Market Analysis
The Wiki definition of Market Analysis says that it studies the attractiveness of a special market within a special industry. It is also known as a documented investigation of a market that is used to inform a firm's planning activities, particularly around decisions of inventory, purchase, work force expansion/contraction, facility expansion, purchases of capital equipment, promotional activities, and many other aspects of a company.
Based on this I would categorize the study in the following manner:
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1) Purpose or Reason
- To assess business opportunity.
- To get an understanding of the target market.
- Best understand market penetration
- To understand the trends in the market.
My view is that it is very difficult to win the edge over the market without understanding the market behaviour, A good understanding of the marketplace is necessary to outshine competition and also to effectively implement a Marketing Strategy.
2) Why do a Market Analysis? (Broader sense)
- To understand the need of the product.
- Understanding to focus of the target audience/potential customers.
- To evaluate capital growth.
- To understand the mindset of a customer/customer base.
- To establish an effective market strategy.
- For better customer acquisitions.
- To stay ahead of competition.
Generation of data:
The data can be classified in to ways here, primary and secondary.
Primary data is what we get from surveys, direct interaction with our clients, observation and understanding. More often, this is the most valuable source of data we can generate.
Secondary data is something that we get via the internet, Govt. Campaigns and research. While this certainly adds value to your findings, this may not wholly apply to your case.
A successful venture utilizes both the data to the maximum possible and tries to gain an advantage in the market.
Types of market:
Here I have identified 3 markets -
A) Builder/Re-seller/Wholesaler
- Builders are property constructors
- Re-seller can be like a middlemen/agent who may play a role in mass market sales.
- Wholesaler someone who buys products/items in bulk.
- This is where mass money is.
- Time convenient.
- Money in flow may not be stable.
B) Individuals
- These are the classes we target to whom we can sell our items both individually/complete system.
- Money flow is stable.
- Time focused.
- Cost of customer acquisition may be high.
- Profit is a variant.
C) Industrial
- These are SMEs, SEZs.
- Unit wise target.
- Help form future business clients.
- Money inflow stable.
- Small untapped market.
3) Market Analysis Process:
From the market analysis we can come too an understanding of the people who are willing to buy.
The value proposition document gives an understanding of why a customer should buy our product.
The Competitors understanding gives us an edge in the market.
To better understand the product, it's better to have a look both ways – from the maker's end and also from the customer's end. In simple words, try to answer these questions – What is your product? What does it do? How does it benefit you over the competition? How does it benefit the customer?
It is also important to mention the specs and the characteristics of the product to give a clear picture to the target audience with a microscope.
When the target audience varies in age, sex and usage – a case study that explains the usability for each one of them will really help.
Depending on the type of business you are in, it makes you extremely efficient if you know the mindset of the customers. Questions like why a customer prefers a Brand A over a Brand B, if answered will help you gain the necessary edge.
While it is important to note that a good service and quality products can clearly set your product apart, it is also important to add attributes to your product if possible. In some cases this may be a completely new product or a product range. Always think of “What's next”. The best example I can think of for this is that of a Power Bank over a conventional Battery Charger. The attribute of the power bank is that its portable, user friendly and aesthetically built. Though you may need to charge the power bank using the conventional power supply, people ignore the aspect if they see a true value in it. Like one of the recent surveys said, 78% of the Indian population will spend a little extra for the value and the service we offer (this is quite astonishing considering the conservative mindset that we are thought of). Attribute your product well. It may be you're market capturing run-away hit.
Market Segmentation
Some of the basic modes of segmentation and how they can help you in your venture is listed below:
A) Geographic
- Locality wise product selling.
- Helps you know your target region.
- Focus sales.
- Inter home region area segmentation.
B) Demographic
- Age, sex, income form some of the basic fundamentals to attract sales.
- Focus group sales are a sure shot income generators.
- A wide appeal also helps in mass market sales.
C) Psychographic
- This to me is the most important aspect.
- I remember what Mark Zuckerberg said on this – The word of a trusted friend is the most powerful tool to influence a person to buy a product.
- The power to influence is the key and having the right kind of influence is even more important to drive sales.
- A customer's notions, preset thoughts all play a key role in deciding the format of tackling.
- Along with the above point, a client's thoughts opens up avenues and opportunity to the service provider to provide the best, raise the bar and lift the notch a little higher.
D) Behavior
- Some products may be a purpose oriented design or use case.
- In many scenarios, the client himself would want something very particular that satisfies him even at an emotional level.
- This may also be a case with a mass product. Ex: Women (Even the conservative ones) are moving to the modular kitchens throwing aside the conventional one. You very well know how you're Mother or Wife feels when they get to pick a Modular kitchen.
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4) Competitive Analysis
Every business faces competition. Acknowledging that they exist and getting an edge over them in as many areas as possible will make your business stand out. You do not have to fear that they may be momentarily be doing better than you, have a path, work on a strategy and proceed in that way to get you a clear edge. Having all these sorted out from the start will certainly help you sail smooth. In simple words, my definition of a business strategy is “destroy your competition”.
A business/start-up must know themselves well, they should also know their competition.
You can also conduct a SWOT analysis on the competitor. A business owner should have answers to few of these questions -
Who are the competitors?
What is their target audience?
How is the customer satisfaction factor?
SWOT Analysis?
What is their market strategy?
Their position in marketplace?
Understanding these factors, you will know where you stand, your marketplace and will also help create a market edge and a competitive edge.
5) Research Analysis
After doing all the above, it becomes necessary to have the data you've collected and organize it.
This will help you create a successful Business Model and Strategy.
Remember: Market Analysis never ends.
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