A market analysis provides insight into the market. Companies can then use this insight to make marketing decisions. The analysis can identify the market segments and their needs. Based on this information, companies will detect market opportunities. They may then decide to approach a certain group of new customers, refocus on existing customers or find customers that resemble their current ‘top customers’. We explain how to use market analyses effectively.
What is a market analysis used for?
A market analysis may provide input for a business case or a new business concept. It can also provide insight into trends, target groups (based on geographical characteristics, for example) and the needs of these target groups. Additionally, a market analysis may be used for:
- Further definition of target groups to answer questions like: How many companies are in my target group? Within which sectors? What are the related sectors?
- Benchmarking to see how certain target groups or existing customers perform compared to the market as a whole.
- Financial insight into certain target groups. For example, the financial performance of companies in the target group, how this relates to the market and whether this demonstrates a positive or negative trend.
- Insight into competitors and suppliers. A market analysis does not always need to focus on potential or existing customers. It may be designed to provide insight into competitors (i.e. the company’s competitive position) or suppliers.
Conducting a market analysis
Suppose that the market analysis is used to find new customers and that these new customers must have the same profile as the current ‘top customers’. In this case, a customer analysis can supplement the market analysis. The following steps must then be taken:
- Step 1. Analysis of the company’s position
- Step 2. Analysis of the existing customer base
- Step 3. Finding new customers
Step 1. Analysis of the company’s position
The sector and the market
- How many companies does your sector include?
- How many companies operate in your segment?
- What is the financial situation of the overall market?
- What is the financial trend within your market?
- Which segments are still profitable?
- How many direct competitors do you have?
- What is the financial position of your competitors?
- What is your financial position compared with your competitors?
The unique selling points
- What do you do differently or better than your competitors? What makes you unique?
- Which proposition appeals to customers, and can you deliver on it?
Step 2. Analysis of the existing customer base
- Where are your existing customers?
- What are their financial and other characteristics?
- Who are your best customers
- What are the needs of your target groups?
- Do you fulfil those needs, or would you be able to?
Step 3. Finding new customers
You now know the current state of the market and where opportunities may lie. Additionally, you have insight into your customers, and in particular you know who your top customers are. Now it is important to match up the analyses and start approaching customers which resemble your top customers with a suitable proposition - obviously in the segment offering the best opportunities. You can do this by expanding your databases and research results with third party data.
Suppose that your top customers are companies with over 50 employees in B2B services with their head office in Antwerp. In that case, you can start looking for contact information of similar companies and you can simultaneously request their financial characteristics. This makes sure that you avoid focusing on companies that fit into your target group profile, but are classed as late payers.