Market studies help small businesses and startups understand the macro-level trends in their industry. They can also be used to identify potential competitors and opportunities. Furthermore, market research is of value for any business, no matter how big or small. They are used for many reasons, including product development, developing marketing strategy, and finding out more about the market that your business is entering.
Marketing is one of the vital components of any successful business. Hasty marketing tactics can often end in failure at best and missing out on a big opportunity at worst. It's crucial to study your market before you launch as well as get some advice from professionals so you can spend 100% of your time working towards a better product.
There are many free tools that can guide you through the process. Incorporating these three tools into your market study plan would help you identify the key competitors in a market. They would allow you to understand what makes your brand distinct from competitors and create a focused strategy for differentiating yourself.
1. PESTLE framework
The PESTLE (Political, Economic, Social, Technology, Legal, and Environmental) model is a tool used as a framework for understanding an industry or market. It is designed to help leaders in the field of business and government make decisions by considering the political, economic, social, technology, legal, and environmental aspects of an issue. When thinking about a business strategy or product launch, for example, companies should consider how each of these factors affects them and what their options are.
The PESTLE analysis will help you take a more strategic approach when planning for your product or service launch.
2. SWOT model
SWOT analysis is an effective tool for businesses and organizations to understand the strengths, weaknesses, opportunities, and threats of their current situation or the opportunities for them in the future. It provides valuable insight into how a business might succeed or fail in its current competitive environment.
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Strengths: While your ability to work hard, your passion, determination, and enthusiasm are all great strengths to bring to the table, competitive strengths are the advantageous skills, resources, capital, network, or value that distinguishes your brand from all others. They are why consumers want you and you alone.
Weaknesses: Your strengths are the areas where you beat your competitors at. Take a look at your weaknesses - the areas that you fall short in comparison to your competition. Hopefully, they can provide hints of things that need improvement, or opportunities for growth!
Opportunities: This is where you leverage your strengths to exploit openings such as growth niches, competitor prices, seasonal changes, or consumer trends. In other words, opportunities represent chances for growth in a field or industry where the business operates.
Threats: The external factors that can affect your business are many. Economic instability, political instability, social media trends, and even changes in the weather can all have a significant effect on your company's bottom line. Examining the threats you face can help reveal where you are ill-prepared and reveal what needs to change in order to be successful.
The value of a SWOT analysis is in its ability to help you maximize your strengths and minimize any threats. To take full advantage, however, be sure to put each strength up against the corresponding opportunity and use the result as leverage for greater potential. The weakness side can also be used by some companies as opportunities for risk mitigation and defense points. This way, weaknesses will not worsen and strengths become stronger based on the emerging opportunities.
3. Porter's Five Forces
Porter's Five Forces model provides a deeper understanding of a firm's cur-
rent competitiveness and highlights options to improve competitiveness.
Michael Porter outlines five forces for competitive analysis:
1) Threat of New Entrant
Ask yourself how easy it is for new companies to enter the market. There
are many factors to consider, including barriers to entry (such as patents
and high set-up costs), the attractiveness of profit margins, and the strength
of your brand.
2) Threat of Substitutes
Assess how easy it is for your products to be substituted by other products.
This includes all alternatives - not just similar products. For example, air-
lines compete with train and coach companies, not just other airlines.
3) Bargaining Power of Buyers
Review how strong your buyers are. Is it a buyers' market? Can buyers
switch to competitors easily? Are some of your customers in such a strong
position that this leaves you vulnerable? If your business-to-business
buyers are operating at low-profit margins, what impact will this have on
your company?
4) Bargaining Power of Suppliers
Assess the strength of your suppliers. Are you dependent on a particular
supplier - and how can this be mitigated? Does the supplier rely on your
custom or could it easily take its operating capacity to other companies
or sell directly to your customers? Could you use alternative products or
methods to reduce your vulnerability?
5) Existing competitors
Understand your competitors and how you compare to them.
What threat do they pose?
What are their strengths and weaknesses?
Could there be a price war or other aggressive strategies - and would you
be able to survive such tactics?
Are they innovative?
Are customers able to move to other companies easily?
How many competitors are there?
Which companies are the strongest?
Are there any newcomers ready to take the market by storm or render
your products redundant?
Assessing competitiveness through all five forces will help you to deter-
mine how the company is performing, its strengths and weaknesses and the
the direction it is heading in. However, Porter's model focuses only on external issues, hence it is often used alongside complementary models
that are better at revealing the internal issues that impact a company's
competitiveness.
Developing a market analysis structure
Market analysis is a quantitative and qualitative assessment of a market. This type of analysis helps companies better understand the target market and the overall structure of the market. Market analysis can be done on various levels such as global, country, sector, customer segment, or product.
In order to structure the market analysis you can use the following example structure:
1. Demographics and segmentation
Segmentation is the process of dividing consumers into different groups based on their demographic characteristics such as age, gender, location, and more. Demographics are categories based on population attributes such as age, education level, or ethnic background.
2. Target market
The target market is the group of people or companies with whom a business seeks to serve. A company's target market will be different depending on what type of product or service they provide, how many employees they have, and other factors that determine their revenue stream.
Identifying your target market by getting to know them through research and understanding their specifics can help you improve your marketing efforts. To better understand your customers’ needs within your niche, it is important to consider which demographic groups represent them so that you can develop creative marketing strategies for those groups.
3. Market need
In order to make the most out of your time, investors will demand enough information about your market. One way to do this is to show them a potential market need. For instance, if you are launching a makeup product, you would want to highlight a need that your product could fulfill. In this case, the needs for greater self-confidence and confidence in public spaces would be valid targets for your company
4. Competition
This section aims to present a fair picture of your competitors. Analyze your competitors' positioning and points of strength and weakness in order to formulate a comprehensive plan for success.
5. Barriers to entry
Oftentimes, barriers are external. However, some of them are internal as well such as not having enough time or the need to teach yourself all the skills that you would need to enter that particular industry.
6. Regulatory environment
The last step in market analysis, your regulatory environment, depends on any applicable laws in your market and geographical area.
What is your company's compliance plan in regards to regulatory requirements? This is one of the last steps in market analysis, but a crucial step. It's important for a company to do its due diligence and understand what its legal obligations are. Companies need to take into consideration the legal obligations that they are subject to. This is especially important in the United Arab Emirates (UAE) where there are a variety of laws and regulations that businesses must adhere to.
Concluding thoughts on market study
A market study is a vital part of investing in any company or project. One of the main reasons for conducting market research is to find out the potential demand and availability of products, which helps in determining the cost of sales and marketing.
While conducting market research, it’s important to identify your target audience. It’s also essential to do research on competitors in order to know what you have to offer and what you need to work on so that your product or service can stand out from the crowd. Without market research, companies make decisions without understanding their competition or customers’ needs. This leads us back to the idea that if we want a rewarding experience, then we need to understand our customers as well as our competition.
There are a few reasons Forex can be an appealing business sector, in any event, for amateurs who have little insight. This implies that dealers can get into the market whenever of day, in any event, when other more incorporated business sectors are shut.