Market analysis refers to the process of studying the dynamics and determining the characteristics of a particular market within an industry. Consequently, the ability of an individual to assess a market using both qualitative as well as quantitative approaches is known as his market analysis skills.
Market analysis skills involve looking into important factors such as market size and its potential value, different customer segments and their buying patterns, the rivalry as well as the economic environment in general. All this is merely done to determine the degree of attractiveness of a market and to comprehend the threats and opportunities that may evolve pertinent to the weaknesses and strengths of the firm.
Why is market analysis important
Whether you are starting up a new venture, looking to expand the existing one, or just reevaluating the current market for increasing sales, market analysis is the key to determining the attractiveness of a market and determining the current as well as potential future risks of serving that market.
Market analysis provides in-depth information regarding the markets that will be served and the needs that will be fulfilled, ensuring that the firm spends its marketing dollars in the most effective way possible. This is mainly because of the third-party perspective that market analysis provides on the best available options for a firm’s marketing campaign. Marketing analysis, therefore, is the cornerstone for the success of any marketing and advertising campaign, playing a significant role in the successful development of a good business plan.
How to improve market analysis skills
Here are some helpful tips for improving you’re your market analysis skills:
- Identify the audience of your business plan. Marketing analysis is mostly done as part of a business plan development process and that business plan tends to serve several distinct purposes. The first tip is to identify the audience for that business plan because it is what determines how detailed your marketing analysis is required to be. For instance, as an entrepreneur you are likely to know your market well since that is where your business idea was generated from. Therefore, the market analysis need not be very detailed if the business plan is for your own (internal) use. On the other hand, if the business plan is being developed with the intent of convincing investors, the market analysis will have to be quite detailed.
- Understand that data collection is not enough. You must always remember not to stop with tons of data gathered. It is essential that you go ahead a step further and actually analyze all that data. All the market information provided must be followed by your findings, indicating the gaps or problems that exist in the market. Most importantly, it should consist of suggestions on how to fill the gaps or solve the problems that are found.