Understanding your customer base is imperative to a business’s success.
Market analysis helps you understand your target audience, competitors, and the market itself to help you make informed decisions. It helps your business make strides in the right direction.
Market analysis has gained prominence in recent years as more businesses are leveraging its benefits in terms of customer acquisition and increasing customer satisfaction.
If you are wondering whether your business needs market analysis and what are the benefits of conducting such analysis, this post is for you.
What is market analysis and when should you run the market analysis?
Market analysis refers to the process of collecting and categorizing information about the factors that affect a marketplace. These factors include the existing customer base, the potential customer base that you may be targeting, your competitors, etc.
Market analysis is necessary to understand both your existing and target audience as well as how to operate in a market.
Every kind of business, be it small or big, new or old, needs market analysis to function properly.
Attest market analysis template helps you conduct complex market analysis with ease. You can customize the template, select the audience you want to analyze using filters and have quick results delivered to you.
A market analysis helps a business in a host of aspects. Here is why and when you should consider running a market analysis for your business:
1. To serve customers better
A market analysis of your existing customer base will gather information such as their likes, dislikes, preferences when it comes to your products, and what they would like to see from you in the future. This helps you perform better in future interactions and cater to the expectations of your customers efficiently.
Domino’s Pizza changed the very way they make their pizza when they learned that their consumers don’t like the thick outer crust of their pizzas and were leaving it uneaten. They made the crust softer and implemented other changes as well.
They analyzed the feedback they were getting and implemented changes to cater to the needs and demands of their customers. The move was appreciated by their consumers as well.
In addition to understanding their needs, a market analysis also helps guide communication with your audience. You can have more meaningful, guided, and personalized conversations with your customers once you have a better understanding of their likes and dislikes.
2. To position your product better
It is actually quite common to conduct market analysis when launching a new product. It helps you gauge your potential audience in advance and learn about them with factual detail. You can segment the market on criteria such as demographics, interests, ethics, etc.
Based on that information, you will know what features to highlight more when advertising to a particular demographic.
For example, if a cosmetic brand is launching a women’s perfume, they would want to focus on the female demographic of their market. However, a thorough market analysis will help them segment the audience even more.
Women who use perfumes in general, and women who are willing to try a new perfume are demographics that are more susceptible to purchase a new perfume than, say, the ones who don’t use perfumes due to medical or religious reasons.
A similar distinction can be made on the basis of the women’s ages as well.
Market analysis doesn’t just help position new products, it aids with relaunching and rebranding existing products just the same. When you understand what your target audience wants from you, it’s easier to position your brand in a way that will be well reciprocated by them. This ranges from product design and distribution strategies to slogans and pricing.
The idea is to break down a product’s uses and benefits and pair them up with the potential needs of the targeted customers.
3. To reduce risk
A certain degree of risk is involved in all business ventures.
One of the best ways to reduce risk is to be as informed as you can be on matters of importance. This includes your own business operations to the market you operate in, including your customers and competitors.
A market analysis helps you reduce risk by keeping you informed of all the major players in the market. You can make informed decisions at every turn when you are well educated on the topics that matter.
The forecast that comes with market analysis is another powerful tool in business decision-making.
Conducting thorough analysis in advance helps you project revenue for future endeavors, thus, making it easier for you to make a decision.
4. To keep up with the trends
As a famous saying suggests, the best way to predict future behavior is to analyze past behavior. Having an in-depth knowledge of the market helps you keep an eye out for tweaks in the trends and therefore, you can capitalize on them before they go mainstream.
Take Instagram for example. They started out as a photo-sharing platform. However, they introduced a feature called ‘IGTV’ when competitor social media platform Twitter came out with ‘Vine’, a platform to share short 6-second videos.
Later, to compete with another video-sharing app called TikTok, Instagram introduced ‘Reels’. The takeaway here is that Instagram has constantly stayed on top of the trends to stay relevant amongst their user base.
A business should look for patterns in the data they collect to identify patterns in the early stages. This will help them capitalize on them before their competitors can. What is more, you can also establish new trends of your own if you indulge in market analysis in a periodic fashion.
5. To optimize your marketing efforts
One of the core aspects of market analysis comes with the marketing of the products and services. Whether it’s launching new products or taking care of the marketing efforts of existing products, market analysis provides you with the in-depth information that will help you make the most informed decisions.
Knowing your audience on a deeper level helps you craft your marketing efforts in ways that connect with them. Sometimes, it becomes necessary that you truly know about your market, especially when it comes to the cultural aspects of it.
One of Coca-Cola’s turbulent campaigns is a great example of it.
Coca-Cola had a marketing campaign where coke bottles and cans would have names inscribed on them. Now, they came up with the top 100 first names in every country to be as inclusive as possible. This indicates great cultural research on the company’s part.
However, they faced trouble in Israel as they were accused of not having any Arab name on the bottles and cans there.
A deeper research of the market was needed in Israel. A solution could have been having top names for every community and religious and ethnic groups instead of taking top names randomly. This would have ensured that everyone was included.
Setting benchmarks also helps pivot your marketing efforts in the right direction. Market analysis helps you achieve that by helping you focus on needed areas and setting realistic goals.
Research suggests that companies that set benchmarks achieve their growth 69% faster with 45% better productivity than companies that don’t.
6. To stay ahead of the competition
By this, we don’t mean to say that the focus of your market analysis should be too much on your competitors’ strategies, especially not more than your own strategies.
However, keeping an eye out helps you tweak your own efforts in effective ways. Consider this an ‘eyes wide’ approach.
You need to be unbiased in your analysis of your competitors. See where they succeed and where they lack. Take the opportunity to learn from their mistakes. The above example of Instagram releasing IGTV and Reels in response to Vine and TikTok can be stated here as well.
Instagram marketed IGTV as a better alternative to Vine as Vines were restricted to being 6 seconds only. Many content creators found the format restrictive. IGTV had no such limitation and appeared as a better option.
Similarly, the infamous ban on TikTok in India, one of the biggest markets for social media platforms, propelled Reels’ popularity there exponentially. Instagram capitalized on its competitors’ weaknesses to give itself an edge.
Market analysis helps a business strengthen its own position in the market in the long run.
By analyzing past mistakes, you can avoid them in the future. You can focus on improving your strengths. It helps strengthen your position in the long run as well as build on a reputation.
Conclusion
Market analysis is a strong tool that helps you understand the industry you operate in, prepares you to perform better, and achieve desired results.
It may seem like an expensive investment at first l, but with time, you will reap its results in long-term planning and your improved company image.
Make the most out of the analysis you conduct and don’t be afraid to course-correct yourself as you go ahead.
Let us know in the comments below why you find it necessary to conduct a market analysis and what benefits you have reaped from it.
Author bio
Atreyee Chowdhury (LinkedIn )
Atreyee Chowdhury works full-time as a Content Manager with a Fortune 1 retail giant. She is also a freelance writer for multiple clients across multiple industries. She comes with several years of web content writing experience and you can reach her at on LinkedIn for any content writing/copywriting requirements. She loves to read, travel, and experiment with different cuisines in her free time.
The post What Is Market Analysis? And When You Should Run Market Analysis? appeared first on Productivity Land .