Creating an online store requires time, investment and the development of a market analysis; This may be easier for those who already have a physical store, than for those who have never had sales experience in their lives. In any case, e-commerce is available to everyone and is easily accessible.
However, venturing into the virtual world requires a bit of care. That dose of attention is called market analysis. Without it, there’s a good chance you’ll set up an online store and never make your first sale.
So that this does not happen to you, we created this article with the intention of give you an idea of what a market analysis is, what it is for, what it looks like and how you can create one tailored to your business objective.
Pour yourself your favorite drink, open your favorite notes app and enjoy this content. oh! And if you have any questions, remember that at the end of the article you will find an open space to leave your questions and comments. 😉
What is market analysis?
Market analysis is a quantitative and qualitative evaluation of a specific market with which you can identify data such as its size, value, competition, barriers to entry, customer segmentation, and purchasing habits, among other things.
Importance of market analysis of a company
Behind every successful business, it is very likely that there is a deep market analysis, since it is an excellent tool to understand both potential customers and the competition and thus, to be able to develop .
Let’s review some other reasons why a market analysis can be beneficial for a company.
- Serves as a basis for developing a marketing strategy;
- reveals specific datesfor example the most popular products in a niche;
- help to take informed business decisions and data-driven;
- Provides a clear view of the competitor’s offer;
- It allows identify barriers of entry to the business and areas of opportunity.
Factors involved in a market analysis
Before going on to describe in detail how a market analysis is done, it is important to have a bit of context about what information we are going to need to prepare it. Broadly speaking, we can talk about Five main factors that can influence a market analysis:
- Size of the market: Although it is true that the bigger the market, the more it will be, it is also advisable to have a well-defined niche.
- Growth rate: do not stay with the size of the current market, review historical data and understand how much it has evolved and if it tends to increase or decrease.
- Cost effectiveness: Identifying the profitability of a market is extremely important, since the profitability of a business in that niche could also depend on it.
- Competition: it is not about finding a market in which there is no competition, but about finding “gaps” that your business can fill with its offer.
- Distribution channels: Assess if there are enough distribution channels and identify which ones are the best.
Ok, since you have a general idea of what you need to do a market analysis, now it’s time to know the points that make up this document. 📄
Structure of a market analysis
What does a market analysis look like? What information can we find in it? These are questions that you have probably already asked yourself by now. A market analysis can be as broad or as short as you likeis usually presented in a document that contains the following sections:
1. Demographics and segmentation
When we evaluate the size of a market, it is convenient to do a segmentation, mainly if your business is developed in an industry directed to a very specific niche. Two important questions to answer in this section are:
- How many potential customers are there?
- What is the market value?
2. Target market
The target market is basically the type of people your business is targeting. For example, if you have a baby clothing business, your target market is not babies, but those who have just become fathers, mothers and even grandfathers and grandmothers.
Some questions this section should answer:
- What age range are your potential customers?
- What is your average income?
- What country and city do they live in?
- Where do they buy?
3. Market need
This is a core part of the analysis because it includes the factors that lead potential customers to buy your products or services. Here too, ground that has not been covered by the competition is explored, which can lead to finding a barrier or area of opportunity.
Let’s look at some key issues in this part of the analysis:
- How much demand and supply is there?
- What weaknesses does your competition have?
- What added values could attract new customers?
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4. Competition
In this section the main objective is provide a clear and objective view of who the main competitors areits strengths and weaknesses, its strategies and its positioning in the market.
When analyzing the competition, it is useful to answer some of these questions:
- How many competitors do you know?
- Approximately what is the income of your competitors?
- What is your best-selling product or service?
- In what sales channels do they operate?
5. Barriers to entry
Barriers to entering a market are those obstacles that you might encounter along the way, that could impede the success of your business. These can range from a competitor with an aggressive strategy to a regulation that complicates access.
Let’s look at some questions that this part of the market analysis should answer:
- Do you need a specific, expensive or difficult to access technology?
- Is there a big competitor that dominates the market?
- Is there a regulation or license that you have to comply with in order to operate?
- Do the distribution channels have exclusivity with other brands?
6. Regulation
This section can be an annex to the previous one and, in fact, there are only a few specific cases where it will be necessary. For example, if your business offers food, pharmaceutical or personal care products that must comply with an industry regulation.
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If you got this far, then you should already have a much clearer idea of the function, value and structure of a market analysis. So, now yes, let’s find out how to make one. 🚀
How to do a market analysis?
Doing a market analysis is not difficult, but it is requires a good investment of time to investigate in various sources, analyze the results obtained and synthesize the information to preserve the most valuable data.
1. Determine the purpose of the analysis
market analysis are not exclusive to new businessesare also very useful when considering launching a product or service, or when a company plans to conquer a new market with a line or collection that is very different from what it has been offering.
It is important that, before you start looking for information, determine very well what the final objective of your analysis is. Some examples could be internal, like increasing sales or brand reach, or external, like getting investors.
2. Research the current state of the market
Being clear about what is happening today in the market in which your business operates is the basis for make the right decisions and lead your brand to success. One way to do this research is to look at the data disclosed by large companies in a certain sector on billing and market share.
You can also do keyword research using tools like and the (we’ll tell you how to use both below); This is essential to know the terms that your potential customers use to make inquiries related to your business and to understand the relevance of each term.
3. Meet your ideal client
While it is true that and brings brands closer to new potential customers, it is also true that a well-defined niche can bring many benefits to a business. Hence the importance of having a defined buyer profile and focusing all efforts on satisfying their needs. When we say “know your customer”, we mean having clear demographic data such as:
- Age
- Location
- Gender
- Socioeconomic level and
- Education
- Occupation
- Interests
- Needs
💡 Type: Create one or more that represent these ideal buyers.
4. Analyze the competition
Carefully analyzing your main competitors is a key part of market analysis. First of all, you have to think about the following: if there is a lot of demand for a product, there will also be a lot of supply. With so many online stores selling items similar to yours, there are probably a lot of cool things you can add to your business and a few weaknesses you can strengthen.
That is why it is important to research the competition before launching a business, in order to absorb all the good things that exist and avoid bad practices.
Even more important than learning from good ideas is find something that sets you apart from the rest. Always keep in mind that there is a lot of competition and that the dispute over customers is great, therefore the small details can be decisive when the consumer chooses where to buy.
💡 Type: a will help you better understand the current state of the competition. This consists of mapping the strengths, weaknesses, opportunities and threats of each competitor.
5. Analyze the data
Now, if you have already completed all the previous steps, then probably by this point you already have dozens of pages with information, graphs, tables, data, data, data… And now? First of all: don’t get overwhelmed! This is the time to sit down review all information what did you find heidentify what will be useful.
Organize the data into segments that make sense to you, according to the research purpose you defined in step one. At this point, the structure of the market analysis that we show you above can be very useful, make sure that it complies with each of the six elements in it:
- demographics and segmentation;
- Target market;
- Market need;
- Competition;
- Barriers to entry;
- Regulation.
6. Take advantage of your market analysis
After you’re done with the research and analysis, it’s time to put it to good use! Review it together with your team and dedicate a work session to share doubts and ideas about the information collected.
Ideally, you should do periodic reviews to understand if the projections were correct and to identify the evolution of the market.
Sources of information to carry out a market analysis of a company
Google Trends
Google Trends is a tool that allows search for specific terms that have been consulted by users in the…
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