What are the benefits of running a marketing analysis?
Clarke Ricks
School of Business, Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 2, 2021
What are the benefits of running a marketing analysis?
A marketing analysis can reduce risk, identify emerging trends, and help project
revenue. You can use a marketing analysis at several stages of your business, and it can even
be beneficial to conduct one every year to keep up to date with any major changes in the
market.
A detailed market analysis will usually be part of your business plan, since it gives you a
greater understanding of your audience and competition. This will help you build a more
targeted marketing strategy.
These are some other major benefits of conducting a market analysis:
Risk reduction: Knowing your market can reduce risks in your business, since you’ll
have an understanding of major market trends, the main players in your industry, and what
it takes to be successful, all of which will inform your business decisions. To help you further
protect your business, you can also conduct a SWOT analysis, which identifies the strengths,
weaknesses, opportunities and threats for your business.
Targeted products or services: You are in a much better position to serve your
customers when you have a firm grasp on what they are looking for from you. When you
know who your customers are, you can use that information to tailor your business’s
offerings to your customers’ needs.
Emerging trends: Staying ahead in business is often about being the first to spot a
new opportunity or trend, and using a marketing analysis to stay on top of industry trends is
a great way to position yourself to take advantage of this information.
Revenue projections: A market forecast is a key component of most marketing
analyses, as it projects the future numbers, characteristics and trends in your target market.
This gives you an idea of the profits you can expect, allowing you to adjust your business
plan and budget accordingly.
Evaluation benchmarks: It can be difficult to gauge your business’s success outside
of pure numbers. A market analysis provides benchmarks or key performance indicators
(KPIs) against which you can judge your company and how well you are doing compared to
others in your industry.
Context for past mistakes: Marketing analytics can explain your business’s past
mistakes or industry anomalies. For example, in-depth analytics can explain what impacted
the sale of a specific product, or why a certain metric performed the way it did. This can
help you avoid making those mistakes again or experiencing similar anomalies, because
you’ll be able to analyze and describe what went wrong and why.
Marketing optimization: This is where an annual marketing analysis comes in handy
– regular analysis can inform your ongoing marketing efforts and show you which aspects of
your marketing need work, and which are performing well in comparison to the other
companies in your industry. What are the drawbacks of running a marketing analysis?
The below drawbacks of running a market analysis pertain less to the method itself
than the resources it requires.
Market analysis can be expensive. If you’re not as familiar with marketing concepts
such as market volume and customer segmentation, you might want to outsource your
market analysis. Doing so can be great for your analysis’s quality, but it can also leave a big
dent in your budget. Narrow your market analysis to a certain group – perhaps current
customers – to lower your costs.
Market analysis can be time-consuming. Market analysis can take precious time
away from more directly business-related tasks. You can analyze one area at a time – say,
buying patterns or competition – to free up your day-to-day schedule.
Market analysis can require extra staff. Some larger companies retain in-house
market analysis staff, and you can follow their lead. Doing so, though, comes with all the
usual costs of hiring a new employee. The question then becomes: Do you conduct your
market analysis yourself, outsource it, or hire in-house? The more expensive options can
often yield more meaningful insights.
Market analysis can be narrow. The most successful market analyses use actual
customer feedback, which analysts often get through customer surveys. These surveys may
reach only a portion of your entire customer base, leading to an inaccurate sample size. The
result is that market analysis may not fully detail your customers and what you should know
about them.
Market analysis vs. conjoint analysis vs. sentiment analysis
Where market analysis is broad and comprehensive, conjoint analysis focuses on
how customers value what you offer. Surveys are often the backbone of conjoint analysis –
they’re a great way for customers to share what drives their purchases. Product testing is an
especially common application of conjoint analysis. This method can yield insights into
pricing and product features and configurations.
Sentiment analysis goes beyond number-driven market and conjoint analysis to
identify how customers qualitatively feel about your offerings. It can show you what
customers are happy and unhappy about with your offerings or buying process. You can also
wade into deeper emotional territory such as anger, urgency and intention, or you can dig
up descriptive feedback. It’s a great tool to use alongside market analysis, whereas conjoint
analysis is all but included in market analysis.
How to conduct a market analysis
While conducting a marketing analysis is not a complicated process, it does take a lot
of dedicated research, so be prepared to devote significant time to the process.
These are the seven steps of conducting a market analysis:
1. Determine your purpose.
There are many reasons you may be conducting a market analysis, such as to gauge
your competition or to understand a new market. Whatever your reason, it’s important to
define it right away to keep you on track throughout the process. Start by deciding whether
your purpose is internal – like improving your cash flow or business operations – or external,
like seeking a business loan. Your purpose will dictate the type and amount of research you
will do.
2. Research the state of the industry.
Map a detailed outline of the current state of your industry. Include where the
industry seems to be heading, using metrics such as size, trends and projected growth, with
plenty of data to support your findings. You can also conduct a comparative market analysis
to help you find your competitive advantage within your specific market.
3. Identify your target customer.
Not everyone in the world will be your customer, and it would be a waste of your
time to try to get everyone interested in your product. Instead, use a target market analysis
to decide who is most likely to want your product and focus your efforts there. You want to
understand your market size, who your customers are, where they come from, and what
might influence their buying decisions. To do so, look at demographic factors like these:
Age
Gender
Location
Occupation
Education
Needs
Interests
During your research, you might consider creating a customer profile or persona that
reflects your ideal customer to serve as a model for your marketing efforts.
4. Understand your competition.
To be successful, you need a good understanding of your competitors, including their
market saturation, what they do differently than you, and their strengths, weaknesses and
advantages in the market. Start by listing all your main competitors, then go through that
list and conduct a SWOT analysis of each competitor. What does that business have that you
don’t? What would lead a customer to choose that business over yours? Put yourself in the
customer’s shoes.
Then, rank your list of competitors from most to least threatening, and decide on a
timeline to conduct regular SWOT analyses on your most threatening competitors.
5. Gather additional data.
When conducting marketing analyses, information is your friend – you can never
have too much data. It is important that the data you use is credible and factual, so be
cautious of where you get your numbers. These are some reputable business data
resources:
U.S. Bureau of Labor Statistics
U.S. Census Bureau
State and local commerce sites
Trade journals
Your own SWOT analyses
Market surveys or questionnaires
6. Analyze your data.
After you collect all the information you can and verify that it is accurate, you need
to analyze the data to make it useful to you. Organize your research into sections that make
sense to you, but try to include ones for your purpose, target market and competition.
These are the main elements your research should include:
An overview of your industry’s size and growth rate
Your business’s projected market share percentage
An industry outlook
Customer buying trends
Your forecasted growth
How much customers are willing to pay for your product or service
7. Put your analysis to work.
Once you’ve created a market analysis, it’s time to actually make it work for you.
Internally, look for where you can use your research and findings to improve your business.
Have you seen other businesses doing things that you’d like to implement in your own
organization? Are there ways to make your marketing strategies more effective?
If you conducted your analysis for external purposes, organize your research and
data into an easily readable and digestible document to make it easier to share with lenders.
Retain all of your information and research for your next analysis, and consider
making a calendar reminder each year so that you stay on top of your market.
Making market analysis easy
If you have the time to conduct a market analysis yourself, go for it – this guide will
help. If you don’t have the time, hiring an in-house expert or outsourcing your analysis is
often worth the cost. Your analysis will help you figure out who to target and how – and
that’s a huge part of business success.
