In this 9 part series of blog posts titled, “Your Guide to Market Analysis for B2B Business Growth” we’ll present an up-to-date overview of how to use Market Analysis to prioritize and validate business growth ideas that make the most sense financially, rationally, emotionally and the best way to implement them for success while also minimizing business risk.
The 9 parts of this blog post series are:
- Introduction and What Do You Need to Analyse
- Identify your Target Market
- Market Sizing
- Market Segmentation
- Market Opportunity Studies
- Competitor Analysis
- Voice of the Customer
- Conclusions and Case Study
Enjoy! And let us know what you think…
Part 1: Introduction and What Do You Need to Analyse?
“Poor firms ignore their competitors; average firms copy their competitors; winning firms lead their competitors.” Philip Kotler, Professor of International Marketing at the Kellogg School of Management.
A successful business will have extensive knowledge about their customers and competitors – that is a fact. Whether you are starting a new business, looking at a new geographic region or launching a new product or service, conducting a Market Analysis is essential to determine if there is a need for your idea and to determine the correct approach to fulfilling this need.
Launching into a new market requires an understanding of the opportunities and risks; the first step in developing your marketing plan, and the ongoing development and/or diversification of your product or services portfolio must be gaining accurate and in depth information about your existing customers, potential clients, competitors and trends in your target markets.
Don’t confuse market analysis with marketing – the latter being “the management process responsible for identifying, anticipating and satisfying customer requirements profitably” (Source: CIM); the assessment of the target audience, competition and determining the need for marketing is the market analysis. The goal of a market analysis is to determine the attractiveness of a market, understand current and future opportunities and assess the potential threats – in short to help you make the right decisions and develop your sales and marketing strategies.
style=”text-align: justify;”>What do you need to Analyze?
Bill Gates said, “I believe in innovation and that the way you get innovation is you fund research and you learn the basic facts” and Mike Bull reached the conclusion that, “the most expensive market research you can do is to launch a product.”
Those are thought provoking quotes and the point is that it’s almost always far less expensive in money and reputation to research markets not only before entering one (or more) of them but often before even developing a product.
Market analysis is a useful tool to assist decision making when determining which markets offer the best potential opportunity for an organisation to grow. The first step is to clearly identify the market under analysis.
PEST analysis is a commonly used approach for measurement. Political, Economic, Social and Technological trends can be used to indicate growth or decline, market attractiveness, business potential, and suitability of access.
The framework is used to derive questions important to the market potential and situation of your company or department. The factors will vary in importance and relevance to a given company based on its industry and the products or services it produces. In selecting and prioritizing markets it’s especially important to focus on factors likely to change in the future. B2C companies tend to be more affected by the social factors, while a defence contractor would tend to be more affected by political factors, technology companies by technological factors. Large companies that produce a wide range of products may find it more useful to analyze one department of the company at a time, a global company might divide factors into geographical relevance, such as local, national, and global.
To produce a comprehensive analysis of a market there are a host of other variables which could be considered, not least, the competition. Often key success factors in a market can be determined just by analysing competitive behaviour. Access to a distribution channel for example can be the key to any new market entrance. Competitors or best in class companies in other sectors with an established channel can provide a valuable source of market experience to tap into. (See Post 7 on Competitor Analysis). Similarly when considering what service or support is required to serve a market or the pricing strategy to adopt, a benchmarking exercise (See Post 8 Benchmarking) can be very illuminating. Often clear gaps and opportunities for disruption can be identified in a market when comparing product features, pricing or even marketing messages.
Areas to consider during Market Analysis:
An analysis of the industry could encompass areas such as overall market size (See Post 4 on Market Sizing) or how the market could be segmented (See Post 5 on Segmentation) or understanding the characteristics of the market and whether it is showing signs of growth or decline (See Post 6 on Market Opportunity Studies).
Central to any analysis of potential markets is the “Voice of the Customer”. Understanding customers’ needs and pain points helps to validate factors for success. Competitive Customer satisfaction studies, image and awareness studies, pricing and persona studies can help here. (See Post 9 on Voice of the Customer).
Collectively all these areas need to be considered in a market analysis.