Before making any business decision, it’s important to have a clear picture of your situation within your particular industry. From assessing potential risks to leveraging your key strengths and ensuring maximum returns, a well-conducted market study can help you understand how your market really works. What does a market study consist of? Why should you conduct one? What are the steps to research your market successfully? Here’s what you need to know.
What Is a Market Study?
Conducting a market study means researching key aspects of a market to determine its needs and wants. From the brands already established to the products available, marketing practices observed, and consumer behaviour, these elements provide insights into meeting those needs.
A thorough market study provides valuable data about the industry overall, the competitors, the consumers, and what your company brings to the table. The challenge lies in interpreting and leveraging the information to define effective strategies.
Why Should You Conduct a Market Study?
As a company, understanding your market should be at the heart of your business model. For example, knowing exactly what your target audience needs and wants, likes and dislikes, responds to and ignores, etc., can help you identify opportunities to stand out.
A market study will help you make informed decisions and fine-tune your strategies based on meaningful data. Some of the applications of this type of analysis include:
- Identifying emerging trends
- Reducing risks
- Targeting your products and services
- Forecasting sales
- Establishing benchmarks
- Contextualising mistakes
- Optimising marketing strategies
But it doesn’t mean you have to explore your market alone! Market study experts such as Alcimed can help you make sense of it all and take your business strategies to the next level.
6 Steps to a Successful Market Study
Whether you choose to conduct your own market analysis or prefer to enlist the help of specialists, several key steps should guide your reflections.
1. Establish Your Purpose
The first important step is to determine your “why”. Are you hoping to gauge your competition, find a new marketing angle, or rework your branding? A sound way to get started is to consider whether your focus is internal or external. For example, improving your cash flow can be viewed as an internal goal, whereas seeking a collaboration with another brand is external. This will help you narrow down the type of research you should conduct.
2. Research Your Industry and the Competitive Market
It is crucial to understand the current state and future direction of your industry, as well as how this impacts your audience and market position. This part is about gathering data and conducting comparative analyses to help you identify your competitive advantage.
In that regard, a good grasp of market saturation and your competition will go a long way. Look at what your direct competitors do differently from you and how their approach benefits them in the market (analyse their strengths and weaknesses). Study them objectively and ask yourself what they have that you don’t. Which aspects of their offering could lead a customer to choose them over you?
3. Identify Market Gaps
If your market study can help you define what others have over you, the reverse is true, too. In fact, knowing your rivals that well will give you a competitive edge by allowing you to identify market gaps within your industry where you can stand out.
These are areas existing brands are not currently managing to fill. To anticipate such gaps, stay on top of social changes and new laws – or more specifically the impact new laws will have on standard products and services. You could also conduct surveys to ask consumers what they wish they could find or why the options on the market leave them unsatisfied.
4. Identify Your Target Customer
There are no absolutes. No product is needed or wanted by everyone irrespective of their location, gender, age, education, interests, needs, occupation, etc. In other words, you should only target the proportion of consumers who fit the profile to become your customers. But first, you need to identify them.
This part of your market study will narrow down your market size, where your customers come from, and how you might influence their buying decisions.
5. Analyse Your Data to Determine Barriers to Entry and Identify Areas of Improvement
As the previous points illustrate, collecting data isn’t everything. Conducting a successful market study also means being able to analyse and interpret the data to make it useful. Always look at the information through the lens of how it benefits your company.
For example, knowing that your sector relies on certain technologies, certifications, or supplies can help you decide how to prioritise your purchases.
6. Create a Sales Forecast
And because sales are the end game for any business, it makes sense to focus on this factor as part of your market study. Ask yourself about what you intend to sell, the number of units you expect to sell over a given period, your prices, and the costs involved in making your products or services available, and do the math!