Market analysis works as the foundation of any business success, whether you intend to start a new business or review an existing one, it is advisable to conduct your market analysis on an ongoing basis at least annually. Most successful businesses have an ongoing program to monitor competitors, services and their products.
The common mistake many entrepreneurs commit is paying much attention to an already existing market rather than widening their net to nab alternative potential ones as well.
Remember, if your products or services are already to the satisfaction of your existing customers, it’s less likely that they are going to ditch you, which means you can invest time and research on alternative or potential markets.
However even with that said, it’s still vitally important to keep up your service quality and listen to your customers – always try to get your customer feedback where possible.
Therefore, while conducting your market analysis, you need to concentrate more on the potential market; think of who might need your product in the near future.
If for instance your business provides cleaning services, don’t just focus on the households you have been already helping, think about alternatives like the hotels in the area, health facilities, offices as well as schools that could find your services helpful. You might be surprised by how you product or service can win them over.
How you gather information for your analysis varies depending on your type of business. If your target market is local businesses, then your local chamber of commerce can come in handy.
The internet has also brought research and information to your finger tips. So no matter if you’re business or service is international, such as online – you can conduct research with a click of a button. Through search engines and directories you are able to access unlimited and helpful information with ease; Google or Linkedin is a great starting point. Also consider forums and business directories which can provide more information. All this can help you with how to analyse markets for your business plan.
Try dividing or breaking your target market into varied potions. For instance, if your product is – say a new data recovery software, you will be targeting students, corporates, schools, hospitals and so on. By diversifying or bisecting this way, it will make it easier for you to craft a relevant business language, pricing, media and delivery to a specific target group.
Corporates will rely on newspapers, students will easily get a message passed through social media like twitter or facebook, while hospitals might easily access directories, forums and the like.
How you price to students or rather the packages and offers you give students will be totally different from those you give corporates or hospitals. As you can see, this diversified method can give you an upper hand and boost your findings, thereby helping you craft a result oriented and efficient market analysis for your business plan.
Quantify the market you are analysing
Many business people and entrepreneurs alike try to dodge this stage and look at it as time consuming and difficult.
They try to find an excuse to circumnavigate and take the quick route, but the truth be told, only those able to measure their market end up with successful business plans.
You need to know, by number, how many people are consuming your product or service and how many potential customers (prospects) have not yet started. Those will be your primary prospects to target.
Not only should you know this, but should also be able to tell the percentage growth moving forward; for instance in our example above, is the number of students you are targeting growing or dropping? and by what margin? what about the corporates? schools? hospitals? and so on.
You need to focus on the sum of potential buyers in each market division after diversifying, after which you project the change in percentage over three years to come.
This is another area you need to keep your eye on and not be caught by surprise. You need to look out for new trends, mostly in press and media. For example technology businesses can use Tech Crunch and other media for the latest competitor and industry information on market trends.
You need to know which trends are causing a stir in your market divisions. remember each division has specific trends affecting it. Still on our earlier example above, that trending with students might not necessarily blend with corporates or rather that trending with hospitals will not work well with schools. Remember this will greatly help you analyse the market for your business plan.
Night runners are known to brag about how great at distance running they are and that there is no one can keep up with them. True, perhaps- but what they don’t consider is that they have never run with anyone beside them.
They run their own races and declare themselves winners. Essentially they compete in the dark. It is the same thing analysing your market without considering your competitors.
You will be caught out if you don’t know someone else is offering the same product as yours, how his or her products differs from yours, and how you can use the unique features of your product to lock in customers over other competitors.
While keeping an eye on your competitors, you also need to be aware of both direct and stealth competitors.
Direct competitors are the companies that comes to your customers’ mind as they also think about you. It gives them room to think about an option of your product or your competitor’s should the need arise. When analysing such companies, try as much as possible to give a detailed analysis; try to define each including the threats they pose to your product.
Stealth competitors come in through the back door, trying to lure your customers with promotions or offers that you can never see coming. Unlike direct competitors, they hunt specifically for your customers and not just develop their own. You should be able to detail such competitors in your market analysis as well.
Competition always offers two options and if you are not smart enough, you might end up on the down side of business. While it comes with threats to the market, it also offers opportunities and whichever way you analyse this it’s your decision on how you will tackle your completion and market base.
Some of the opportunities that come with competition includes; improved products. Here every business fights to be on the top of the game ensuring only the best products in the market survives. Apples Iphone and Samsung’s Google android phones have both been in this situation for a number of years.
However, if you are unable to catch up with the quality and product improvement speed you might be shoved out of business. It’s up to you to choose where you want to stand.
How to analyse markets for your business plan is one thing and using the analysis to your advantage is another. Market analysis should help you understand shortcomings, strength as well as opportunities so that you can come up with a viable business plan that will catapult your business to a whole new level.
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