How to do a market analysis and why is it important? 10 steps

Market analysis is a business practice that aims to study the sector in which the organization is inserted. Therefore, a market analysis can include a qualitative assessment of competitors, data collection about the sector, trends that involve it and other elements that can directly or indirectly affect a company and its results. 


 

After all, what is it, why is it important and how to do a market analysis? These are the three questions that we will answer throughout this article. So if you want the answer to them, keep reading! 

The emergence or growth of any company takes place within a market that already exists, which has other companies and serves certain customers. Whether it's a consolidated market, on the rise or that has just emerged. 

Just as “no man is an island”, no company emerges without being somehow tied to a market. Even if he is very new, he must consider that there are customers, products and services as well as other organizations.

This idea puts us face to face with the need to learn how to do a market analysis. So let's go!

What is market analysis?

Market analysis is a business practice that aims to study the sector in which the organization is inserted, considering aspects such as:

  • competitors; 
  • customers; 
  • demands that are already met; 
  • gaps; 
  • opportunities. 

A market analysis can include a qualitative assessment of competitors, data collection about the sector, trends that involve it and other elements that can directly or indirectly affect a company and its results. 

For example, in recent years, the Covid-19 pandemic has had to be considered in the market analyzes carried out. Likewise, economic crises, moments of political uncertainty and other miscellaneous issues are also part of a complete market analysis.

In short, doing the market analysis of a company consists of observe the environment in which it is inserted and everything that involves it, such as competition, customer behavior, trends, such as m-commerce, and others social aspects, political and economic.

As we will see later, a good market analysis evaluates the threats and opportunities that organizations may need to deal with in the short, medium and long term. 

In the same way that it is important to observe the company's strengths and weaknesses, which are internal elements, external evaluation is also indispensable for the sustainable growth of a business.

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    How important is market analysis? 

    Carrying out a detailed market analysis allows the company to have access to data and information that will facilitate your decision making

    In addition, by knowing the environment in which it operates, a business will be able to identify, for example, what the current needs of customers are. What are your main complaints? What do you miss?

    By answering these questions through market analysis, a company has the opportunity to develop new services and products that meet what consumers want or need. This is an opportunity to:

    • generate more business; 
    • increase sales
    • win new buyers;
    • occupy a prominent place in this market.

    Market analysis is also an opportunity to differentiate from your competitors, after all, you will need to study them. 

    For companies that are still in business plan stage and that have not started their operations, the market analysis proves to be important to assess how much the proposal has short, medium and long term success potential

    The result is the possibility of adapting the plan combined with a saving of important resources, such as time and money.

    How to do a market analysis? 

    In this article on how to do a market analysis, we could not leave out the method that is a success: the SWOT or SWOT analysis

    SWOT is the acronym that brings together four concepts: 

    • strengths;
    • weaknesses;
    • opportunities; 
    • threats.

    While the first two, strengths and weaknesses, require the company to look inwards, observing internal factors that can make it grow or fall, the last two elements, opportunities and threats, make managers look outside, that is, at the market. 

    Between external factors that should be considered in a SWOT analysis are:

    • customers;
    • Providers;
    • competitors;
    • environment;
    • social and economic variants etc.

    Given the importance of this method, we recommend that you deepen your knowledge on the subject in the exclusive article we have produced for you: How to do SWOT analysis? 4 steps to more efficient planning

    How to do a market analysis: 10 important points 

    In conjunction with SWOT analysis, some steps must be considered in the process of how to do a market analysis. See what they are below.

    1) Understand your market

    2) Know your persona

    3) Study other audiences

    4) Decide who you will sell to

    5) Identify gaps in the market

    6) Understand why they buy your product

    7) Recognize the purchase papers

    8) Understand the buying process

    9) Evaluate the after-sales of the market

    10) Use the data 

    1) Understand your market

    One of the most important steps is to understand what your market is, who constitutes it, potential customers, competitors, etc.

    2) Know your persona

    Next, get to know your persona very well. Watch what does she buy and what are the needs she has, that is, why she buys.

    Learn how to create a persona and how important it is to your business.

    3) Study other audiences

    Assess whether your business's current consumer profile is the only one that needs your offer. Are there other potential audiences that are not yet considered?

    4) Decide who you will sell to

    After analyzing the market, persona and potential audiences, clearly define to whom your company will sell. Establish behavior and interests of these audiences. 

    5) Identify gaps in the market

    identify the market gaps, that is, is there any demand that has not yet been met? Which are they os top selling products? Is the consumer completely satisfied with the solutions they have access to today?

    6) Understand why they buy your product

    Understand why the consumer buys or would buy the products or services offered. What is the demand they need to solve? Is the chosen option the only one that solves this need? Do new features already exist or can be created to solve the same problem? 

    7) Recognize the purchase papers

    Know the purchase papers involved in purchase day of your products. Consumers are well served in all funnel stages?

    8) Understand the buying process

    Understand how the purchase process happens and consider new formats. 

    9) Evaluate the after-sales of the market

    rate the after sales that is currently available on the market. It is based on this that you will know what cannot be missing in your service and what can differentiate you.

    Read also: What is customer success? Concept, benefits and how to apply in e-commerce.

    10) Use the data 

    Use your company and market data to assertively assess what is working and what needs to be optimized, so you can improve your results using the Business intelligence

    Conclusion

    In this article, you saw what is market analysis, what is the importance and some steps that will guide you in the process of how to do a market analysis and define the directions that the company will take. 

    After all, the importance of market analysis is related to to what is done with the information collected and organized

    Learning how to do a market analysis will allow your company to better prepare itself to achieve goals such as increasing sales and conversion rates.

    Remember that the tech is an ally, both for carrying out research that will contribute to the market analysis, and for applying the necessary changes in your company, in search of improving the customer experience and increase your results. 

    With that in mind, we invite you to meet SmartHint solutions, to improve the shopping experience inside your shop and increase results. Discover our technology!

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    Rodrigo Schiavini

    Rodrigo Schiavini

    Founder and business director of SmartHint, he is also regional director Paraná of ​​ABComm, with more than 10 years of experience in electronic commerce for major brands in the most varied segments.
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