices and quality of the products offered.

In addition, it helps to verify the degree of dependence on a particular provider. This is essential to make decisions in the face of questions such as:

Is this product worth launching if the single major raw material supplier has a reputation for failing to deliver on its promises?

Vendor analysis also allows you to identify potential partners.

Competition study

The purpose of this component is to find out what similar products and services are already available to the consumer. Also to identify the reputation they have in the market and the differential of competing companies, their management and financial situation.

Observing the positioning of competitors and their strengths and weaknesses helps to uncover unmet demands that can be explored.

Knowing how to identify consumer dissatisfaction with competitor products and correcting the noted errors is usually a good way to conquer the space.

In addition to knowing the types of products and services offered by competitors, the company needs to study the strategy of these other  players  in the market.

A successful launch generates reactions. If a company launches an innovative product and it is successful, other companies are expected to publish copies or versions of the novelty.

One way to classify the profile of competitors by their type of reaction is to use the categories adopted by Philip Kotler. According to the author, the competitor may be:

  • Cautious  : does not react quickly to the opponent’s movement;
  • Bold  : reacts quickly and firmly;
  • Unpredictable  : does not have a reaction pattern;
  • Selective  : reacts only to certain specific types of market movement.

Anticipating how competitors will respond to the launch or new product helps ensure the longevity of the business. This prepares the entrepreneur to face possible difficulties.