February 15, 2021

Author: Amber Anderson 

Starting a successful business requires a great deal of market knowledge. Learn how to leverage your resources to conduct a market analysis.

A market analysis gives a comprehensive breakdown of customers, competitors, partners, opportunities and threats. And having that valuable insight helps you meet your business goals.

But where do you start? And how do you gain this level of insight on a “scaling” budget? By accessing public information, doing your own research and developing a plan, you can get the information you need on any budget.

Conducting a market analysis is the framework for everything that follows—brand strategy and identity, product strategy and development, marketing, operations and customer support. These insider tips can help you gather the data you need to understand your market landscape.

1. Start with your customers.

Market analysis helps you identify your target customer. Pose as many investigative questions as possible to truly understand who they are. Are they working professionals? Parents? Homeowners? What’s their salary range, and how much disposable income do they have? Use this information to get an idea of customer demographics and behaviors.

From there, dig into your customers’ wants, needs and challenges. What are their pain points? Are they buying from any of your competitors? Where are other businesses falling short in meeting their needs? Once you answer those questions, you’ll have a better understanding of how your business can serve them.By the end of this assessment, you should have enough data to create customer personas, which will help guide future decisions.

As you gather this data, you’ll discover a lot of sources for reliable, free information. Industry and government agencies, such as the U.S. Census Bureau and the Bureau of Economic Analysis, are rich with demographic data. Foundations and public policy organizations are great sources for gathering social information. Research reports from business consulting firms are equally valuable as they provide insights on market trends and consumer behavior. For more personalized data, consider surveying or interviewing your customers or holding focus groups.

2. Identify your competitors.

Now that you know who your customers are, you need to know who else is trying to win their business. Learn as much as you can about your competitors—what they offer, the feedback they receive from customers and where they can improve. How can your company fill that void? How can you provide a better product?

Be sure to include competitor pricing in your analysis. How do their prices compare with yours, and how can you offer your customer a better value for their money? The key question here is: What do you and your competitors have in common, and what sets you apart? Are there opportunities to add value while differentiating your product from the rest? The bulk of this information should be relatively easy to find.

Next, narrow your list to your top three competitors and do a deep dive. Test out their products, visit their store and chat with their employees. Try to get a good sense of what they're doing well and what you can do better.

3. Find potential partners.

It’s easy to overlook partner analysis, but it’s worthwhile to invest the time and energy here. The goal is to discover businesses that are servicing your existing and potential customers. What product or service do they provide, and how might it complement your offering? How can they help you produce a better end-product? Partnerships can take on many forms—from joint advertising to influencer marketing.

Budget-friendly resources for finding potential partners include internet searches, online media and industry databases. Referrals can also go a long way, as trust and credibility are crucial when forming partnerships.

4. Look for opportunities.

Once you’ve gathered all of your data, you can conduct a SWOT analysis, which organizes what you’ve learned into four categories: strengths, weaknesses, opportunities and threats. By highlighting the opportunities, you’ll have a clear vision of how you can position yourself within the market.

Once you understand the market landscape, you can establish your price. First, consider the cost of delivering your product or service. Then think about your customer. How much do they value your business, and what are they willing to pay? What are other businesses charging for the same product, and how can you offer a more competitive price?

A market analysis is a critical step in leveling up your business. Conducting a thorough analysis may take some time, but you’re left with a solid understanding of how to move forward and make important decisions for the good of your company.

Photo: Getty Images