What is a market analysis and how to do it

A market analysis is a fundamental tool for any business that wants to know its sector, its clients, its competitors and the opportunities that exist in it.

In this article we explain what a market analysis is, what it is for, how it is done and we give you some examples and a free template that you can download.

Social Listening: What it is and the advantages for your business

What is a market analysis?

A market analysis is a process that consists of collecting and analyzing information about a specific market, that is, about the set of consumers and suppliers of a specific product or service.

The objective of a market analysis is to know the characteristics, size, value, evolution, trends, needs, preferences and behavior of potential and current customers, as well as the situation, strategy, strengths and the weaknesses of direct and indirect competitors.

A market analysis also involves studying the external environment that influences the market, such as the economic, social, cultural, political, legal and technological context.

A market analysis allows you to obtain relevant and reliable information to make strategic decisions about the business, such as defining the target audience, positioning, price, distribution, promotion, product, etc.

This analysis helps identify the opportunities and threats that exist in the market, as well as the internal strengths and weaknesses of the business, which facilitates the development of an action plan to take advantage of competitive advantages and improve the aspects to be improved.

How is a market analysis done?

To carry out a market analysis, you must follow a series of steps that allow you to obtain and organize the necessary information to obtain valid and useful conclusions for your business. These are the steps we recommend you follow:

1. Define the objective and scope of your market analysis . Before starting to collect information, you must be clear about what you want to achieve with your market analysis and what aspects you want to analyze. For example, you may want to do a market analysis to launch a new product, to enter a new market, to improve your positioning, to increase your sales, etc. You must also define the scope of your analysis, that is, the market segment you want to study, the geographic area, the time period, etc.
2. Identify the sources of information you are going to use . Once you are clear about the objective and scope of your market analysis, you must look for the sources of information that allow you to obtain the data you need. There are two types of sources of information: primary and secondary. Primary sources are those that you obtain directly from clients or competitors, through techniques such as surveys, interviews, focus groups, observations, etc. Secondary sources are those that already exist and have been prepared by other entities, such as market reports, official statistics, academic studies, specialized publications, etc.
3. Collect and analyze information . The next step is to collect the information from the sources you have selected, using the appropriate methods and tools. For example, you can use online survey software, databases, search engines, etc. Once you have the information, you must analyze it to extract the relevant data and organize it in a way that you can interpret and present it. For example, you can use tables, graphs, diagrams, etc.
4. Prepare your market analysis report . The last step is to prepare your market analysis report, where you must capture the results and conclusions of your research. The report must be clear, concise, structured and supported by reliable sources.

Business consulting: what it is and when your company needs it

The report must contain the following elements:

• Introduction : where you must explain the objective, scope and methodology of your market analysis.
• Sector analysis : where you must describe the general characteristics of the sector in which your business operates, such as size, value, evolution, trends, external factors that affect it, etc.
• Demand analysis : where you must describe the profile, needs, preferences and behavior of potential and current customers of your product or service, as well as the level of satisfaction and loyalty they have with your offer.
• Competitor analysis : where you must identify and evaluate the direct and indirect competitors of your product or service, as well as their strategies, strengths and weaknesses.
• SWOT Analysis : where you must summarize the opportunities and threats that exist in the market, as well as the internal strengths and weaknesses of your business, using a SWOT matrix.
• Conclusions and recommendations : where you must synthesize the most important findings of your market analysis and propose the actions you must take to improve your competitive position and achieve your objectives.

What are the benefits of doing a market analysis?

Doing a market analysis has many benefits for your business, such as:

• It allows you to better understand your sector, your target audience and your competition, which helps you adapt your offer to the needs and expectations of your customers.
• It allows you to detect the opportunities and threats that exist in the market, which helps you anticipate changes and take advantage of competitive advantages.
• It allows you to evaluate the strengths and weaknesses of your business, which helps you improve the aspects you need and enhance those that differentiate you.
• It allows you to make strategic decisions based on data and facts, which helps you optimize your resources and maximize your results.

