Market Analysis helps in obtaining critical information about customers and competitors in the industrial spectrum under which the company is running. Through market analysis small business owners come to know about the target market and the scope of doing business in the business environment. Well established organizations conduct market analysis as part of their regular strategy to know more about the trends which govern the business operations.
Companies often succeed in their area by knowing more about the current and future needs of the customers. A small business owner should know when is the need of the customer is changing and the strategies need to be adjusted for meeting the targets. Consumer surveys and opinion polls are good in gathering information about the needs of the customer. Sometimes the need of the customer might be about solving a problem they encounter through the purchase of the product or availing professional advice regarding a query.
The best way to meet the needs of the customer is by offering a better product compared to the competitors. The products and services offered by the company should be higher than the expectations of the customer in order to get noticed.
For Defining a Market Opportunity
A market need becomes an opportunity for the business owner if he can create and sell a superior solution for the need. The company must have the capability to deliver its products and services at the high level of quality the customer expects. The business owner must make a realistic assessment of what his company excels at in order to determine whether he can effectively compete in the market. Another way to define market opportunity is to identify where competitors are falling short of customer expectations and determine how your company can do better. Look at the major competitors in your market and analyze their strengths and weaknesses in relation to yours. An unmet need in the marketplace becomes your company’s opportunity.
Estimating Market Size
Accurately estimating the current size and projected growth of the market for the company’s products and services is critical, because there must be enough customers to support the sales level required for the company to become and remain profitable. Industry trade organizations publish data on the current size and projected growth rates for their industries. The National Restaurant Association, for example, publishes forecasts of restaurant revenue growth and analysis of industry trends. For consumer products and services, an effective way to analyze market size is to obtain information on demographic characteristics — the populations of consumers in your area broken down by categories such as age and income level. The U.S. Census Bureau publishes demographic data on local communities.
Choosing Target Markets
Target markets are the groups most ready to buy your products or services — the customer groups that have the most urgent need to purchase what you are offering. Narrowing the large overall market down to target markets is necessary, because target markets have different motivations for making purchases. Consumers’ lifestyles, beliefs, values and attitudes shape their buying habits — the kinds of products and services they are most interested in purchasing. These purchase behaviors are referred to as psychographic characteristics. The Bureau of Labor Statistics publishes a Consumer Expenditure Survey that analyzes the buying habits of American consumers. Understanding consumers’ motivations helps the business owner tailor his marketing message to resonate with each target group — his message convinces them that his company is providing exactly what they are looking for.