5 reasons to invest in market analysis
Companies today operate in an extremely changeable market environment. Recently there has been much talk not only of widespread and continuous change, but also of much deeper disruption, which significantly alters the existing order and the way business is done.
This makes regular and reliable market monitoring exceptionally important. Investing in market analysis gives you reliable information, so you can act more effectively today and also prepare for what the future may bring.
How does market analysis support company growth?
Market analysis supports a company at every stage, from planning the business and raising funds, through designing the product portfolio and building the brand image, to developing its growth strategy.
Market analysis is a continuous process of gathering and analysing information about the market, products, customers and competitors. An important part of it is turning dry data into practical know-how that can then become a specific action plan.
Because market analysis yields a wide range of data, we can draw conclusions and develop recommendations for many areas of business. Market research therefore helps us at every stage: planning the business and raising funds, designing the product portfolio, building the brand image, identifying potential customers, and developing and modifying the company's growth strategy.
How does market analysis help build a growth strategy?
Market analysis lets a company assess its current strategy, understand key success factors and competitors, and shows how to build or modify the strategy to increase sales and market share.
One of the main types of market research is strategy analysis. It can support us in several complementary ways.
First, market analysis lets us assess the company's current strategy and check whether it responds well to, for example, market trends, customer needs and competitors' actions. Second, it reveals the factors in the business environment that have a significant impact on the company, as well as the key success factors that have made other businesses leaders. Third, it provides specific information about direct and indirect competitors, their strategies, activities, products, prices, budgets, marketing reach and so on.
Fourth and most importantly, market analysis shows how to build or modify a strategy to accelerate the company's growth and increase its sales and market share. These recommendations may cover the company's overall growth strategy or specific strategies, for example for sales, marketing, entering a new market, launching a new product or internationalising the business.
How does market analysis help reduce business risk?
Market analysis reduces risk by letting companies base business decisions on hard, verified data on consumers, trends, competitors and barriers to market entry.
In an uncertain and changeable business environment, everything we do carries a certain risk. This risk may result, for example, from incomplete data, unverified information, inconsistent indicators, lack of time, or unfamiliarity with sources or methodology.
Risk can be significantly reduced if we base business decisions on hard, verified market data. Market analysis helps us gather and analyse information on many different topics, for example consumer behaviour, market trends, success factors, industry innovation, competitors' strategies, technologies used, market segments, barriers to market entry or the effectiveness of marketing and sales channels.
An in-depth understanding of how the market works lets us make better decisions in our companies: more effective, because the risk of failure is minimised.
How does market analysis help set business priorities?
Market analysis provides verified information showing which industries, innovations, technologies or market niches are the most profitable and which challenges need to be addressed first.
Every day, we receive hundreds of new pieces of information and data. In the media we read about important events and changes that may affect our business. On the internet we find articles and analyses that might be useful in our professional work. On social media, customers and competitors publish posts every day that seem important to us. In this flood of information it is easy to get lost and focus on the wrong things.
Market analysis helps set priorities effectively by providing relevant and verified information. With it, we see more clearly which new industries, innovations, technologies or market niches are the most profitable or the fastest growing. We identify more accurately the challenges, difficulties and issues that need to be addressed first. We plan specific actions for the coming week, month or year more rationally. We can focus on the factors that will bring the fastest results, the greatest profits and the biggest increase in competitive advantage.
How does market analysis help track market trends?
Market analysis identifies consumer, industry, technology and business trends and shows whether a given trend is still growing and worth including in the company's plans.
Following trends without delay is an important part of an effective business strategy, so as not to fall behind the competition. Some companies (e.g. start-ups) must go even further: rather than follow changes, they need to create trends and be the first to introduce new solutions, products or innovations.
Market analysis makes it easy to identify consumer trends as well as industry, technology and business trends. The data gathered can show, for example, how the market is developing in Poland and abroad, what global and local leaders are investing in, and what new things customers are looking for. You can also check whether a given trend is still growing, and therefore whether to include it in your short-, medium- and long-term plans.
Trend analysis can therefore clearly show us where new business opportunities lie, in which direction our company should develop, which products are worth adding to the range, which innovations can improve the purchasing process and so on.
How does market analysis help understand customer needs?
Well-executed market analysis uncovers consumers' unconscious needs and preferences, the purchasing process, the criteria that determine a purchase and the optimal price level for a given market segment.
Since the customer is at the centre of every business, the most important resource of every company should be in-depth knowledge about its customers. Understanding customer needs, however, goes far beyond recognising their behaviour and preferences.
With a properly conducted market analysis, you can obtain very detailed information that can be of great importance for building a competitive advantage. Well-executed consumer research also uncovers what is hidden deep down. What unconscious needs and preferences do consumers have? Why do customers buy this one particular product out of many very similar ones? What does the purchasing process look like? Who makes the purchasing decision, and who uses the products? How much weight do customers attach to each of the criteria that determine a purchase? What price level is optimal for a given market segment? Which product features are essential, which provide a competitive advantage and which are unnecessary?
Why is it worth investing in market analysis?
Reliable information about the market, customers and competitors translates into greater company efficiency, higher profits, optimised costs, a larger market share and a stronger brand.
Market analysis should be the basis for all important business decisions. If we are thinking about developing our business further, market analysis is a worthwhile investment. Having reliable information about the market, customers and competitors translates into greater company efficiency, higher profits, optimised costs, a larger market share, and a stronger brand and competitive advantage.
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