The successful launch of any business product is, most times, reliant on the results of market analysis. Conducting market analysis for your business product gives you the insight you can leverage to position your product for dominance in the target market.
Most entrepreneurs often overlook the need to conduct intensive market analysis before they introduce their products to customers. The implication is that sometimes, they find out they overestimated the need for the product or downplayed the market share and strength of their competitors.
In this article, you will learn why conducting a market analysis will help you forestall these dismal outcomes.
We have already discussed one of the most important parts of the Business life cycle, Market research in this previous article, and we didn’t want to miss another important part called Market Analysis. Most people confuse Market Research and Market Analysis as the same. We will clear that doubt as well.
Let’s begin with Market Research vs Market Analysis first then we will jump to the importance of conducting Market Analysis.
Market Research vs Market Analysis
Market research and Market analysis both are identical twin brothers but never to be confused as the same. Both help in making better decisions as per the current market trends and analysis of the continuation or discontinuation of a particular trend.
While Market research is the process of a low-level look at the understanding of the designated market in terms of both your existing and future probable (potential) customers, Market analysis is the process of looking around how things work in a similar business line in terms of growth, potential changes, competition, etc.
Both Market research and Market analysis go along with the same target, which is sustaining existing customers, creating new customers, and scaling to optimum growth.
Benefits of conducting Market Analysis
Now that we are familiar with both Market Research and Market Analysis let’s dive deep into the few major benefits of Market Analysis.
1. Provides analytical models for your product
Market analysis involves the evaluation, both in quantity and quality, of the external and internal factors that drive a market in a specific industry. When you conduct market analysis, it helps you evaluate whether there is a viable opportunity in that market while presenting you with possible entry barriers.
In addition, you will get benchmarks that you can use to measure the success of your product. Why are all these data points necessary? They help you gather data that you can integrate into analytical models using software like Femap to measure the success of your business product in the market.
What this model does is help explain why your product will do well or perform poorly under particular metrics. It provides you with enough background to test and modify your product before introducing it into the market.
2. Helps with risk assessment
Every venture that has an opportunity to yield profits has its associated risks. Conducting a market analysis will help you assess the risks of pushing your product into that market.
Where are the strongholds of your competitors? Are there economic or social barriers to the optimal utilization of your product? These are a few insights you will gain to allow you to make business decisions that will reduce the risks you expose your business to.
3. Informs your marketing strategies
Market analysis is mostly focused on assisting you to tailor your products to the customers’ needs. Sometimes, your business’ offerings will not have the visibility it needs to reach these customers. This then informs the basis for deploying marketing strategies.
With thorough market analysis, strategic areas of weakness for both your business product and that of your competitors will be discovered. This unmasks areas that need to be targeted for your marketing campaigns.
4. Gives insights into new trends
It is no news that consumer behavior is ever-changing. And with that, there will be pumps and dumps in product demand and supply. Market analysis positions you to observe how the demand and supply curves fluctuate with time, social and economic changes.
Early insight into new trends will give you a competitive advantage to acquire a large market share and earn customer trust and/or loyalty.
A market analysis is beneficial to your business. It helps you with budgeting and gives you a fair estimate of what your revenue and profit might be. It should be included as an essential part of your business plan and conducted regularly to evaluate your KPIs.