Learn to Analyze Your Target Market Effectively in 4 Simple Steps

The importance of understanding consumer behavior and competition trends

A market analysis provides information on industries, customers, competitors, financial management, and other market variables. It also helps you develop actions to loyalize customers, evaluate products and new microenterprise alternatives.

Similarly, with this tool, you can determine the relationship between the supply and demand of a product or service. Simply put, market analysis is the qualitative and quantitative assessment of your target market.

“If we knew what we were doing, it wouldn’t be called research.” — Albert Einstein

Implementing market analysis

Market analysis is crucial to understanding the consumer base you need to target. It allows you to reduce risks even when your business is a simple idea. Start by gathering demographic information to better understand the opportunities and constraints you will have.

You can include data on age, property, family, interest, or any variable that applies to your business. A good exercise is to answer these questions to form a good idea of your market:

• Demand: is there interest in your product or service?
• Market size: how many people would be interested in your offer?
• Economic indicators: what are the income brackets and the employment rate?
• Location: where do your customers live and how far can your company go?
• Market saturation: how many similar options are already available to consumers?
• Pricing: how much do potential customers pay for these alternatives?

How to perform market analysis in 4 steps

1. Determine the purpose of the analysis

The type of market analysis you perform varies by purpose. For example, if you run a study for internal, because it’s for internal exploration, you probably don’t need to collect as much data as you would for an external purpose. Look at the perspectives: analyze where your industry is headed using metrics you can use Mixpanel, you can monitor how your users are interacting with your product.

By clearly understanding the business problem, you can maintain a focused and effective research process. An effective trick is to imagine what the “perfect” research report would look like to help answer the questions raised. If you produce a report according to the criteria you imagine, will you have the information you need to make an informed decision? If you say yes, get more data.

2. Develop your research plan

Let’s look at some techniques for conducting a market analysis: Prospects and Customers Interview: often, you get the best feedback when using this tactic because you go directly to the source. This could take the form of a focus group or individual interviews.

SurveyMonkey is a great tool to create surveys, quizzes, and polls for any audience.

Take advantage of your own network. Spread the word to your employees, friends, old colleagues, and LinkedIn connections that you are doing a study.

3. Collect data and information

Most of the data collected will be quantitative (numbers or data) versus qualitative (descriptions and observations). Ideally, should be a combination of the two types of data.

When collecting data, we ensure that is valid and impartial. You must never ask an interviewee: “Do you think we should offer a higher price level with additional services?” If you did so, you would apply negotiation techniques that influence the individual’s response. So you try to ask open questions or closed questions.

4. Investigate your competition

To continue the analysis of the market, study your competition. It is a duty that takes time to investigate what other companies do. Look at the offerings they implement, how they develop their sales plan, location, specific customers, and market disadvantages.

You must create a list and analyze each of your competitors and determine the weaknesses, opportunities, strengths, and threats. What do you offer those other businesses don’t have? Why would a customer choose a competitor’s business over your company? Does it pose a threat to your business?

The bottom line

Analyze your data and develop an action plan.

Now your research is complete. It is time to reveal the findings and take action. Start developing financial strategies and marketing campaigns, see how you can use these findings to improve your business. If you did an analysis for external, you can save it for “later”. Review this market analysis from time to time to make the adjustments.

Of course, there is much more to the market analysis process than these four basic steps, but they are enough to begin with. Even if you think you know your buyers well, you might find new channels and get message suggestions to help you get better.

“Innovation needs to be part of your culture. Customers are transforming faster than we are, and if we don’t catch up, we’re in trouble.” — Ian Schafer