If you start selling a product without first studying the target audience and competitors, you can lose time and money. To save resources, market research is conducted.
What is market analysis
Who needs a marketing analysis of the market
Methods and types of market analysis
Main stages of market analysis
How to Conduct a Marketing Analysis of the Market
Possible Mistakes When Conducting Market Analysis
Expert advice
What is market analysis
Table of Contents
The market is the relationship between the seller and the buyer and the external environment in which the company exists. Market analysis in marketing is a tool that helps to find out how the macroenvironment affects the company, what is needed for further growth, what consumers think and what place the company occupies relative to competitors.
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Who needs a marketing analysis of the market
Studying the target audience and competitors of a product is marketing research that is necessary for any business. In some situations, a more in-depth analysis is required. Here is who will benefit from it:
● For aspiring entrepreneurs.
Before launching a new business or product, you need to understand whether it will be in demand on the market. For example, an entrepreneur wants to sell e-books with a graphic tablet function in Russia. To understand whether this product will be bought and whether the investment will pay off, you need to conduct a market analysis.
● Existing business.
Any company strives for growth and development, but there are always external factors that hinder this. If a product or service is selling poorly, there may be several reasons. For example, the market is oversaturated or there are problems with the product, promotion channels and distribution system. Market research and analysis will help to find internal problems and external “threats”: for example, to find out that competitors are selling a similar product cheaper. After the analysis, marketers or business owners understand what needs to be worked on so that the business develops and is competitive.
● For students of marketing and sociology.
In this case, conducting a market analysis is necessary for term papers and theses, in which market indicators are studied or a company, brand or product is analyzed.
You can start understanding market indicators on your own. For example, in the course “Market Analysis and Assessment” students learn to draw up a plan and select appropriate research methods, analyze trends and prepare reports.
Methods and types of market analysis
There are many methods of market analysis in marketing, and the use of specific tools depends on the field of activity and the “age” of the company, the purpose of the analysis, product features and other factors.
When a marketer begins market research, he always faces the question of where to get data. There are several options:
● Primary research.
In this case, specialists from the company or an invited agency collect data from scratch. To do this, they conduct consumer surveys and gather focus groups.
● Secondary research.
Sometimes a company needs a large array of data to analyze the market, for example, about the volume of sales of goods in retail chains. It is impossible to collect such information independently, so marketers turn to statistical data from Rosstat, marketing research, expert interviews, and data from specialized associations.
● Quantitative research. This is a method of market analysis
that helps answer the questions “How many?” and “Who?”. For example, marketers need to find out the exact number of consumers who know a certain brand of drinking water, understand how often they buy the product, in which outlets. An example of quantitative research is various surveys: by phone, on the website or in person.
● Qualitative research.
This type of market analysis helps answer the questions “How?” and “Why?” Qualitative research is conducted to test a hypothesis or to find out in what circumstances consumers use an existing product. To do this, in-depth interviews are conducted with the target audience, focus groups are assembled, or consumers are observed.
Main stages of market analysis
Main stages of market analysis
To obtain reliable and informative results of market analysis, you need to proceed in stages:
1. Define the research objectives.
Before starting a market analysis , a marketer or business owner needs to understand how the analysis objectives relate to the goals and objectives of business and marketing. For example, a construction company has a plot of land that can be divided into small plots and sold for development or built houses and sold “two in one”1. The goal of the business is to get the maximum profit. 2.The goal of marketing is to plan promotion and sales in such a way as to attract the desired target audience.3. The goal of the research is to understand who to sell to and what real estate options are of interest to potential buyers.4. After a clear goal has been formed, they move on to the next stage.
2. Create a marketing analysis plan.
At this stage, the general goals and objectives of the market analysis are broken down into smaller ones: what research will need to be conducted, where to get data for analysis. For example, a construction company needs to collect information on the market in a specific region, study competitors and their offers, assess demand and consumption characteristics.
3. Determine research methods.
To obtain information about competitors and the market as a whole, a construction company can conduct secondary research: for example, order a market review from a marketing agency. But to study consumers, it will be necessary to conduct primary quantitative research or qualitative research: for example, assemble a focus group of representatives of the target audience.
