Overview

A fundamental part of any business plan is a market analysis. A market analysis section is developed purposely to provide the business with an expertise to run a particular arcade and enable the business attract effectiveness in the same arena of operation. This article will look what exactly is meant by market analysis and the significance of market analysis.

Definition of market analysis

A market analysis is a qualitative and quantitative evaluation of the market. A market analysis develops a thorough look into the actual market size with reference to value and volume. It also looks at the numerous purchase patterns and various customer segments, competition and the overall economic terms that act as barrier to business success.  Market analysis is a part of industry analysis and therefore would also be understood as environmental investigation. Through this analysis, the strength, opportunities, threats and weakness can also be investigation. With the assistance of a SWOT analysis high level business strategies can also be established. A market analysis is significant especially because of its well-known documentation that acts as a form of investigation to inform a business of its planning strategies.

The different dimensions of market analysis

The outline of a fair market analysis is outlined from specific dimensions.

Key details of success

Key success factors

Channels of distribution

Cost structure of the industry

Market profitability

Market growth rate

The trends in the market

Market size

The main aim of a market analysis is to determine that attractiveness at the existing market place both for the present and the future. Most businesses develop an evaluation of future markets by having an understanding of the evolving nature of the market, the existing market threats and how they relate to the strengths and weaknesses within the organization. Organizations have used these findings to act as a guide for their investment plans and advancing their success in the future (Joshi, Reibstein & Zhang, 2016). The findings gathered in a marketing analysis would act as a motivation to an organization that needs to transform its investment strategies. While conducting a market analysis for a business, the areas that are more likely to be affected would be the laborers, facilities that need expansion, new purchases of capital equipment, inventory levels and other advertising activities within the business.

Elements of a market analysis

The market size and value

Market size in the market place analysis would receive a definition from the aspect of market potential and market volume. The market volume reveals the complete nature of volume of sales for a special market. The volume is wholly dependent on the nature of demand and the quantity of buyers. Market volume can only be measured in quality (value) or quantity (volume). The quantity of goods and the market price are taken into account when the qualitative measurement is used. Other than the market volume, the market potential can be of a similar significance in a market analysis. The market potential provides managers with a definition of the top most limit of demand and considers potential clients (Klaesson, & Therese, 2015). However, the market potential is much fictitious than the market volume because it provides goods and values for market orientation. The relationship between market potential and market volume is responsible for providing data in relation to the possible chances of market growth. Information such as the financial data of major market players, trade association information, government data and customer reviews are presented the market size element (Aaker & McLoughlin 2010).

Potential customer

Defining a potential customer depends on the kind of business. A multinational business like Samsung would want to attract the highest number of potential customers as compared to a small and medium enterprise at the local area. For example, in the market analysis of Samsung, it is evident that the organization acts as the sole manufacturer and the sole distributor of genuine Samsung phones. For this reason, it is expected that the target market also understood in terms of potential customers for Samsung are not only within their area of production. When conducting a market analysis, it is important that the organization looks at the target market or who its potential customers are in order to maximize on its production. However, this element is factored in when evaluating the size of the market. The market needs

This particular section is very significant when developing a market analysis because it is in this section that the business is revealed to a potential investor that might bring you to the knowledge of the market. Basically, the market need knows why consumers buy the product. In this section, business managers are expected to go into necessary details on the exact drivers of market demand for the products and services they intend to offer. A way in which managers can find out about market drivers is looking at the take away concept. Looking at Dorman’s coffee market analysis, a major driver of the market need is consistency. Consumers will always go for a product that seems to be consistent. Dorman’s coffee business has been successful not only because of consistency but also because of buying from a chain of producers as opposed to buying from an independent shop locally.

Competition

It is important for businesses to factor in the concept of competition when developing a market analysis. A business must be able to explain the position of its competitors as well as describing their strengths and weaknesses. The idea in this section when constructing a market analysis is to analyze the angle in which the market brings weaknesses to a business. From this view, the company is able to strategize itself perfectly when about to venture in. Fulfilling this section ensures that the business manages to match the benefits that come with the product and consumer wants.

The relationship between business success and market analysis lies in communication and interaction. Understanding the market is necessary in understanding the perspectives of business which would further help in balancing the existing business relationships and concepts. The areas discussed in this article bring us to the significance of conducting market analysis. I believe market analysis would be significant to a business in sales forecasting, marketing strategy and ensure a proper market research is established for the purpose of success. However, in as much as market analysis is significant for every business, I believe not every business manager needs to perform an analysis of existing market. All the same, it would still be relevant for managers to use the date gathered in market analysis in order to know how to get to successful business conclusions and strategies that they need to use to be successful.