• You can adapt your product or service to the needs, preferences and expectations of your potential and current customers, offering a differentiated and attractive value proposition.
• You can define your target audience, segmenting the market according to criteria such as demographic profile, purchasing behavior, income level, etc.
• You can establish your positioning, that is, the image you want to project in the minds of your clients and how you want to differentiate yourself from your competition.
• You can set your price, taking into account the perceived value of your product or service, the elasticity of demand, production and distribution costs, profit margin, etc.
• You can choose the most appropriate distribution channels to deliver your product or service to your customers, whether physical or digital, your own or someone else's, direct or indirect, etc.
• You can design your promotion strategy, selecting the most effective communication and marketing tools to publicize your product or service, generate interest, persuade and retain your customers.
• You can evaluate the performance of your business, using indicators such as sales volume, market share, degree of satisfaction, conversion rate, return on investment, etc.

To apply the results of a market analysis to your business, you must develop an action plan that contains the objectives, strategies, actions, resources, deadlines and those responsible for each area. 

What is an advertising campaign?

There are different tools to carry out market analysis, depending on the type of information you want to obtain, the research method used and the resources available. Some of the most common tools are:

• Surveys : These are questionnaires that are applied to a representative sample of the market, to obtain quantitative and qualitative data on the opinions, attitudes, preferences and behaviors of clients or potential clients. They can be done online, by telephone, in person, etc.
• Interviews : These are conversations carried out with key people in the market, such as clients, experts, opinion leaders, etc., to obtain in-depth information about their motivations, needs, expectations and experiences. They can be done individually or in groups, structured or semi-structured, etc.
• Focus group : These are meetings that are organized with a small group of people who belong to the target market, to generate a debate on a specific topic related to the product or service. They are used to explore the perceptions, attitudes, emotions and reactions of participants, as well as to generate creative ideas and solutions.
• Observation : It is a technique that consists of recording the behavior of clients or potential clients in their natural environment, without intervening or influencing it. It is used to find out how they use the product or service, what problems or difficulties they encounter, what satisfactions or dissatisfactions they express, etc.

• Data analysis : It is a process that consists of collecting, organizing, processing, interpreting and presenting data obtained from primary or secondary sources, using statistical, mathematical, computer tools, etc. It is used to extract the patterns, trends, relationships, correlations, causes and effects that exist in the market.
• Competitor analysis : It is a process that consists of identifying and evaluating the direct and indirect competitors of the product or service, using sources such as their websites, their social networks, their financial reports, their advertising campaigns, etc. It is used to know your strategies, your strengths, your weaknesses, your opportunities and your threats.
• SWOT Analysis : It is a tool that consists of preparing a matrix that summarizes the internal strengths and weaknesses of the business, as well as the external opportunities and threats of the market. It is used to define positioning, competitive advantages and business objectives.
• Google Keyword Planner : It is a free Google tool that allows you to know the keywords that are most used in search engines, which helps you identify the needs and search intentions of users, as well as the volume and competition of each keyword .
• SEMrush : It is a paid tool that allows you to analyze the organic and paid positioning of your website and that of your competitors, as well as the keywords they use, the traffic they receive, the links they generate, etc.
• BuzzSumo : It is a paid tool that allows you to analyze the content that performs best for any topic or competitor, as well as the social networks where it is shared, the influencers who spread it, etc.
• Alexa : It is a paid tool that allows you to know the global or country ranking of any website, as well as the demographic profile of its visitors, traffic sources, length of stay, bounce rate, etc.
• SurveyMonkey: It is a paid tool that allows you to create and send online surveys to a representative sample of the market, to obtain quantitative and qualitative data on the opinions, attitudes, preferences and behaviors of clients or potential clients.
• QuestionPro : It is a paid tool that offers you a suite of solutions for market research, such as online, offline and mobile surveys, online communities, online samples, data analysis, etc.

Written by Moises Hamui Abadi : I am an entrepreneur, founding partner of Viceversa and SoyMacho. After leading several digital businesses and advising several other businesses; I decided to form MHA Consulting, a digital marketing consultancy dedicated to growing and enhancing digital businesses in more than 7 countries and generating more than 1,500 million pesos.