Market analysis - learn the methods, understand the market and grow your business

Key information:

• Market analysis is called activities that allow us to learn or better understand certain market mechanisms, behaviors and processes.
• Properly conducted analysis allows for informed strategic decision-making, which involves minimizing the risk of error.
• In order to properly interpret the market situation, it is necessary to analyze both the environment closer to the company and the state of the entire region (country or continent).
• Micro-environment analysis includes learning about: competitors, potential buyers, suppliers.
• The study of the macroeconomic situation gives information on aspects: legal, political, technological, social.
• Market analysis is carried out using tools such as Porter's 5 forces method, SWOT analysis, PEST analysis, BCG matrix.
• The time and cost of conducting a market analysis depends on the specific sector you want to study and the method of study.
• A well-developed market analysis positively influences the dynamics of the company's revenues, optimizes costs, and gives a chance to identify opportunities and market niches.

Details below!

Do you want to expand your company or enter a new market? Or perhaps you have an interesting product or a unique service that you want to launch, but You lack confidence that your idea will succeed. Many people don't take action due to such doubts because they don't know how to deal with them. The solution is ridiculously simple— market research made with intuitive and easy-to-use tools.

Market analysis - what exactly is it?

Market analysis We call activities that allow us to learn or better understand certain market mechanisms, behaviors and processes. Thanks to it, we can learn barriers to overcome and to develop an appropriate development strategy. Furthermore, market segmentation enables effective customer targeting, which allows for precise tailoring of offers to the specific needs of different consumer groups.

Why conduct a market analysis?

Market research it is worth conducting for several reasons: to understand the specifics of the market, to understand consumer needs, to assess competition, and to identify potential risks. This is also exceptionally helpful before internationalization, which means entering a foreign market. Comprehensive analysis of the market, allows you to learn about its specifics and receive information on the situation in the sector. Properly conducted analysis allows for informed strategic decision-making, which involves minimizing the risk of error. Additionally, knowledge of what a given industry looks like allows for the acquisition of competitive advantage. In turn, knowledge market segmentation enables the company to maintain a stable position by better aligning its offerings with the needs of different customer groups.

How to conduct a market analysis?

To properly interpret the market situation, it is necessary to analyze business sector – both the company's immediate surroundings and the condition of the entire region (country or continent). Convenient terms to describe these areas are the company's micro- and macroenvironment.

The former is a narrower concept. Micro-environment analysis includes cognition:

• competition,
• potential buyers,
• Suppliers,
• substitutes.

Macroeconomic situation analysis gives information regarding aspects:

• Legal,
• political,
• technological,
• Social,
• Environmental,
• economic.

All of this data is important when planning your business, as it allows the entrepreneur to better prepare for market entry and more efficiently acquire the necessary resources. Greater knowledge allows for better organization of strategic actions, and this is one of the most important ingredients for success.

Market analysis methods

As mentioned in the introduction, market analysis is carried out using certain tools. By examining the macroenvironment in terms of political, technological, social, environmental, and economic aspects, we will gain useful information, but it will not be enough if we want to acquire comprehensive knowledge of the market. Several analytical tools should be used to view the market situation from different perspectives. The models used during market analysis are widely known, as the conclusions drawn from them are invaluable.

Porter's 5 forces

One of the tools used to study a company's micro environment is the method of Porter's 5 forces. This concept allows for understanding the structure and verifying the potential of the sector into which the entrepreneur intends to enter. The model developed by Michael E. Porter involves assessing the bargaining power of buyers and suppliers on an enterprise, the intensity of competition in the sector, and the threat of new entrants or substitutes.

Below is Porter's 5 forces template.

PEST analysis

To examine the macroeconomic situation of a company, the following can be used PEST analysis. It involves identifying the political-legal, economic, social, and technological factors related to our business. The fruit of using such a tool is fundamental, albeit very valuable, knowledge concerning what we can, what we should, and what we must do.

Below is the PEST analysis template.

