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How To Conduct A Market Analysis For Your Business
The term "market analysis"
is often confusing to entrepreneurs, especially for
people who focus on a specific niche or market segment.
In fact, many small business owners don't understand
the process or complain that conducting a market analysis
is too complicated or too expensive and wonder why or
if it is necessary.
What is market analysis?
In the most basic terms, a market analysis
is an assessment of:
- A particular problem or opportunity in a market.
- The needs of the target market relating to the problem
or opportunity.
- Ideas for marketing a particular product or service
that fills the needs of the target market.
When should you conduct a market
analysis?
- When you are starting a business.
- When you are entering a new market.
- When you are considering a new product or service.
Why should you conduct a market analysis?
- To minimize business risks.
- To understand the problems and opportunities.
- To identify sales opportunities.
- To plan your marketing/sales approach.
The process of conducting a market analysis
can be divided into three parts:
Part 1 - Understanding Market Conditions
This gives you basic information about
your entire market -- the size, the competition, the
customers.
Part 2 - Identifying Market Opportunities
This gives you more targeted information
about potential problems or opportunities in the potential
market, and includes information about growth, current
and future trends, outside factors and more information
about specific competitors.
Part 3 - Developing Market-Driven
Strategies
Here is where we get into what market
research does for you. It helps you to pinpoint opportunities
to grow your business. By understanding the market and
knowing what opportunities are available you can create
a marketing strategy that leaves your competitors in
the dust!
Here are 10 questions that can help
you get started:
1. What is the market I want to reach?
- Who are they? (Basic Demographics)
- What is their biggest problem in relation to this
market?
- Are their needs being met by the products or services
provided in this market?
2. Who is my competition in this market?
- Are they successful in this market?
- Are they marketing a similar product or service?
- What is the market share of the three biggest competitors
in this market?
3. Is there room for growth in this market?
4. What is the size of this market?
- Is there room for growth?
- Is the industry growing? Stable? Saturated? Volatile?
Declining?
5. How is my product or service different from the competition?
6. How can I reach this market?
- How is my competition currently reaching this market?
- Is it the most effective way?
- What are the alternative ways of reaching this market?
7. What are the business models of my competition in
this market?
- Are they effective?
- Is there a way to do it differently or better?
8. What do customers expect from this type of product
or service?
- What are the core competencies of this product or
service?
- What would make the product "new" "different"
or "better" for the customer?
9. How much are customers willing to pay for this product
or service?
10. What is our competitive advantage in this market?
Knowing the answers to these questions
will not only help you figure out if there is a need
for your product or service, it will help you figure
out the best ways to reach your customers, price your
products or service and ultimately make more sales!
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