How to conduct a market analysis for a business plan?
Before you start any business, you should know everything about it. But the market analysis does not stop the moment you open up your business. It is in fact, an ongoing process. Yet, many entrepreneurs and start-up owners make a lot of mistakes with it. Hence, suffer in the business.
But you must not worry about it. We are giving you all the information that you need for market analysis. Yes, you read it right. In this blog post, we are putting together everything you need to know while studying your target audience. Even interesting, these details are relevant at any point in time in your business. It’s amazing, no? Keep reading the blog till the end to have all that you need!
What is market analysis?
Theoretically, it includes the analytical study of your industry and the market response. It includes practical study and oftentimes, even implementation. With market analysis, you also study important differentiators like competitors, the global commerce market, financial trends, customer psychology, and more. Basically, it includes everything that comes under the umbrella of the business- But with the point of view of actively changing the market in it.
The definition is easy to write but harder to implement. As, in practicality, the scenario is completely different. You have to give a helicopter view to every move you make. After that, you have to list down the pros and cons. And then, depending on that, you have to list down new strategies with the projected advantages and disadvantages. It is an ongoing process that is hardly linear. But with every step, the goal is to get closer to the customer.
Is market research the same as market analysis?
No, market research is not the same as market analysis. In fact, market research is a part of market analysis. The main difference being- Market analysis includes practical implementation. Whereas, market research does not. Market research is the primary part of the analysis. Which is used for the implementation.
But did you know that your target audience plays a very important role in a market analysis?
What is the target audience analysis?
Ever heard of the example of a man who was selling car shields to people who did not even have a car? Well, that’s just not an example- that becomes the true story when you don’t do your target audience analysis well. It’s a common mistake among budding entrepreneurs: They go on to marketing their product and solution to every other person they meet. This brings them more losses than failure. Why? Because they are simply wasting their precious time and money. Not every other person you meet is going to need your solutions.
On the contrary, when you do target audience analysis properly, your market is your solution to people who need it. It just becomes natural for you to offer your solution to them. And for them to happily use their solution.
See, marketing is not that single screen widget that works (the same) for everyone. It is rather a rounded ongoing activity. It helps you communicate your vision, solution, and your company to your target audience. That being said, you have to understand that marketing involves studying target audiences, their strengths, their weaknesses, their needs, their desires, and so many other things. You practically have to make a real-time outline and apply your marketing tactics. Analyze their response to it and note how it helps your solution and brand.
That being said, it is safe to say that target audience analysis is fundamental to marketing analysis.
What is the target audience/customer segmentation?
Wait before you do target audience analysis, you need to do target audience segmentation
The business world is a big world. And approximately, there are 8 million people on this planet. And everyone including yourself is a buyer. But not every buyer can be your buyer. And not every next person is going to be your target audience or customer.
You need to find out a group of people who are actually going to need your solution. And this practice of deriving your target audience is called target audience segmentation.
How to do target audience/customer segmentation?
Before you start the target audience segmentation, understand that you are going to test your solutions and marketing tactics for your audience. Your audience is actual people. And there are many things that you have to take into consideration.
However, to make it as efficient, first draw the four most important criteria: Behavioural, Demographic, Geographic, and physiographic.
Let’s understand these criteria:
For this criterion for target analysis, notice and understand your consumer interaction with your products, your marketing tactic, and your brand. Refer to their testimonial, buying graphs, repeat customers, and their response to your online presence.
In this criteria, you study more intimate details of your audience. These details include their age, gender, education, profession, general beliefs, religion, and even nationality. Here, you basically try to understand their psychology and buying patterns. You figure out why they buy and how they buy.
Here you break down their avatar based on where they live. This can be subdivided by nation, state, town, and so on.
In hare, you try to understand their personality. So, that you relate to as much as possible. And then derive your solution and marketing tactic that is most relevant to them.
When you complete your end-to-end research for your customer avatar, it’s time to dive deeper with the step-by-step way to analyze your target customers.
