Marketing market analysis is a way to get answers to key business questions: what, how and to whom to sell. It is useful to conduct it before the launch of a project in order to assess prospects, identify the strengths and weaknesses of competitors and understand how to build on them. Market analysis helps to better understand the target audience, develop or adjust a development strategy, and quickly reach the desired level of income. We talk about the methods and stages of this research.
The market is the process of continuous interaction between sellers of goods and services and consumers. Market analysis is a study of the parameters of their relationships.
The research results are used to create a unique selling proposition and determine a product promotion strategy.
Conduct market analysis to better understand customers and competitors and understand what value your company provides to customers.
The ultimate goals of the analysis are to create in-demand products and increase profits. To do this, you need to collect information about all the factors that can influence business development.
Sales audit is a narrower concept. It involves analyzing the sales system within the company. During the audit, all available sales channels are examined: their level of effectiveness, strengths and weaknesses, and prospects for use are identified. The goal is to correct the identified deficiencies so that the system works smoothly at every direction and stage.
Market analysis of an enterprise is carried out based not only on data from a specific company, but also from its entire environment. It helps to identify the key needs of the target audience, identify the most successful strategies of competitors and take note of them, formulate a USP, and assess the prospects for expanding the product range.
The results of market analysis influence priority strategic business decisions.
Marketing analysis is a study of a specific segment: market structure, consumer behavior, prices, free niches. It is carried out if the business has been operating for a long time and is looking for new ways of development – for example, additional sources of income, fresh promotion strategies in general, or improving product characteristics.
Comprehensive analysis – a comprehensive study of segments and industries. It is carried out before the launch of the project in order to choose the direction of activity. This type of research is also useful for making fundamental successful changes to the current development strategy.
Qualitative analysis is based on individual opinions. Its results are not suitable for accurate calculations and statistics – only for subjective assessment.
Quantitative – based on measurable quantities. It is more objective and structured, allowing you to see the real state of affairs.
Self-analysis is suitable for a small company. If employees thoroughly know the strengths and weaknesses of the business, know how to interact with each other and look for ways to develop, this may be enough. However, the likelihood of biased assessment is high.
If the company has its own marketing department, the analysis will be more effective. It is important that marketers have access to various sources of information and are not afraid to point out mistakes to managers or representatives of other departments.
Analysis with the involvement of a third-party agency is the best option. A completely independent assessment will provide the most accurate results.
Structure and main stages of market analysis
A comprehensive market analysis is carried out in stages. This is necessary so as not to miss a single important factor affecting the activities of the enterprise.
Explore the industry and its prospects
Analyze the market as a whole and the niche you plan to occupy:
determine what exactly your company will do and what place it will occupy in the market;
evaluate the dynamics of demand for a niche – the rate of rise or decline;
find obstacles to development – for example, problems related to logistics, lack of infrastructure, legislation;
highlight promising areas of growth – for example, new products or services that will be in demand among consumers.
Determine the ratio of supply and demand, the number of major players, and the unmet needs of the target audience. If supply exceeds demand, it is necessary to adapt to consumer needs.
To obtain quantitative indicators, it is useful to use data from CRM systems and other modern services. They simplify the collection, structuring and analysis of information about consumers and business processes. For example, the Address Book of the Mango-office contact center contains detailed data about clients and the history of communications with them. You can use the information from it for market analysis and other research.
Qualitative data is obtained from in-depth interviews, focus group experiences, and in-depth research. They are provided in the form of reviews and subjective ratings.
Create a portrait of consumers who will buy your product or order services – use the following parameters:
Demographic – age, gender, type of activity, marital status, level of income and education.
Geographical – territory of residence, possible places to receive services or purchase goods, specifics of the region, features of local legislation.
Socio-psychological. Determine what social class consumers belong to, what guides them when making a purchase, and what lifestyle they lead.
After a detailed description of your target audience, divide it into groups – for example, rank them according to similar purchasing power. Segmentation is useful when developing a marketing strategy and pricing policy, as well as for choosing optimal advertising formats.
To assess your prospects, determine who your competition is. It can be of three types:
Competitors have a similar target audience and do the same thing as you. For example, for a coffee shop in a shopping center, the direct competitor will be a neighboring establishment of the same type.
Companies target similar audiences or conduct activities close to your profile. For a coffee shop in a shopping center, the indirect competitor is a pizzeria or restaurant nearby.
Includes those who operate in a neighboring region but may enter your market segment. For example, in the city where you opened a coffee shop, a branch of a large chain may appear.
When analyzing competitors, take into account their pricing policy, product range features, and level of product quality. It will be useful to know the sales channels, main suppliers and partners, and staffing. Be sure to highlight the strengths and weaknesses of each competitor – this will help you avoid mistakes and, possibly, lure part of your target audience.
When analyzing sales, focus on several criteria. They will help you study the company’s work from different angles.
