Marketing encompasses all of the activities that go into promoting a product
or service. A marketing analysis is the actual assessment of the target
population, competition and needs for marketing that product or service.
The marketing analysis process can be broken down into six steps:
Defining the problem
Analysis of the situation
Obtaining data that is specific to the problem
Analysis and interpreting the data
Fostering ideas and problem solving
Designing a plan
So, why should you embark on the market analysis process? The primary reasons
are:
To determine if there is a market for your products or services
To establish the need for developing a marketing plan
To ascertain market information that will assist in the sale of your product or
service
Before embarking on the complete process, complete the following Market Analysis
Questionnaire.
Market Analysis Questionnaire
To begin the market analysis process, answer the following questions. If you
cannot answer every question, focus on finding the answers even if it means
consulting others. This article can be downloaded or printed to enable you to
complete the questionnaire.
These questions will enhance your understanding and knowledge of your target
market and industry, and ultimately determine: Is there a need for my product or
service?
What defined market am I trying to reach?
What specific companies are servicing this market?
Are they successful?
Are there other companies servicing this market with a similar product?
Are they successful?
What is their market share?
Is the market saturated or wide open? If so, why?
What is the size of the market?
Is it a growing market?
Is the industry stable, volatile, growing or trendy?
How can I reach this market?
How do my competitors reach the market?
What are the business models of my competitors?
What do customers expect from this type of product or service?
What core competencies must the product or service have?
What are customers willing to pay for this type of product or service?
What is my competitive advantage?
Back to Outline
II. The Complete Process:
A. Defining The Problem
Defining the problem is crucial to conducting a successful marketing analysis.
This may require a great deal of time but it is well worth the time and energy
expended. Defining the objectives is tantamount to a successful marketing
campaign. Many individuals waste valuable time performing good research on the
wrong problem.
The following questions will assist you in defining the problem:
Are we trying to market our entire product or service line? Or, are we trying to
hone in on a new product or a new service?
What specific marketing strategies have we utilized in the past two years?
How has each strategy affected sales?
What strategies are we currently using?
How do our competitors market their product?
How much money is allocated to marketing?
When making a sale, do we survey our customers to determine a referral source?
Do we thank our referral source?
Why would someone choose our product?
What differentiates our product from our competitors' products?
Why do people choose our competitors' products or services?
Do we need to enhance our current product or service?
Who are our customers?
Are they from a specific region?
How do we attract new customers?
How do we increase sales from current customers?
Many companies fail to understand the nature of the problem before trying to
solve problems related to sales. A classic example occurred in the soft drink
industry when Coke and Pepsi, the two top soft drink rivals increased the
intensity of marketing efforts to battle for higher sales. At the same time, Dr
Pepper's revenues began to decline, a problem that was attributed to a weak
promotional campaign. Subsequently, the "Be a Pepper" slogan was instituted.
Although the ads were a hit, revenues continued to decrease. The marketing
managers had to reanalyze their problem.
Focused research revealed that the target population for Dr Pepper differed from
Coke and Pepsi. It was found that Dr Pepper's target market believe life should
be lived in accordance with one's own set of personal values and not based on
the expectations of others. Cola drinkers, on the other hand, try to win the
approval of others. Despite the catchy slogan, Dr Pepper's marketers turned away
prospects with a campaign that invited them to be part of a large group of
"Peppers."
The soft drink industry clearly exemplifies the importance of defining the
problem. It is important not to confuse the symptom with the problem. If a
company is having trouble selling a certain product, it doesn't mean that there
isn't a need. The problem may be distribution and/or pricing. Mistaking symptoms
for problems will lead to misguided research and serious mistakes.
Back to Outline
B. Analysis Of The Situation
An analysis of the situation is an informal survey of what information is
available in the problem area. The analysis will help define the problem and
ascertain the need for additional information. This process entails informal
talks with informed people. Informed individuals can be others in the company or
outsiders with knowledge about the industry or product. In some instances,
customers are contacted to provide information.
When the marketing manager is unfamiliar with the situation, the analysis step
is of primary importance. It is important to understand the problem area -
including the nature of the target market, competition, the marketing mix and
the external environment. Without this knowledge, costly mistakes may result. An
example of this problem would be a retailer who wants to survey his customers. A
research firm is hired to do in-store interviews. However, as an example, the
contracted firm is not aware that many of the stores are in the process of being
renovated. As a result, the information collected reveals the customer's focus
on the appearance, noise level and difficulty finding items due to construction.
The information would be of no value.
The analysis should focus on both primary and secondary research.
Primary And Secondary Market Research:
If you don't have all the answers to the questions listed in the Problem
Definition section, you can find the answers by either conducting primary
research or accessing secondary research.
Primary research is research that is proactively created for a specific purpose.
Primary research may include focus groups, qualitative surveys and phone
interviews. This is information you collect yourself.
In contrast, secondary research is research that has already been conducted for
other purposes. From it valuable information can be gleaned. Secondary research
can be found in libraries, online, through periodicals, books, etc. The easiest
and most efficient way of accessing this type of data is on the Internet.
Library information can also be found on the Internet. Access your favorite
search engine and type in the following:
For businesses Type in the trade association name followed by either .com or
.org
For universities Type in the name of the institution followed by .edu
For government Type in the name of the department followed by .gov
If you want to conduct a detailed industry search, and just type in "industry
research reports" and you'll receive a variety of sites. The more specific you
are, the more defined your search will be.
The Internet is an excellent tool to conduct a competitive analysis. Simply type
in the company name followed by .com. If this doesn't work, try accessing the
online yellow pages and type in your competitor's company name. If they have a
Web site, you'll have an insider's view of their services and various other
reports.
Demographic and competitive reports can be attained for a fee at Dun and
Bradstreet's Web site, dnb.com.
Industry newsletters can be emailed to you when new data is reported. By
searching your industry on the Internet, you will uncover lots of potentially
valuable marketing analysis information.
Other widely used standard research sources include:
Trade and Industry Sources such as Gale Research publishes the Small Business
Source Book, which has a strong focus on retail trade. It lists industry
associations, trade shows and conventions, consultants and venture capital
firms.
Forrester Research and Gartner Research publish detailed reports and studies
focusing on the information technology industry.
American Demographics Magazine
Federal level and state governments publish reports on specific industries,
markets and products. To receive a list of publications call the U.S. Printing
Office in Washington, D.C. (202) 783-3238
The U.S. Department of Commerce publishes the U.S. Industrial Outlook each
January. It provides a general economic outlook by forecasting growth rates for
the coming year and reporting on the production of the last year.
The U.S. Census Bureau publishes more than 100 current industrial reports on
5,000 manufactured products. Consumer Information Reports, better known as CIRs,
provide information on production, shipping, inventories, consumption and the
number of firms manufacturing each product.
Once you feel comfortable entering a market, make sure your market will be
receptive to your product or service. Your widget might be the most innovative
on the market, but if your target market doesn't think so, you may be in for a
costly year.
A comprehensive primary market research study is ideal. For it to be
comprehensive, the research should include information from field and laboratory
studies to professionally run focus groups. If you are unable to perform a
comprehensive study, conduct a focus group to achieve a comfort level.