The Comprehensive Guide to Conducting a Strategic Market Analysis
Often, companies only think of conducting a market analysis when launching a new product or service.
However, while you may be in a larger organization or tech startup and need to roll up your sleeves and get stuff done, routinely conducting a market analysis allows you to analyze your quickly changing and highly competitive industry to discover new revenue opportunities and foresee future hurdles.
Because markets are changing and evolving so rapidly today, it’s important to revisit your market analysis for older products and your overall business to make sure you’re still focused on exciting and delighting your best prospects.
In case it’s been a while since your last market analysis, here’s what a marketing analysis is, how to conduct a market analysis, and the types of insights your team should be able to glean by successfully completing one.
What is a marketing analysis?
A marketing analysis can contain a variety of components that are often tailored to your company’s needs. It’s important to work with your team to make sure you’re all on the same page about what is necessary and what is wasted time on incremental value.
The following are important parts of such an analysis:
There are two types of competitive intelligence: tactical and strategic. If you’re launching a startup, you should be focused on strategic intelligence for pitch decks and tactical intelligence for actually acquiring your first customer.
Larger teams at bigger organizations who are either re-analyzing older products or launching new products within the organization should focus on working backward from 1) the larger strategic alignment to 2) the bigger brand to 3) the tactical methodology of converting existing customers to the use of the new product.
Read more about the types of competitive intelligence, techniques and how to use competitive analysis to make big decisions with confidence.
Understanding your market’s value is a multi-layered process. Each layer tells a very different story and gives different insight into what your marketing and sales team will need to do to capture market share.
The first step in understanding your market value is analyzing your total addressable market (TAM). There are three ways to analyze your TAM, and all of them will help you highlight the largest opportunity you can capture with your exciting new product.
Next, you’ll need to understand the total possible value of your market. To project your market value, you need to understand the highest price at which a buyer will still purchase a product and the lowest possible price at which you can sell your product. Read more about determining your market value.
But how much of the total addressable market is your company planning on grabbing, and in what time period? Creating market share projections is the last phase in analyzing your market value when conducting a market analysis.
To determine your company’s or product’s market share, you need to project sales measured as a percentage of an industry’s total revenues. While we’re sure we’ll cover this in a future blog, this is also a pretty good explanation of how to understand your market share projections.
There are three steps to defining your buyer outline within your marketing analysis.
It all starts with understanding your ideal customer profile. While you might have a total addressable market, what if you could just focus on the most ideal cases? Defining your ideal customer profile allows you to home in on the characteristics of your best opportunities. These might include certain technologies, locations, industries and more.
Once you understand your ideal customer profile, it’s about understanding the individual buyers who make up that profile (or account). If you’re targeting IT leaders and decision-makers, this might mean crafting your buyer personas around CTOs, VP Engineers and Senior Directors who would work within your ideal accounts.
And, if you’re selling high-value products, creating a list of target accounts is your ultimate goal when developing your buyer outline within your marketing analysis. Even if you don’t go full account-based marketing, we’re big believers that you should still create a list of target accounts to understand who your real potential buyers are.
Barriers to entry
Every product and companies has barriers to entry — whether they’re big regulatory barriers or just small inconveniences is for you to find out when conducting a market analysis (or later, when you run into them unexpectedly because you didn’t do your homework).
The barriers to entry vary depending on whether you’re launching a new product, expanding to new markets, or starting a company. Here’s a list of barriers to entry to help you think of all the potential pitfalls before they happen.
Potential pricing structure(s)
There’s a good chance that your pricing structure will change throughout the duration of your product’s lifetime. That doesn’t mean you should just take a wild guess at how to price your product when launching. It’s important to analyze potential pricing structures using competitive intelligence, potential user surveys, and analysis of the overall landscape.
There are dozen of articles and guides to help you price your product. We suggest you spend less time reading and more time asking.
So now that we’ve covered what’s in a marketing analysis, what about how to actually conduct a marketing analysis?
How to conduct a market analysis
Each section of a market analysis requires unique research and analysis. If you’re part of a marketing team, think about divvying up the sections within your marketing analysis, and don’t forget to work with sales — they have some valuable insights.
If you’re looking to conduct competitive intelligence, our most recent blog talks about the different methods of competitive intelligence and how to gather insights by conducting thorough analysis.
For market value, understanding your total addressable market can be approached via a top-down, bottom-up, or value theory approach. Don’t just pull a very generic statistic like “we’re disrupting the $580-million-dollar event industry” — which is way too broad of a statement. Instead, take the time to analyze who your potential customer is and who really needs your product.
For market share and market value, you’re going to have to bust out that calculator again and spend some time coming up with numbers that actually make sense.
To put together the buyer outline section of your market analysis, you’ll need to identify:
- Ideal customer profile: Use the four types of data to help you outline your ideal buyer and help your team target real opportunities rather than focusing on the large total addressable market.
- Buyer personas: Buyer personas should be used to increase the understanding of key players within your potential buying committee. Here’s a good breakdown of creating buyer personas, but be weary of relying too much on personas as you move from product theory to product launch and scaling.
- List of target accounts: This is the best way to really understand your potential product’s or company’s market because it involves taking the time to identify real people you believe need your solution based on data.
To identify potential barriers to entry, you should focus on:
- Regulations: What are the potential government or local regulations impacting your product’s creation and distribution?
- Access to resources: If you’re selling a digital product, this means your ability to deliver a high-quality experience at speed within the area you’re targeting.
When looking at potential pricing structure(s), analyze competitors and potential customers so you can get a feel for the potential pricing model of your new product or service. If you’re conducting a yearly market analysis, this might mean updating your pricing based on new information.
But, at the end of the day, what questions should a marketing analysis actually answer for your company?
Questions a market analysis answers
If you’ve spent all this time putting together a marketing analysis, let’s make sure you get all the juice from the squeeze.
A marketing analysis should answer:
- Who are my potential customers/users/clients/buyers?
- What are their buying habits?
- How many of them are there?
- How much will they pay?
- Who is my competition?
- What have their challenges and successes been?
- What could prohibit or hinder me from launching?
And while you might think you know the answers to these questions, conducting a formal market analysis every year will allow you to continue innovating and analyzing the overall potential for your company and products based on real data.