Total sales volume is an important, although not the most informative indicator. Revenue growth does not always lead to positive profit dynamics, which increase only as a result of competent management decisions and automation of routine tasks. It is important to analyze the sales volume in different periods and each time find the reasons for the changes, up or down.
Use factor analysis. It takes into account two parameters – changes in sales volume and prices. To find out how much sales volume has changed, subtract the actual value from the planned value and multiply the result by the price of the product that you want to set.
Knowing how attendance fluctuates over the course of a day, week, month or year, you can use your employees’ time more efficiently. For example, determining optimal store opening hours or scheduling inventory/rearrangement for the least busy period.
Conversion is the percentage of website users or store visitors who completed the target action. This could be a purchase, a subscription, or an order for a service. In a retail store, conversion is determined using special counters at the entrance, and in online services – according to analytics data.
If the number of visitors/users is stable, but the conversion rate is falling, you need to find out at what stage they refuse to take the target action. The reason may be an incompetent or insufficiently attentive sales consultant, inappropriate methods of operating a retail outlet, or an unfriendly website interface.
Conversion is assessed over time—single coefficients won’t tell you anything.
To calculate this indicator, the number of completed orders is divided by the total revenue. The higher the result, the more money the average client leaves you with.
The average bill is convenient to use when comparing the work of several retail outlets or departments, as well as the same branch in different reporting periods. The indicator depends on the quality of work of sellers, the literacy of the display of goods and the completeness of the assortment.
Find out which services or products are in greatest demand and why they are attractive to customers. Consider the level of popularity of products when organizing displays and conducting marketing activities.
Many people think that popular products are already bought, and therefore there is no point in discounting them. However, if the cost of the most popular products is reduced, this will help lure part of the audience away from competitors.
The method is effective when the average check consists of several items. The client will come for a discount on a popular product, buy something else in addition, and the store’s profit will increase.
A complex indicator that describes the volume of products on hand. When analyzing, pay attention to the following parameters, which indicate the risks of a shortage or surplus of goods.
It is important to find out what caused the return and draw conclusions. For example, a salesperson may deliberately persuade customers to buy inappropriate products in order to meet a personal sales target. In this case, it is worth reviewing the volume of the latter and/or the bonus system.
Summarize key performance indicators for different periods in a table and compare them with each other. The choice is individual for each company.
KPI analysis is suitable for assessing the performance of individual employees, a structural unit or the entire company. Usually they compare data for the reporting period and, based on the results of the study, award bonuses, optimize business processes, increase or reduce staff.
This is the ratio of payroll to gross income. For retail stores, the figure is usually around 10%.
A serious drop in the indicator is also bad. If the owner saves on salaries, he loses the best personnel, which is always fraught with a drop in the company’s income.
Make sure you have a complete and comprehensive understanding of the market. Identify its segments and prioritize. Remember: in a highly competitive market, business must be customer-focused.
Study your target audience – not only before opening a business or launching a new product, but also over time. Experts recommend conducting target audience research at least once every two years. Organize an unscheduled analysis if you discover that demand for competitors’ services is growing, and your sales are not reaching planned levels.
Don’t forget about competitors – direct, indirect and potential. It is important to pay attention not only to your closest competitors, but also to technologies whose development poses risks for your project. Organize a system for collecting information about competitors to monitor their activities.
Build competent communications with staff, investors, dealers and suppliers. Don’t forget to analyze the quality of work of suppliers, the satisfaction of investors, and the mood of employees – this will help to avoid troubles.
Regardless of the state of affairs in the company, look for new development prospects. Think about how you can enter other markets, attract additional investors, and win the loyalty of a previously unreached audience.
Review the results of marketing planning according to the criteria. How logical is the marketing plan, is it possible to identify mandatory components in it, is the plan related to financial goals, are the risks of unforeseen circumstances and force majeure taken into account, are alternative ways worked out.
Market analysis should underlie both product strategy and service methods. Consider whether the assortment needs to be optimized: it may be too large or, conversely, not complete enough. You may not be able to afford free services like trial periods of using the service. Pay attention to the volume of the average check – sometimes selling additional products allows you to increase profits without significantly changing the pricing policy.
During the analysis, evaluate whether your company is making enough efforts to build a strong brand: perhaps the consumer simply does not know about you. It is important to invest in promotion, but do it wisely, monitoring the return on investment.
Conduct an objective assessment of the marketing department’s performance. If there are no desired results, perhaps the manager or employees are not coping with their job responsibilities. Often the reason lies in the low qualifications of workers, which can be increased, or their incompetence, which must be eliminated. Monitor how the marketing department interacts with other structural divisions of the company. And remember that ideally every employee should be interested in increasing profits. If this is not the case, reconsider your staff motivation system.
Don’t ignore opportunities to implement new technologies. For example, sales system automation simplifies data collection and analysis. Choose modern tools that match the specifics and scale of your business. This will save working time and reduce the likelihood of errors due to human factors.