What is market analysis?
Market analysis is the examination and evaluation of a market environment. The deep insight provided by market analysis allows businesses to understand industry trends, target audiences, customers, competitors, market size, growth potential, and many other vital factors. These valuable findings can be used by businesses to fully understand many aspects of their industry and market
Why companies need market analysis
The key benefits of market analysis for businesses are:
- In-depth market insights A comprehensive understanding of the market and environment you are operating in enhances operations. Risk assessments reduce potential pitfalls.
- Future growth is enabled by strategic planning Having insight into competitive gaps, customer pain points, and customer behavior means you’re able to clearly identify market opportunities that lead to new growth.
- Sharpened competitive edge Tracking competitors through benchmarking, landscape analysis, and deep dives allows you to position yourself for data-driven success.
What are the challenges when carrying out market analysis?
So, the competitive advantages of a market analysis are clear. But some obstacles may present themselves during analysis. These could include:
- Deciphering data: When dealing with massive amounts of data, knowing exactly what to look for can be difficult. You also have to be sure that the data is accurate and relevant.
- Budgetary and time constraints: A market analysis may have to fit into a desired timeframe, limiting the methods of analysis that can be used. A tight budget places a premium on the prioritization of aims.
- Unknown unknowns: Market analysis aims to predict future forecasts accurately. But figuring out unforeseeable risks and uncertainties may be tricky when working with available data.
However, these challenges can be overcome when market analysis is carried out with clear goals and processes. New AI-powered tools are also reducing the workload of gathering, analyzing, and validating data.
How to conduct a market analysis in five easy steps
Step 1: Identify your objective
The foundation of any successful market analysis. Identifying your end goal in a market analysis begins by determining the answers you need to achieve those aims. From there, you can construct the questions you need to ask. For example, a portfolio manager may carry out market analysis in order to identify possible investments for their clients. The objective, in that case, would be to identify undervalued assets or ones that may generate high return rates.
Time and budget often play a defining role in carrying out a market analysis. Acknowledging this at the outset means you’re aware of the importance of focus and concentration. As long as a clear purpose of the analysis is visible from the start, a balance can be achieved with any budgetary or resourcing limitations.
At this initial stage, you’ll also want to choose the best methods and sources for gathering the data. Information may come from a host of sources – market research reports, news articles, expert interviews, social media, and government or industry publications.
Step 2: Do your research
This stage is all about estimating where the most valuable data may be found. Once the purpose of the market analysis is defined, you can select the most appropriate methods for conducting primary and secondary research. A portfolio manager may focus on data relevant to assets being considered as investments. That would involve examining historical price data, financial statements and analyst ratings.
Other analysts may focus on expert interviews. Again, formulating the right questions to ask is critical. These interviews may divulge essential information. But first, the experts must be identified. Interviews may take place across an entire organization, spanning several disparate departments. High-quality data forms the basis of your analysis, so this step is well worth investing some time in.
Step 3: Analysis is everything
By this step, objectives are clear, expert interviews have been conducted, and data collated.
Now it’s time to examine what’s been gathered.
Analysis is what refines this data into
something beneficial for businesses. It will also pinpoint any missteps along the way. If a particular data set proves incorrect or misleading, additional research is still needed before moving on to the next analysis stage.
Say an analyst examining data on e-commerce notices that mobile devices are the platform of choice for online shoppers. Having identified that trend, they will carry out a quantitative analysis, perhaps using statistical methods to study data. They may also conduct a qualitative analysis – for example, feedback analysis drawn from focus groups. Lastly, they may identify from their analysis the factors at play in driving a trend and the implications for the marketplace. And this may be considered against the background of the wider competitive landscape. All of this leads to insights that enable data-driven decisions to take place.
Step 4: Validate, validate, validate
Validation is essential in understanding if the collated data makes sense. It’s the crucial stage where the findings from the analysis are confirmed. Validation eliminates the risk that incorrect data or flawed data are used in the analysis. This means businesses can be confident that credible and authenticated data drive strategic decisions based on the analysis.
Analysts often utilize the expertise of their colleagues in the field, bringing a fresh perspective to findings.
Step 5: Present the results
An exciting moment – the key stakeholders are gathered and presented with the core results. These are the people who will actually be utilizing the findings of the analysis and putting it to work.
A great way of implementing this is through a workshop (or a series of workshops). At M-Brain, we’ve seen firsthand how this generates lively and upbeat discussion about the findings. Deeper questions arise on how clients can crystallize these insights into business plans and future strategies.
Clear presentation is key to fostering understanding of an analysis. Findings are often visualized in an easy-to-understand way with takeaways highlighted. Analysts should come prepped to answer stakeholders’ questions.
Bonus step: Continuous monitoring is key
Depending on the purpose of the analysis, this may sometimes be necessary. For example, there may be a definite time limit to the project.
But it’s worth considering the benefits of continuous monitoring of the findings. It grants real-time insights, enabling businesses to stay up to date with evolving trends and opportunities. If a strategy is enacted based on the analysis, monitoring means this can be evaluated and modified. After all, nothing beats in-depth knowledge of a business environment’s shifting landscape.
Leverage your business for success through AI-powered market analysis
Valona has over 20 years of experience in conducting comprehensive market analysis, using the best methods to help businesses fully understand their market environment. Contact us if you’re interested in making data-driven decisions based on the latest market intelligence.