How to do a market analysis?

A market analysis studies the attractiveness and the dynamics of a special market within a special industry. It is part of the industry analysis and thus in turn of the global environmental analysis. Through all of these analyses the strengths, weaknesses, opportunities and threats (SWOT) of a company can be identified. Finally, with the help of a SWOT analysis adequate business strategies of a company will be defined. The market analysis is also known as a documented investigation of a market that is used to inform a firm's planning activities, particularly around decisions of inventory, purchase, work force expansion/contraction, facility expansion, purchases of capital equipment, promotional activities, and many other aspects of a company.

Market Analysis: Following points should be taken care while doing a market analysis.

·        Examine whether or not your industry is growing, maturing or declining.

·        If it is declining, identify the problems that exist and be able to change the ones you can. Show how you can adapt to changes that you can't control.

·        If your industry is maturing, show how as a new company, you may be able to better adapt to external forces; better than the more mature competition.

·        In a newly emerging and growing market (the best scenario), differentiate yourself from new competitors. Show how you expect to become a major market share holder, using a new approach to the marketplace and utilizing the latest technology. Identify the older methods of generating your product/service being challenged by your business' approach.

·        Acknowledge the problems and challenges of the marketplace you are entering. Use your analysis to construct a strategy that will put you ahead of your competition.

·        Look to ways of prolonging the "life" of your business if you recognize that what your getting into is threatened by newly emerging technologies and business approaches. To advance your business in the new economy means finding your "niche", or, creating one of your own.

·        In your market analysis focus is on key areas like industry wide sales performance. Acknowledge why sales (as a whole) may be declining. Look to national and provincial averages, citing reasons for poor performance. Reasons can be both external to a particular businesses operations, or internal to the way the business operates. People called "industry analysts" have developed a way of determining the causes of business failures, focusing on the direction newly emerging business can take to realize success. Reference these professionals.

·        Your focus should also turn to the local scene, since local markets may or may not follow the greater industry trend for various reasons. Compare the local situation to the national and provincial averages; the trends in sales, and the estimated total market that can be reached by local companies.

·        Recognize the position your local competitors have taken in the local market; the clientele they serve, the product they produce, the price they expect to charge for their products and services.

·        Finally, relate your own businesses position to the position of others, reflecting on the maturity and experience of your business competitors.