The market analysis section looks at the potential market for your products and services as opposed to analyzing your actual market. It is a very crucial section of the business plan since it helps you understand so many aspects of your target market including trends, changes, behavior dynamics and size. It is important for both existing and new businesses, since the business sector, the market environment and production change constantly. Coming up with a good market analysis is of the essence. Here is how to conduct a market analysis that will help better inform business decisions and plans for the future.
Identify Your Target Market
Many information sources can help you conduct your market analysis. However, not all information sources are suited for your business plan or niche. Identify your target market for analysis and determine what information source falls within your niche. Getting the right information sources is crucial in helping you get the most appropriate data, information and statistics about your target market and thus help come up with well-informed decisions. Decisions that can help your company come up with products and services that are acceptable to the target market.
Do With What You Have
Getting information on your target market may not be easy. However, you may go through the internet for government and commercial statistics. While not all information you require may be available publically, try as much as possible to make informed estimates from whatever little information you have got on your target market. You can come up with an amazing market analysis from maps, phone directories and even catalogs.
Divide the Analysis into Sections
Once you have identified you niche, split your target market into meaningful segments for analysis. This division will help you effectively analyze the market and address specific market needs, trends, pricings patterns, decision criteria and the media in each of the market sections. This way your analysis will stay objective, informative and effective to facilitate the making of smart business decisions.
Measure the Market Size and Growth
The most effective market analyses are those that are able to measure your market size and quantify it growth. Measuring the size of your target market will enable you to show what your total market is. For example, if small local businesses fall within your niche then your analysis should be able to show that you have 500 local businesses in your market or 100,000.
Quantify the growth of your market to be able to come with market projection for the future. If you see that your business still hasn’t sufficiently covered the market and there is room for growth and future opportunities, then this section should cover it. Analyze the market trends and behaviours patterns to be able to come up with a proper market forecast for your market analysis. Show how large your market will be in 5 years and what plans should be available to cater for the growth.
Acknowledge the International Marketplace
As the primary factors influencing your business and your target market may all be local factors, do not underestimate the role of the international marketplace. Today’s economy is increasingly becoming a globalized marketplace. Understanding what international factors influence your business will not only help you in your market analysis, but also help you identify some potential global markets for your brand.