By conducting a market analysis, you’ll learn about your prospective customer and their unique behaviors. Your research will shape your marketing, pricing, and other business strategies. This article digs into how to build an effective market analysis.
Conducting industry and target market research is a crucial step in creating a successful business plan. It helps you understand your competition, identify potential customers, and make informed decisions about your business' products or services.
Before you build, do your groundwork. Industry and target market research are the foundation of a strong business plan.
The goals of your market analysis include:
- Understanding your market size — how many people are interested in your product or service?
- Assessing demand — how much of your product or service does your market need?
- Clarifying market saturation — who else is providing a similar offering, and what makes your business different?
- Determining pricing — what will your potential customers pay for your product, especially when compared to competitors?
Market analyses are very specific to your particular offering and industry, and it is important to note that these trends and preferences are highly variable. Customer insights and opinions change frequently, and staying on top of customer behavior can help keep your business and products attractive to your prospective market.
Here are some steps to follow when doing industry and target market research for your small business plan:
Industry & Target Market Research Tips1. Define your industry.What industry is your business in, and what are the key trends and challenges facing that industry? 2. Research your competitors.Who are your main competitors, and what are their strengths and weaknesses? Understanding your competitors will help you identify areas where you can differentiate your business. 3. Identify your target market.Who are the customers you'll be targeting with your products or services? Consider factors such as demographics, location, and needs when identifying your target market. 4. Gather data on your target market.Once you've identified your target market, gather data on their needs, preferences, and buying habits. This can help you tailor your marketing and sales efforts to better meet their needs. 5. Analyze the data you've collected.Use the data you've gathered to identify trends and patterns in your industry and target market. This can help you make informed decisions about your business' products or services and marketing strategy. (Using data visualization can help you more easily understand and communicate insights from your data.) 6. Use the insights you've gained to inform your business plan.Use the insights you've gained from your industry and target market research to inform your business plan and make informed decisions about your business' direction. |
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How do I get customer insights?
Market feedback isn’t static, so to receive information about your target market, you can conduct questionnaires, focus groups, interviews, and surveys with existing or prospective customers. This feedback can provide you with the information you need to determine an advantage in a competitive landscape. Doing industry and target market research may seem like a time-consuming task, but by gathering data and analyzing trends, you'll be better equipped to make informed decisions about your business' products or services and marketing strategy.
Curious about where to find the statistics you need?
The U.S. Small Business Administration (SBA) has a wealth of federal business statistics to help you outline consumer behaviors, demographics, and economic indicators. Local agencies can help with similar information in a smaller geography.
A great place to start your market analysis is to think of your business' closest competitor. Who are their customers? What are their behaviors? What is your competitor’s price point? Then, take this information and compare it to your products and services — if you see differences in behavior, you have just found your value proposition!
Are you building out your business journey? Don't miss this info-packed article about How to Define Your Business Mission and Goals!
