A Guide to Market Analysis Introduction 1

White Paper CONTENTS A Guide to Market Analysis Introduction 1. Define Your Approach 2. Identify Your Target Market 3. Who are Your Customers? 4. Market Sizing 5. Segmentation 6. Market Opportunity Studies 7. Competitor Analysis Introduction 8. Benchmarking A successful business will have customer requirements 9. Usage and Attitude extensive knowledge about their profitably” (Source: CIM); the 10. Image and customers and competitors - that is a assessment of the target audience, Awareness fact. Whether you are starting a new competition and determining the business, looking at a new geographic need for marketing is the market 11. Customer region or launching a new product or analysis. The goal of a market Satisfaction service, conducting a Market Analysis analysis is to determine the is essential to determine if there is a attractiveness of a market, 12. Competitor need for your idea, and to determine understand current and future Customer the correct approach to fulfilling this opportunities and assess the Satisfaction need. potential threats – in short to help 13. Summary you make the right decisions and Launching into a new market requires develop your sales and marketing an understanding of the strategies. opportunities and risks; the first step in developing your marketing plan, Since 1992 Business Advantage has and the ongoing development and/or been helping hundreds of IT vendors diversification of your product or and their channel partners make services portfolio must be gaining informed decisions about new market accurate and in depth information opportunities, assess market sizes about your existing customers, and trends and plan their marketing potential clients, competitors and strategies. Our specialist researchers trends in your target markets. are skilled at obtaining detailed © All materials are the information and providing accurate copyright of Business Don’t confuse market analysis with analysis of complex data sets; they Advantage and are not to be marketing – the latter being “the are also well versed in collecting and used without express management process responsible for processing trends analysis permission of the author. identifying, anticipating and satisfying information. Page 2 Whitepaper 1. Define Your Approach Traditional qualitative and guidelines. In depth individual quantitative methodologies can interviews, focus groups or smaller apply to B2B market research and mini-groups can be utilised for analysis but must be used creatively qualitative research. Only this to obtain the best results. approach will help you discover what is in a respondent’s mind – emotions, perceptions, beliefs, intentions and Qualitative Research Qualitative Research gives you so on, and is usually a fore-runner to insight into how people really Often not enough is known about a - but not a substitute for - larger think and behave and – more potential marketing situation to be scale quantitative surveys. importantly – why able to design a structured study that yields representative or quantifiable results. A qualitative Quantitative Research approach will allow you to explore Quantitative studies involve the issues in depth in a relatively collection of statistically reliable data unstructured manner, giving you from a larger sample group, and the insight into how people really think analysis of the resultant data using, and behave and – more importantly for example, tabulations, charts and “Traditional qualitative – why. Qualitative research tends to graphs amongst other forms of and quantitative use open ended questions to obtain statistical analysis. This type of methodologies can apply detailed answers, closed ended approach may be applied to to B2B market research questions with “yes or no” answers customer or employee satisfaction and analysis but must be are avoided, with the idea that studies, channel partner research, used creatively to obtain people are encouraged to share the best results.” image and awareness, usage and their views and thoughts without attitude, new market opportunities giving them extensive directions or etc. 2. Identify Your Target Market Always remember what the ultimate objectives of your marketing plan are: increasing your sales increasing your market share increasing your brand awareness raising your company profile achieving competitive advantage Who are you targeting? Identify: who, what, where and why: A Guide to Market Analysis Page 3 Who are you targeting? What are you offering? A new product or service to Your entire product/services existing customers portfolio Existing or new product or service A selected range from the portfolio to potential new customers A specific product/service Existing products or services to a A customised product/service new sector/market A new product/service An add-on to or diversification of an Where are you aiming? existing product or service (for example services associated with your product range) Where are you aiming Why would a customer buy your A new industry or business sector product? A new customer size category Evaluate the competitive landscape A new geographic market Why customers in key segments buy competing products to yours material accordingly. “Before you formulate your plan ensure you Before you formulate your plan ensure you understand the needs of the understand the needs of customer and market, and develop your offering and marketing the customer and market” 3. Who are your Customers? Knowledge of your existing and/or vertical sector potential customers gives you a picture their buying cycle of the size of the market, what product who and what influences their or service to offer, where to target, the purchases price, market and internal influences on buying and so on. Think about who changes in the market and the currently buys from you and whether impact this may have on their type of profile is your optimum sales/buying power market, or whether you can diversify into (environmental, economic etc) new territory. Factors to consider include: “Keeping the customer satisfied” is company size also a mantra for any business location of the headquarters seeking sustained success. See section 11 Customer Satisfaction on number size and location of branch Knowledge of your existing how to keep in touch with the views offices and/or potential customers of the people that really matter – gives you a picture of who their customers are your customers! the size of the market Page 4 Whitepaper 4. Market Sizing To realise the optimum profit developed from the desk research. potential of your products and The more one explores the services you need to know the size hypotheses, the more clarity is and characteristics of your potential obtained. markets, and understand what trends are shaping the development of those To gain a more accurate estimate this markets. will usually need to be followed up by Establish the size, shape, primary research, this would involve: characteristics and direction of A market sizing study forms part of defining the “universe” in which a targeted market your overall market analysis - which in your market exists by listing all the turns forms the basis for your companies to which your product marketing plan. Establishing the size, or service could be relevant shape, characteristics and direction of interviewing a sample from these a targeted market enables you to: to assess the potential penetration identify key objectives of the product or service and set realistic targets identify key players already present in that market determine optimum routes to market using these figures to estimate the total market size – your plan your sales and marketing addressable market “Keep the cost of the activity researching shifts in behaviours exercise down by making tailor your actions according to and attitudes amongst key market characteristics and trends of desk research your first players across time to identify particular market groups approach“ various movement trends maximise revenue and profit establishing predicted growth rates potential – make your marketing spend effective identifying any relevant regulatory factors Be sure to keep the cost of the exercise down by making desk When looking at your existing research your first approach (a customers and researching new qualitative assessment) to understand potential, analysing changes in the what current data may already be market is important, this can often available on the market. Even in a give indications of new opportunities new market there is very rarely no and threats. Trends should be data available. Gathering opinions assessed both geographically and by from industry experts, business industry. libraries, trade associations and other published data such as major market player financial reports establishes the value of information available. To support the desk research talk to other vendors, the industry experts you have determined, journalists, the Follow up with primary channel etc – test the hypotheses research to gain a more accurate picture A Guide to Market Analysis Page 5 5. Segmentation Segmentation is a way of dividing up conducting the research, but also of a market to identify trends in it; the implementing the solution and the analysis is used to create a profile of business impact. Consequently ideally the target market: for each segment sub segment you industry segments and sub want to know what the economic segments are identified using sic value and the economic potential for codes, company size,

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