Updated: May 4
Getting your market research on board is one of the first steps towards building your empire. But what constitutes a good market research and why is it critical for business. In this article, we will guide you about ideal market research and how you should plan it.
It is quite possible to collect all your gold in one bag and reap riches from it. However, when it comes to market research segregating different parts is a primary thing. It allows you to have a clear understanding of your business which will help when you are pitching your idea to investors.
Structure for Market Research
Segment Analysis Overview
-Global and Target Segment Analysis
-TAM / SAM / SOM
-Competitive Landscape [Gartner Chart]
-Feature Comparison Matrix
-Porter's Five Forces Analysis
The beginning of your market research should contain information about the overall market with quantitative information. This section is more like an introduction to the market containing growth, projection, and trends.
Once you have your market overview in place, it is time to brief your reader about the industry which you want to be a part of. Industry analysis should dig deeper into the targeted industries within the market and study its past growth and projections.
Market research should always convey information about global markets and industries. Business is connected to various aspects around the world, a small shift in one corner may have huge ramifications in another part. Global trends and projections have a greater role to play in your business then it used to be.
You have played your part well enough if you have sorted out things and have reached to study or analyze the target market. However, the real tussle starts in the market of your interest. Your understanding of the targeted economy can make or break your business.
Segment Analysis Overview
An industry will have various verticals. Segment analysis tries to understand these variations which will help you to place your business in the correct slot. In other words, how users interact with business determines the segment. Eg Product Type, End-User experience.
Global and Target Segment Analysis
Segmentation of business may vary depending on geographic location and economic condition. Global and Target segments may vary greatly or may even be the same. The purpose of segment analysis is to find out such intricacies for the benefit of your business.
The size of the market is most important while choosing a business. The amount of time and money to be invested in a business will depend largely on the Return projections and scalability factors in the market. In layman terms, figuring out your slice of pie from the overall cake is market sizing.
TAM SAM SOM
Total Available Market (TAM) is the total market demand for a product or service. This will comprise of all your competitors including the big players. Serviceable Available Market (SAM ) is the segment of the TAM targeted by your products and services which is within your geographical reach. Serviceable Obtainable Market is the portion of SAM that you can capture.
A compound annual growth rate (CAGR) will help you to determine the growth potential of your business. As per Investopedia, CAGR is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year of the investment’s lifespan.
You must be able to analyze your competitors with strategic precision and understanding
Gartner Chart segments the competition in four quadrants with appropriate clustering. Here, clustering is done on the basis of common characteristics.
Competitive Advantage is the X factor of your product or service that gives you an edge over your competitors and is most likely your unique selling point. This differentiator is what will help you to find your mark in the industry.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Here, you should be able to clearly gauge your strengths and weakness in comparison to your competitors and plan your business accordingly.
Feature Comparison Matrix
A Feature comparison matrix is an effective way of comparing the various features of business/product on the same scale. This will help you better understand the scope of comparison.
Porter's Five Forces Analysis[Optional]
Porter Five forces is a business analysis model named after Michael E Porter. It is a powerful method for measuring competition in a business. The five forces are in the following:-
-New entrants into the industry
-Power of suppliers
-Power of customers
-Threat of substitute products
Demographics is the superset of your user persona. It helps you to segment your market in terms of your customer perspective. Factors like age, sex, religion, region, etc will be captured here. Proper understanding of demographics will help you to target/customize your products according to their needs.
Customer Analysis is used to understand the behavior of the customers, types of customers, and the needs of the customer. You can gain insight into customer needs and expectations by studying historical data or by using predictive analysis to ascertain a customer's expectation. This information can help you to better plan your marketing, sales, and product launch.
You may have the best product in terms of technology and feature but if your timing about the product launch and its marketing is not correct all your effort may go in vain. A correct assessment of the trend is vital for any business to adjust itself in the market.
Marketing has come a long way from classical marketing techniques. Today you have plenty of options in digital marketing alone. You must plan all the options like social media, email marketing, affiliate marketing, SEM, etc along with classical marketing options to get the best for your business. Weight your opportunity cost closely and then go for it.
Now, that you are aware of how to structure and plan your market research. It is time to draft one.
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