Market analysis is a process of gathering, evaluating, and interpreting information about a particular market or industry. It includes studying various factors that affect the demand and supply of goods in the market, including target segments, competition, market mix, demand and supply structure, market size estimate, market growth, market attractiveness, influences, trends, key challenges, and opportunities. The purpose of any market analysis is to better understand the target market and customers, identify market gaps (or opportunities), evaluate the desirability of demand for the project product, and prepare the marketing and sales strategy.
Step-By-Step Process
- Identify your target market in terms of, for instance, geographical location, product and industry.
- Identify your customer segments as explained in the previous article.
- Collect data about the target market covering all factors affecting the demand and supply of products.
- Understand the needs, preferences, and purchasing behaviours of the target consumers to identify potential opportunities and challenges.
- Evaluate the competition structure in terms of the competition factors (e.g., price, quality, or service), competitors and their shares of the market, competitive positioning, and competition strategies.
- Evaluate the existing market mix, which includes product specification, value propositions, pricing, promotion, and distribution channels.
- Analyse the supply (e.g., local production and importers) and the demand, and conclude any gap and opportunity.
- Quantitatively estimate the market size (e.g., total consumption of customer segment as the value in a year) using top-bottom or bottom-up approaches. Top-bottom approach uses national statistics to reach the market size of an industry, while the bottom-up approach assumes individual consumption to estimate the market size.
- Evaluate the consumption records of the target market to figure out the potential market growth.
- Evaluate the market attractiveness using Porter’s Five Factors Model describing the new entrance threat, product substitution threat, buyer’s negotiation power, supplier negotiation power, and rival. The market is attractive if it is highly protected against new entrance and substitution, buyers have few choices of products, unfocused supply chains, and enable competition.
- Evaluate the internal and external environment of the business by using SWOT and PESTEL models. SWOT analysis involves evaluating a business on four key dimensions; strengths (e.g., value proposition or patent), weakness (e.g., new to the industry), opportunities (e.g., product and market development), and threats (e.g., easy to enter a market). PESTEL model evaluates the external influences on a business and stands for political (e.g., political stability), economic (e.g., growth or interest rate), social (e.g., lifestyle, migration to/from cities, values, habits, and norms), technology (e.g., technology access), environment (e.g., the impact of sustainability), and legislation (e.g., acts).
- Identify the market trends and patterns that could impact your business, such as economic factors, technological advancements, and cultural shifts.
- Identify the market challenges or gaps your business can address by offering unique or innovative solutions.
- Prepare a document highlighting the above outcomes, and share it with your team and experts.
Example
Market analysis for a pharmaceutical manufacturing facility in the GCC has revealed (90%) of the market, which reached $18 billion in 2023, is fed by imports, dominated by branded medicines, growing by (5%) annually, highly protected by heavy investment, easy replication of generic medicines, price competition is fierce, and industry is highly regulated. Market trends include customer focus, price reduction, digital technology, medical insurance, and governmental support to encourage local production. Market challenges reveal the lengthy process to register new medicines, higher dependency on imports to meet the local conception (i.e., imports reached 90% of the market size), expensive investment, lack of skill-full workforces, and fierce price competition. The key opportunity is import substitution, growing consumption of drugs, and government support for local production.
Useful Tips
- Define the goals and objectives of your market analysis upfront to ensure that you collect and review the right data.
- Collect and testify market data using multi-sources of primary (e.g., customer interviews) and secondary (e.g., studies and published statistics).
- Filter out irrelevant data and focus on the most relevant data points that help you make informed decisions about your business.
- Analyse the data objectively and avoid personal biases or assumptions that could impact the accuracy of your analysis.
- Utilize tools and techniques such as SWOT analysis, PESTEL analysis, and Porter’s Five Forces model to structure your analysis and identify key insights.
- Use brainstorming sessions and focus groups to create ideas, evaluate data, and make decisions.
- Get input from other stakeholders, including employees, customers, suppliers, and industry experts, to gain a more comprehensive understanding of the market.
- Regularly monitor the market to stay up-to-date with trends, changes in consumer behaviour, and the competitive landscape to adjust your business strategy accordingly.
Things To Avoid
- Avoid stereotype assumptions in market judgement, data, and analysis.
- Collecting generic and false data on the market industry.
- Avoid being biased in your analysis by recognizing and accounting for your own biases and assumptions.
- Don’t rely solely on historical data to make conclusions about the market. Consider current trends and projections to make informed decisions about the future.
- Don’t ignore the needs and preferences of your customers.
Final Note
This article is sourced from my new book- Your Guide For Preparing An Industrial Feasibility Study. For more information about the book:
Visit the book site: https://growenterprise.co.uk/book-your-guide-for-preparing-an-industrial-feasibility-study/
To register in our newsletter: http://eepurl.com/ggcC29
Or email us at: maldawood@growenterprise.co.uk
The author: Munther Al Dawood- Industrial Enterprise Expert
Grow Enterprise 