Meaning of market analysis

A market analysis is the study of the different dimensions of the market or the particular industry. It is basically the layout of the market in which the firm wants to operate and provides all the required information on the market.

There are various internal and external factors that affect the organization. The organizations conduct a SWOT analysis and PESTLE analysis. The SWOT analysis is the analysis which helps the firm in identifying its internal strengths and weaknesses as well as the external opportunities and threats that are there in the industry. The PESTLE analysis is the analysis which is conducted to study the macro environment outside the organization.

SWOT analysis

The companies do the SWOT analysis in order to identify the strengths, weaknesses, opportunities, and threats for the business.

Strengths

There are various factors that can act as the strength of the business and these are:

• The advantages that the organization have
• Competitive edge in the industry
• The resources that are cheap and unique and are not available with the others
• USP that is unique selling proposition of the organization

These all are the strengths of the company and the most important internal factor that has a great impact on the analysis of the market by the marketers.

Weaknesses

The weaknesses of the organization can be:

• The things that can be improved in the organization
• The activities that must be avoided in order to facilitate the growth
• The things in the organization that are not liked by the people in the market
• Factors that affect the sales of the organization and the effect here refers to the negative effects that lead to the decline in the sales

It is very important for the organization to identify its weaknesses before conducting the market analysis.

Opportunities

Opportunities are external to the environment of the organization. The opportunities must be grabbed by the organization in order to grow. The opportunities can be:

• Technological changes in the market whether on the broad or narrow scale
• Changes in the policies of the Government that are related to the industry

Threats

The threats of the organization can be identified as:

• The obstacles that the organization faces from the external environment
• Competitors in the industry
• Changing technology threats
• Debt or cash flow problems

PESTLE analysis

Political factors

Political factors that can influence the firm in the industry is the intervention of the Government in the policies of the economy. Political factors include political stability in the international market, changes in the trade as well as tax policies, etc.

Economic factors

Economic factors have a great impact on the firm. So, in order to conduct the market analysis economic factors must be considered. Economic factors include interest rates, inflation rates, exchange rates, taxation policy, etc.

Social factors

These are the factors that are based on shared values and beliefs. The social factors include age, health, population, career, attitudes, etc. these are also an important part of the market analysis.

Technological factors

The technology is changing at a very fast pace in this modern world. So, the factors that are related to the technology must be considered by the organization or the firm while conducting the market analysis.

Legal factors

The factors that are related to the legal aspect in the macro environment are health and safety, equal opportunities, advertising standards, consumer rights and laws, product labeling and product safety. 

Environmental factors

Environmental factors are of utmost importance for any firm or organization and they must be considered while doing the market analysis. Environmental factors include the availability of raw materials, pollution levels, etc.

Dimensions of marketing analysis

There are various dimensions of the marketing analysis and these are as follows:

Market size

The size of the market matters a lot for the organization because the number of competitors depends on the size of the market. If the size of the market is big, there will be more competitors as compared to a small market. If it is analyzed by the company that the market size is big, then the product should be developed in such a way that it stands out from the product of the competitors so the customers cannot switch to others.

The growth rate of the market

The other important dimension that must be analyzed by the company is the growth rate of the market. The growth rate of the company helps in determining the investment that the marketer wants to make in the industry. If it is analyzed that the market will grow in the future then the firm investments more and if there is no growth prospect in the future, then the firm is likely to invest less.

Market trends  

The trends that are prevailing in the market plays an important role in the market analysis. The firm understands the trends of the market and develops the product according to the trends that are going on in the market. Trend sometime forms the part of a threat to the organization as they change very frequently.

Market profitability

The main motive of every business is to earn a profit in the long run. In order to ensure that the business will bring profitability, the market profitability needs to be analyzed. If the market is highly profitable, then only huge investments can be done.

Key success factors

Key success factors are the various factors like technological progress, economies of scale, etc. which helps the company in achieving success in the industry or the market.

Distribution channels

Distribution channels are the requirement of every business to send goods to the customers. So, distribution channels are very important and need to be considered while marketing analysis.

Industry cost structure

The cost structure of the industry is very important to analyze as on the basis of this the business can estimate the cost that is required to get the goods into the market for sale to the customers.

Steps in the marketing analysis process

Step 1: Define the problem or opportunity

The first and very important step of the process of marketing analysis is to define the problem for the business or the opportunity. Defining the problem will help in finding optimal solutions to the business problem.

Step 2: Develop a research plan

After the problem of the business is defined, then the business develops the research plan. The research plan will include the various methods which can help the organization to solve their business problems. The research plan can be developed by using different techniques. The survey is conducted for prospect clients. After that various other surveys are conducted using different tools that are available.

Step 3: Collect relevant data and information

The data that is collected while analyzing the market can be qualitative as well as quantitative and the business mix these two data. The data which is collected then filtered and the information that is relevant for the business is considered for the research.

Step 4: Analyze data and report findings

The data collected in the previous step is analyzed to find out the trends and patterns. Analysis of data is helpful in finding the trend in the market, and buying behavior or patterns of the customers can also be identified by making some patterns that are very useful for the business or the firm.

Step 5: Take action

This is the last step of the process of marketing analysis. In this step, the business uses the collected information or data and the trends or patterns that are gathered for solving the problems of the business.

Importance of marketing analysis

There is a various point that highlights the importance of marketing analysis and these are as follows:

• The market analysis put customers first

It is very important point that is attached to the marketing analysis. The marketing analysis puts the customers in the first place while conducting the analysis. The main focus of analysis is on the customers, their needs, buying behavior or patterns, etc. After analysis all the aspects of the customer of the particular market or the industry then only the analysis is done for any other things that are required by the business for sustaining in the market.

• Market analysis forces companies to look inward

The other point of the importance of marketing analysis is that it helps in forcing the companies to look inward. While conducting the analysis for the factors that are external to the business, there arises a need to analyze the factors that are internal to the business also. The attitudes, values, and beliefs of the internal environment also affect the organization to the large extent. So, this must be analyzed with the external environment for the growth of the organization.

• A market analysis helps determine the Unique Selling Proposition (USP)

A market analysis helps the business to understand the products and services of their competitors and as a result, helps the business in developing the competitive edge against its competitors. The unique selling proposition is determined by the analysis of the market.

Advantages of marketing analysis

• Marketing analysis helps in developing communication with the potential customers of the business
• The biggest benefit of conducting the marketing analysis is that it helps in identifying the opportunities that are existing in the market
• Trends that are prevailing in the market can be identified with the help[ of marketing analysis which is very helpful in product development
• The analysis of the market helps in building the reputation of the company in the industry

Disadvantages of marketing analysis

• The market analysis does not guarantee the success of the business in the long run
• The other disadvantage is the misrepresentation of the data that is collected through the analysis of the market. The data is misrepresented by the employees which lead to failure of the business
• The data collection methods that are used for collecting the data while analyzing the market are not appropriate sometimes and results in the losses in the business
• The costs that are involved in the marketing analysis is very high. The business has to incur huge expenses in order to conduct the successful marketing analysis.