Step 1: Gather reliable, recent data
Do the industry research. Gather the information from published PR and research agencies. You can even consider looking into statistics and details from third-party sources. Gather as much information as possible until it starts looking monotonous. However, when you collect all the data, make sure that it is coming from a reliable source.
When you gather all the important data, try to draw a real-life picture of your target customer. As the data is of living, breathing people that you are going to cater to. One more thing that you have to take care of- is that the market trends keep changing quickly. So you have to always stay in touch with the most possible recent data. And take action on it as soon as possible.
Step 2: Know your customer and divide your market
The data you gather is not going to be of one person. It is not even going to be for one kind of a person. The data is going to give you information about different kinds of people and communities. So, your second step would be to group their data properly.
For this, ask questions like:
- Who are these people- men, women, or nonbinary?
- Do they have children?
- What is their family background?
- How educated are they?
- What do they do?
- What are their likes and dislikes?
- What are their weaknesses?
- What are their strengths?
- Which part of the world are they from?
And such other important questions that take you nearer to your target audience.
Step 3: Know your competition
Competition is an inseparable part of your business management and market. Hence, you will have to keep considering them at each step of the way. For which, be regularly accurate with your competition analysis.
Performing competitor analysis will help you know your strengths, weaknesses, threats, and opportunities against your competitor. And that, why would your customer prefer your solution and company over your competitors and vice versa.
Step 4: Integrate your analysis in the business plan
Once you’ve completed your market analysis and identified the audiences with the most potential, it’s essential to incorporate these different target customer segments into your wider business plan.
Now finally let's discuss how to do market analysis.
Here are 4 proven methods of market analysis:
If you have ever been a part of the buying market, you must be familiar with surveys. They are inexpensive and accurate. It includes a group of questions regarding your solution and your brand. A lot of times, you can even carry out a survey before launching your solution or brand. That’s because it involves a large part of your target audience. And the results of surveys are 99% accurate.
These days, companies run online surveys too. As in that way, they can reach more numbers of people and gather the data from a wider perception.
Case studies involve Interviews. These interviews allow you to have one-on-one correspondence with your audience. It helps you dive to the root of the topic, read your audiences’ mind and heart. Your customers/leads are usually caught in giving the most candid opinions during case study programs. Hence, they are very useful in gathering the most authentic response. These days, most of these case studies are carried out online.
Moreover, these case studies could be in audio/visual form or in the form of text. In either way, it is a powerful tool of market analysis.
Group research is the marketing analysis tool that includes testing your solution on a small group of people. Theoretically, it is quite simple- you test the solution with them and you analyze. But its practicality is altogether a different picture. Depending upon your products, it involves different risks for the people who are participating.
Moreover, oftentimes, you carry out group research before the launch of your solution. In that case, the secrecy of the brand could be compromised. However, if done rightly, it does give you honest results and deep marketing insight.
The customer observation session includes your company representative and your ideal user. Your representative simply observes and takes notes of your ideal user while they use your solution.
Using this tool of marketing analysis, you can get the most direct results.
There is no set-on-the-stone rule that you have to implement any one of these methods. In fact, there is no such rule that restricts the number or the types of the way you choose. In the end, whichever procedures give you a clear picture is the best for you. In the same line, you don’t even have to stick with one method of market analysis. Actually, it is advisable that you try different methods to acquire a bigger picture of the market situations.
Step by step approach on the practical implementation of market analysis
- Step1: Decide upon your marketing analysis tool
- Step 2: Involve your target personas
- Step 3: Allows them to use your products
- Step 4: Get the most accurate results
Apart from this, you need to understand that you do not always need these marketing analysis tools. Oftentimes, you might just get the right ideas only while studying your target audience. Hence, it is advisable for you to perform target audience analysis and marketing analysis regularly. The drill is quite simple- Study-Develop-Implement-Analyse-Repeat.
Why is market analysis important?
Market analysis helps you in the continuous improvement of your solution and your brand. It provides you with quick, efficient research to understand customer needs and tests new features.
Other than that, market analysis helps you to get more efficient, as it takes you closer to your customers. These methods are cost-effective and accurate. And lastly, if done rightly, they can even help you have an upper hand over your competitors.