Have you spotted the right markets for your business yet?
Your strategy has a big influence on your success. The markets to focus on. The products to offer. And how to make them available. You can easily make a wrong decision. And as a result risk the profitability and eventually existence of your organization. But what is the right market? And what makes your offer right for a specific market? A strategic market analysis can provide you with the answers.
What is a strategic market analysis?
A strategic market analysis is a study of the market forces that define your success. Providing you with the insights you need. Knowing the potential of your product-market combinations is crucial for decisions such as budget allocation, market approach, markets to operate in or products to develop.
Why should you perform one?
The answer is simple: because it provides you with the required input for a strong business strategy. It will help you determine the elements for your SWOT analysis. The acronym for Strengths, Weaknesses, Opportunities, and Threats. Your SWOT is a step in the process to clarifying your key issues. So you can decide on the best strategy. To eliminate the main threats that are amplified when coupled with certain weaknesses. And of course benefit from opportunities that allow you to use your strengths.
Dimensions of a marketing analysis
A proper marketing analysis contains both an external assessment, of factors outside your organization, to define market attractiveness, and an internal assessment to gather insights on your competitive power for a specific market. Often the minimum amount of elements used per assessment is 3. But the more elements the more reliable the outcome.
Elements of an External Analysis
In your external analysis you evaluate the attractiveness of a market for your product. You define Opportunities and Threats by looking at the:
Macro trends – The PESTEL model lets you determine the Political, Economic, Social, Technological, Environmental and Legal situation for your product in a country. For instance, government policy may impact the regions you can operate in. The economy can affect your profitability. Social factors infulence the mentality of individuals. The rate of innovation can optimize your efficiency. Environmental factors can determine operating costs. And legal aspects how you can operate in a region.
Market Size – The market size is a significant factor to determine the potential of a specific market. After all, a market needs to be big enough to make a profit with your approach, as raising your sales price may simply stop customers from buying. Also the growth rate is a huge factor in any sort of marketing analysis. If a market has no growth you may want to avoid investing too much time and money in it.
Buyer needs & behavior – You will only be successful if you meet the needs of your target customer. So, it is crucial you know what these needs are. Which problems do they face and how do they currently manage it? What do they look for when investigating a product such as yours? What are their expectations. In respect of quality and service level.
Industry (suppliers) – If you are in the business to make a profit you need to analyze the market profitability. Otherwise investing your time and capital may turn out to be a total waste. This profitability is determined by the local competitive forces. The level of bargaining power of buyers, of suppliers, the intensity of rivalry, pressure from substitute products and threat of new entrants.
Elements of an internal Analysis
An external analysis serves to evaluate the competitive power of your product in that market. You can find insights on your Strengths and Weaknesses by assessing:
Market share & market share growth – Your market share tells you something about your position is in a certain market. How well your offer fits the market. Or whether your market approach seems to work. A decline in average market share growth may be a signal that it’s time to make changes.
Customer loyalty – How happy are your customers with your offer and approach? Methods such as NPS, customer surveys, number of complaints or social media can give a good indication. But average scores vary by industry, region, or customer characteristics. So you will need to compare them within your industry.
Market approach – The more competitors, the more important your market approach. Not only will you need to make sure your offer stands out so customers don’t switch to a rival, but you also need to get your pricing right. Setting your price too high will cost you business. But then again, setting it too low may have people doubt your quality. Are you sure your product availability is up to level? And does your customer relate to the benefits you claim to provide?
Branding – Customers are more likely to buy from an organization with a good reputation. In addition, a strong brand may also provide you with other benefits. Such as more success at finding new talent. Managing to convince stakeholders of your strengths brings you a competitive advantage. One that is particularly hard to copy.
Cost position – Your cost structure is a significant factor while running a business. Reducing your costs allows you to make more profit without increasing the sales price. In general a crucial instrument in a competitive market.
Spot your opportunities with relevant insights
A proper market analysis will help you gather the insights you need to define a winning strategy. And as a result develop a durable and lasting competitive advantage. In other words, helping you reach your targets! Have you found new insights from your analysis? Do let us know!
No time or expertise to perform a full marketing analysis? Try SpotOpp. A tool that leads you through your internal and external analysis and interpretation of results. Multiple-choice questions get you the insights you need. Highly reliable by various contributors from your organization and proven marketing models. Discover the potential of each product-market-combination. And at annual budget and regular reviews take optimum business decisions, add value, save costs and reduce risks.