A Beginners Guide to Marketing Analysis
Marketing analysis, despite its misleading name, is more than just analyzing your market. It involves a thorough understanding of your customers, your competitors, your strengths, and weaknesses. Finally, you leverage all your knowledge, skills, and the resources available to you to create a robust strategy. That’s right; a marketing analysis helps you create an effective and efficient business plan.
What is Marketing Analysis?
The standard definition of marketing analysis is that it is a qualitative and quantitative assessment of a specific market in an industry. It provides a complete portrait of the market, covering both in-depth analysis and the big picture. The analysis helps you understand the market size, the various customer segments, profitability and potential of each customer segment, customer buying patterns, customer behavior, the market share of competitors, your strengths and weaknesses, industry barriers, and the environmental factors that affect the market.
With all this information available to you at your fingertips, you can make a highly specific plan that targets the most profitable set of customers, while completely bypassing those areas where your competitors have the traditional advantage. In other words, you can focus on the customer segments where your strengths give you the competitive advantage.
Some of the insights that you stand to gain from a marketing analysis are as follows:
1. Consumer demographic data
3. Potential target segments & niche identification
4. Market size – both volume and value
5. Growth rate of the market
6. Market needs
8. Competitor analysis
9. Key success factors
10. Barriers to entry
Choosing Your Target Market
As a businessperson, you always want your market size to be as big as possible. But, as the market size increases, so does the competition in the market. When no major barriers to entry are present, there will be more competitors vying for the same customers. Therefore, you have to focus on a very specific customer segment or set of segments to target. Those customer segments will be your target market. Your choice of target market should be such that you should have an advantage in that segment with respect to your competitors. Perhaps, your product has a unique feature that is loved by the customers in that segment, and your competitors cannot offer the same feature. Or, it could be something else. Your product or service should provide the target segment something that those customers cannot find anywhere else--at least for the same price or lower. Otherwise, they will just go to your competitors.
Take for instance the entertainment industry. The entire worldwide value of this industry is slightly more than $2 trillion. Now, if you are a German language movie maker, you cannot expect your movie to be watched by all the people who exist in this multi-trillion dollar economy. Your customers are those who understand the German language or are comfortable with reading subtitles in their language. Perhaps, you can even include the groups that watch foreign movies dubbed into their languages. Similarly, a lot of other factors limit your actual target segment to a fraction of the market size.
Marketing analysis helps you find the size of each customer segment. Then you can use the knowledge to affirm the market value, identify customers' unique needs, and map their customer journey.
Marketing analysis helps you understand what you are up against. It gives you a complete lowdown on your competitors’ standing in your market. The analysis offers information such as product pricing, number of employees, the size of the company, their annual revenues, their strengths, their weaknesses, geographical areas of operation, and so on.
The idea is to analyze your competitors and find the kinks in their armor--those are their weakness that you can exploit. You should only consider weaknesses that complement your strengths and your overall vision. For instance, it doesn’t matter if your competitor does not offer online support if you too cannot offer online support to your customers. Also, your competitors’ weaknesses should not be something that can be overcome with ease. You can’t have something as your competitive advantage if your competitor can also start offering it in a few months after your debut.
Most importantly, a competitor analysis helps you figure out the key drivers of demand. You can use this data to meet the presently unmet needs of your target segment. We recently shared an amazing infographic called "Using Myers-Briggs to Increase Engagement: Judging vs Perceiving." The infographic shows how you can use personality traits to better segment your target market according to psychological preferences and values. In addition, the infographic shows you how to apply behavioral segmentation according to cognitive functions. For example, you will learn how to apply differences in how people learn, communicate, and work to create more engagement.
Once you have completed the analysis of the present situation in the market, you will be creating a data-driven marketing strategy for your business. Your marketing strategy will cover all the short-term, medium-term, and long-term actions that you will be taking to sell your product to your target segment.
By now, you already have the list of customer segments that will be profitable for you and where you have an advantage that your competitor cannot copy in the medium term, or at least in the short term. Your job is to come up with multiple channels to reach your target market, in a way that maximizes your profits. Ask yourself questions like these:
- What distribution channels should I use to reach my target market?
- How many audience members can I reach with that marketing channel?
- Where do my customers like to hang out both offline or online?
- What do they read?
Once you have zeroed in on the communication channels, you should find persuasive and effective ways of communicating your product’s value. Focus on building a community around your product or service. Start by understanding the mindset of your target market. Again, marketing analysis can help you determine whether your customers make emotion-based decisions or logic-based decisions.
Finally, give your customers a reason to come back and share a good word of mouth about your product, service or company. It could be something like referrals. Or it could be something like discounts on repeat purchases.
Yes, you can make these decisions without the help of a marketing analysis. But, it will be like working in the dark with a stick to guide you. It may work, but it will take a lot of effort, and precious time which can cost you your business. Marketing analysis helps you create a strategy so that you don’t have to experiment with valuable resources. The answers you used to find by experimenting can be now be answered with accuracy thanks to marketing analysis.