4. Conduct research.
To ensure that the analysis process does not drag on for a long time, it is necessary to define clear deadlines, budget, and performers: by the company or with the involvement of specialists from a marketing agency. Let’s say that the construction company from the example above will need about a month for a full analysis.
5. Analyze the research data.
After the marketer receives all the results of different types of market analysis , it is necessary to summarize the information and correlate it with the goals that were set at the beginning of the research. To do this, clarify whether the questions have been answered and whether the hypotheses have been tested.
It happens that the conclusions do not coincide with the goal. In this case, it is necessary to return to the research stage and check the hypotheses and the quality of the collected data once again. For example, it may turn out that the questionnaires were filled out incorrectly during the surveys or the market analysis was superficial.
6. Present the results.
This stage is no less important than the research itself. To present the analysis, you need to present it to the team, investors or creditors. The presentation should be structured so that the conclusions follow logically from the analytics that have been collected.
How to Conduct a Marketing Analysis of the Market
It is important not only to act in stages, but also not to skip any of them. This way, the research results will be reliable, and the company will be able to make accurate decisions.
There are several ways to analyze the market: independently or by contacting an agency for a full analysis or specific data if you cannot find it.
It happens that when analyzing a local B2B market or a complex product, it is difficult to find information in open sources. For example, the company “Alfa” provides audit services, and its marketers analyze the market in one region. There are ten more similar firms working here. Marketers can find a rating of firms by total sales volume, but are unlikely to learn about the structure of these services: how many audit, accounting or management services each company provides and which of them can be a direct competitor of “Alfa” in terms of audit. Agencies that conduct research in the field of audit can help with this.
The agency’s help may also be needed if there is a lack of data on consumer behavior. For example, marketers at Kazachiy Istochnik LLC conducted a study of popular brands of drinking water in the Krasnodar Region. The company’s marketers only had information on the Russian market. To obtain data on the Krasnodar Region, they contacted the agency and ordered a quantitative online study.
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Possible Mistakes When Conducting Market Analysis
To ensure that your research results are helpful rather than misleading, there are common mistakes to avoid when analyzing the market:
❌ Use unreliable data.
There is a lot of information on the Internet about the analysis of a market or product: these are student essays and term papers, articles on popular but not specialized resources, ready-made business plans with research results. Such information cannot always be trusted, because the published research may be sponsored, and the term paper may contain errors.
❌ Use outdated data.
The world is changing rapidly, and in many areas, research from 3–4 years ago will be outdated. For example, in 2019, the catering market was actively growing. In 2020–2021, during the pandemic, the industry changed: some players left the market altogether, while others reoriented themselves to home delivery, including contactless, in order to stay afloat and even make money. If you compare data for 2019 and 2021, the study will be biased.
❌ Not diving deep enough into the research.
This mistake occurs due to a lack of understanding of how much data needs to be analyzed to get a deep report. For example, a marketer relies on information from only a couple of experts whose opinions they trust. Such data may be incomplete and reflect one point of view.
❌ Use the wrong research methods.
It happens that in a company, the research is not conducted by marketers, but by the business owner or another specialist. Because of this, it is easy to make a mistake and use the wrong market analysis tools. For example, to assess the characteristics of product consumption, you need to conduct a qualitative study – an interview, but instead they do a quantitative one. This takes time and budget, and the data obtained turns out to be unnecessary.
❌ Not following the research order.
The reliability of the data and the quality of the analysis depend not only on the methods, but also on how accurately the research order was followed. If you swap the stages or skip some, there is a risk of getting distorted results that do not correspond to the purpose of the study.
❌ Calculate only one indicator.
All market indicators should be calculated in monetary terms, such as rubles or another currency, and in physical terms, i.e. liters, pieces, tons. Comparing these data provides more complete information about the market. For example, the construction materials market fell by 30% in physical terms, but grew by 50% in monetary terms. The reason is not the growth in sales, but the increase in prices for goods. If you take into account only one factor when analyzing the market, you can draw the wrong conclusions and build the wrong sales or promotion strategy.