SWOT analysis

Porter's 5 forces or PEST analysis These are just examples of the tools you can use, as many other methods have been developed that offer a slightly different perspective. An example is SWOT, which allows an assessment of the company's strengths and weaknesses, as well as the opportunities and threats it faces. Conducting a SWOT analysis boils down to identifying all the key factors affecting a company's strategic situation in four analytical categories.

Portfolio analysis - BCG matrix

On the other hand, a tool that gives you the ability to find the position a company is currently in is portfolio analysis otherwise known as. BCG matrix.  This method allows for the assessment of the attractiveness and competitiveness of a company's products and services, as well as the potential for their sales growth and profit-generating ability.

Below is a template of the BCG matrix.

Example of what a market analysis should include

It is easier to understand the market analysis process when we provide an example study for a fictional company. First, we will address the company's microenvironment, using the method Porter's 5 forces.

Suppose we want to set up a restaurant in Warsaw offering traditional Polish cuisine. In the vicinity of our establishment, there are not many food outlets offering at least similar products, but there are a lot of suppliers here who are engaged in an intense competitive struggle.

The multiplicity of supply companies reduces their bargaining power, and the dispersion of locations means residents have little choice, which negates their ability to influence us and the strength of competition in the sector. Due to the attractiveness of the area, the possibility of new entrants and the emergence of substitutes (cafes, fast food) pose a significant threat.

Now that we know what the microenvironment looks like, it's worth examining the macroeconomic situation. This can be used for this PEST analysis.

Analyzing the legal and policy aspects will make us aware of what standards our premises must meet and what we need to include in the contracts we sign with suppliers or employees. Further, looking into the economic background will allow us to choose the right financing for the business or match the offer to the financial capabilities of potential customers.

The subsequent arrangement of our product list will depend on social factors, meaning lifestyle, habits, or buyer preferences. The final step in the market analysis will be to examine the technological situation. We don't want to invest in outdated equipment. We are interested in the latest solutions that will allow us to deliver high-quality products quickly and reliably.

How long does it take to analyze the market?

It takes from 2 to 10 weeks for several consultants to conduct the analysis, depending on the chosen method of analysis and the availability of the needed data. However, it is hard to give a specific amount of time that is needed to perform a market analysis. The completion time depends on the specifics of the market you want to study.

It is also important how thorough an analysis you want to conduct and how many factors you will take into account. Conducting a comprehensive market analysis on your own is a very time- and labor-intensive activity, so it is worthwhile to use the help of a consulting company whose team will complete the market study in less time.

How much does a market analysis cost?

Just as the timing of a market analysis depends on many factors, so does its cost. To properly prepare for an appraisal, one should consider the three most important aspects influencing the scope of the analysis: the number of factors to be examined, the chosen market, and the analysis method.

However, the final cost of the market analysis will depend on details such as the availability of market data, the emergence of the need for primary research, the size of the research group, the detail of the information the client wants to receive and what elements of the analysis are most important to the client. The cost of a comprehensive analysis by a consulting firm can range from several to tens of thousands of zlotys, depending on, among other things, the aspects of the study mentioned earlier.

Get an edge over your competitors!

It doesn't matter if you want to start a new business or grow one. Market analysis allows you to build a powerful knowledge base, which in turn will translate into greater freedom in running your business, which will clearly increase your chances in the sector. Knowledge market environment provides the foundation for making informed decisions that open the door to success, allowing a business not only to survive but also to stand out in the market.

Furthermore, a well-developed market analysis positively impacts a company's revenue dynamics, cost optimization, and provides opportunities to identify market chances and niches. Thanks to it, we can better understand consumers' desires and needs, and even develop certain competitive advantages.

The more reliably you use the tools, the more advantage you will get over your competitors. Don't let yourself get ahead of others. Try them out and beat your rivals.

Market research is simpler, than it seems – trust the professionals to guide you through the entire process. Sign up free consultation and start building your competitive advantage now.