Market analysis

Market analysis has only one job, which is to determine how attractive a market is for a specific type of business. A market analysis is going to tell you if the market will work for the product or service that you are trying to sell, plus how well the market will work for your business. A market analysis is determined by using predetermined dimensions to give you the information that you need.

Here are the dimensions that are used in a market analysis.

Market size:

The market size is the size of the market that you are going to be selling your goods too. The thing about the market size is that it can be evaluated based on present sales. This will give you a great outlook on the actual size of the market that you have. It can also be evaluated based upon the potential number of sales that you can have if you were to expand the sale of your product or service. No matter how it is evaluated in order to determine the market size, you are going to need information from a variety of sources. These sources include government data, trade associations, financial data from major players, and customer surveys.

Market growth rate:

The easiest way to forecast the market growth rate is to use the historical data that you have and apply it to the future. The drawback to this easy method is that while it will give you a good estimate it is not going to take into account important turning points, which means you can end up with far less growth than what you anticipated. Rather than going with the easiest method the best method that you can use to predict the market growth rate is to study the growth drivers including demographic information and sales growth on products that are complementary to yours. The reason that this is one of the better methods to use is because the drivers act as leading indicators, which is far more accurate than just pulling historical data.

Market profitability:

With market profitability you are going to want to use the average profit potential as a guideline so that you can actually determine how hard or easy it is going to be to make money in that specific market. Anybody can sell products in a market but that doesn't mean they are actually going to make money while doing it, they might even end up losing money. In fact there is actual a useful way to evaluate the attractiveness of an industry by using five factors that help influence the market profitability. The five factors are buyer power, supplier power, barriers to entry, threat of substitute products, and rivalry among businesses in the industry.

Industry cost structure:

The cost structure is used in identifying key factors in the industry for success. The best way to do this is to use Porter's value chain model. This is important because it is used to determine where value is added but at the same time, it is also for isolating the costs.

Distribution channels:

You need to look at a business's distribution channels because they distribution process is important for any business, it is what gets the products to the consumers or suppliers. Instead of looking at all of the steps involved in the distribution process, you can look at a handful of them and still get an idea of how well the system is working.

Market trends:

Market trends will give you new ideas on the main sources of new opportunities for your business; they are also a great source of any new threats. You will need to keep an eye on both the good and bad trends in your industry because they will keep you informed of changes in price sensitivity, demand for variety, and level of emphasis that is on support and service.

Key success factors:

These factors allow you to determine if you have achieved success with your marketing objectives or if you have failed. What these factors are will depend on what type of business you are involved in, but they will also be determined by the types of marketing objectives that you have set for your company. Some possible factors that you might need to look at include: access to essential unique resources, ability to achieve economies of scale, access to distribution channels, and technological progress.