By Linda Kuster / Guest Column
When business planning for 2018, did you invest resources in updating your market analysis? Prioritizing this work regularly can pay off in market share, revenue and profitability.
Often, when an owner launches a business or an executive joins a company, she will spend a great deal of time analyzing the market, customers and prospects. But then the daily demands of the business mean a full analysis often goes by the wayside. “Analysis” may dwindle to managers making a projection based on a quick review of sales data.
What do you risk by not conducting a regular market analysis?
- Failing to capitalize on opportunities
- Being unaware of new competitors
- Stagnant growth
- Advertising with low ROI
- Brand identity that loses relevancy
Solid market analysis
First, revisit your definition of your market. People often define this too narrowly. Your market includes anyone who might buy from you for any reason. It is your customers, competitors’ customers and those who may have a future need. It should also include people who don’t make the purchase but who influence the decision, such as children helping aging parents select an assisted living community or physicians who advise patients on the best weight loss programs.
Information that helps you describe your market can be gained from a broad range of sources. Spend time searching the internet for directories, industry association data, government statistics and industry expert blogs. These are some of my favorite resources:
- The United States’ official guide to small business services at usa.gov/business
- ReferenceUSA – many libraries, including Cedar Rapids, offer members free access
- The Pew Research Center (pewresearch.org), which provides free research reports on demographics, issues, etc.
Other relevant information can be obtained free or at low cost from organizations you belong to, such as the local chamber of commerce, or from companies that specialize in industry/consumer reports, such as IBIS World or Mintel.
These resources can help you quantify market potential, identify competition and understand overall trends. For example, if you own a recruiting firm, you may want to keep track of outsourcing rates, graduation rates for key majors and unemployment rates in your industries to understand your best opportunities for placements.
The gold standard for the most reliable market information is to conduct a custom research study in your specific markets.
To develop precise strategies and forecast growth, you must understand the needs of different kinds of buyer segments. Analyzing your in-house data is key, but so are insights from qualitative data. These insights can help you understand the “why” behind sales and customer behaviors. Ways to gather qualitative data include:
- Online comments and reviews
- Influencer or industry blogs
- Focus groups
- Conversations with customers/prospects
- Feedback from sales and service staff
Choose one or two aspects to focus your qualitative research on after examining your data. If you have a large customer base that doesn’t purchase often, explore what will motivate repeat purchases. If you are doing fine with your core customer group, identify an underserved segment in the overall market to mine in the next year.
The best predictor of future behavior is past behavior. After you’ve examined statistics and trends for purchasing, subscribing and other behaviors, consider what may be changing. Will lower corporate taxes open up funds for capital purchases? Will baby boomers enter senior communities at the same levels as prior generations?
Unless you operate in a very stable industry and market, you should keep the plan that emerges from your analysis for no more than three years. Making an effort to review and update that analysis annually will pay off.
Linda Kuster is director of research strategy at Vernon Research Group, based in Cedar Rapids. Contact her at (319) 364-7278, ext. 7104 or firstname.lastname@example.org.