Why You Should Be Using a Competitive Market Analysis?

Have you ever questioned the importance of a market analysis for your organization? With a competitive market analysis you will be able to identify the significance of a specific vertical market, niche, or industry. As a subset of market research, a market analysis is utilized to gain a better understanding of your target market in opposition to competitors. By providing additional information of your brand and how it is beneficial to its consumers, a market analysis proves to be an essential tool in leading the successful strategies of brands and businesses.

A competitive market analysis can provide:

• Consumer demographics
• Common consumer buying habits
• Competitor information

This whitepaper will go into detail about the benefits of a market analysis, how to conduct a market analysis on your own, and how an agency can assist in running a detailed market analysis.

 

Benefits of Running a Competitive Market Analysis

It is crucial for each brand to conduct a competitive market analysis. Giving insights into the strategies of your competitors, a market analysis helps brands acknowledge their weaknesses and strengths in relation to their provided services or products. With this vital information, businesses and brands have the ability to effectively reduce spending waste.

An in depth analysis can give you the ability to maximize brand health, content strategy, and community management. Brands will have the opportunity to uniquely advertise your product or service while attracting new consumers.

 

Benchmarking – What is it?

A substantial benefit of running a competitive market analysis is benchmarking. Benchmarking is creating a point of reference or foundation on which future growth can be measured.

Established companies and small startups have both shown to benefit from benchmarking. Competitive analysis allows for data review that details how consumers view you and your competitors.

Although varying insights can be discovered through benchmarking, two pieces of information are deemed particularly important to consider when marketing your brand or business- spend levels and share of voice.

 

Taking a Closer Look at Benchmarks; Spending and Share of Voice

Benchmark #1: Spending

When you narrow in on spending, you can see how much of your budget is devoted to advertising. With this information, you’ll be able to compare your spending trends with your competitor.

Benchmarking aims at facilitating your spending to determine whether it is comparable to, less than, or more than other brands and businesses within your industry. It sheds light on spending in various facets of the business and ways you can optimize spending in correlation to other businesses in the industry budget and spending.

 

Benchmark #2: Share of Voice

Share of voice (SOV) is another essential piece of data that provides insights to a business. This is a measurement of how much of the market your brand owns compared to any competitors.

This information allows for an interpretation of how visible your brand is and how many people are talking about it in the industry. The higher the market share, the more popular and authoritative you brand is considered among current and potential consumers.

 

Budgeting for Success

Projecting and accounting for accurate budgets

is a crucial part of a business or brands success. Budgeting for success refers to ensuring spending will meet your business goals and targets from a cost perspective.

Once conducted, a market analysis, will allow for your organization to have data that will provide financial insights to drive business for your brand. This will provide the ability to create budgets to improve share of voice, generate a significant lift in visibility, and increase sales, thus resulting an increase in success globally within your industry’s marketplaces and pertinent platforms.

 

Competitor Positioning

A benefit that comes with competitive market analysis is competitor positioning. This type of market analysis allows for understanding what the competitors are doing in and across your industry or field of expertise.

For example, this can provide insights in how other businesses are marketing their products and determine if adjustments need to be executed across an existing marketing strategy. This provides the ability to analyze the competitor’s unique value propositions to either pivot or improve your own. With the accumulation of this data, it can provide a competitive advantage against competitors.

 

Analyzing Market Opportunity

With benchmarking, competitor positioning, and budgeting for success, you now have the capacity to analyze market opportunities. While reviewing competitors and their marketing techniques, be aware of any areas that might be lacking in order to capitalize on for your own success.

When a target market that isn’t already saturated is found, consider why you want to serve the market and which of their needs you can address. From there, brainstorm ideas for the right services and products and present to this audience acquiring new customers and establishing a footprint.

 

Can I Conduct a Market Analysis Myself, or Should I Hire an Agency?

Conducting a market analysis yourself can produce some results, however, it has proven to be more effective when hiring an agency to do so.

In this case, when it comes to a marketing analysis a marketing agency can provide results that would differ greatly.

Before you decide to conduct an in-house market analysis, you should be aware of the differences or challenges involved when conducting on your own:

• Lack of experience
• Incorrect methodologies
• Inability to access analytical resources
• Time constraints

 

When you choose a firm that has the capability to produce a well-rounded market analysis, you are optimizing a budget to allow for open communication, quality work, and expertise.

Executing the work in-house can result in a variety of issues, including bias toward a company that someone may have an investment in. Internal bias can be subconscious and can have damaging or lasting effects.

 

 

 

What Tools Are Needed for a Market Analysis

The tools needed for market analysis are vast and varied. Since different industries use different tools for unique purposes, the list of resources is extensive.

For instance, Google Trends, Market Finder, and Rising Retail Categories are resources used in finding out if products have the potential to be successful. If marketing through YouTube, using Find My Audience would be the most beneficial in finding your target market.

Here are some popular options or references that can be used:

• Census Bureau - can be used to find data on potential target markets
• Make My Persona - build personas for possible customers
• Tableau – ability to look at different data sources

Some other sources to consider: Statista, Claritas MyBestSegment, SurveyMonkey, TypeForm, Upwave Instant Insights, and Loop11 are other tools that might be useful.

When choosing to do competitive market analysis in-house, it will be necessary to determine which of these tools works for you. It’s important to understand how to use each of the tools that are relevant to your business and keep up with any changes and updates they may have.

 

How to Conduct Your Own Competitive Market Analysis

Conducting a market analysis can be a time-consuming process that uses a variety of tools. However, holding a market analysis (and continuing to implement them over time) is essential for business success. As mentioned above, you’ll acquire the benefits of benchmarking, budgeting for success, competitor positioning insights, and the ability to analyze market opportunities from a single project.

Take a look at the steps below on conducting your own competitive market analysis.

We’ll explain how to carry out which step, what it can achieve, and why it’s necessary for the success of a business.

 

Leveraging Third Party Research Tools

When choosing to execute a market analysis in-house, a wide variety of research tools will need to be leveraged. Scientific decision-making is the most effective way to create definitive, comprehensive, and end-to-end knowledge about audience engagement and company operations. It’s imperative to gather and analyze the correct information to create an efficient development of achievable KPIs, marketing policies, and pricing strategy.

Several types of data should be represented in your research tools:

• Sales Data - why and how services and products sell
• Customer Data - provides insights on who is buying your products to target market segmentation and meet market expectations.
• Product Data – manufacturer’s standard illustrations, schedules, diagrams, etc.
• Market Data - pricing or other data related to Securities and other assets

Tools that offer competitor analysis help you find gaps in the market to expand your business strategy.

Selecting the right resources is essential to get the best results when the market analysis is finished.

 

Survey Competitor’s Customers

After these market analysis tools are selected, the next step is to survey the customers of your competitors. This is essential because you need to know what the other companies are doing well and where they can improve. Learning a competitor’s successes and needs for improvement can help you then understand how the customers feel about the services they provide, products, customer service, and other major business factors can provide insight into how to strategize your next business move.

Without access to this information, you may find yourself flying blind.

Examples of what you should be looking for when surveying competitor’s customers include:

• which customer segments competitors serve
• how the behavior differs between segments
• what the average revenue is per customer and segment
• how the loyalty and satisfaction scores stand between different segments

 

Send in the Secret Shopper

Sending in ‘secret shoppers’ is another technique used to obtain the best market analysis for your brand. Also called ‘mystery shopping’, this involves having someone shop at your company to see what the experience is like. Secret shoppers can be used in-person, online, or over the phone. Some aspects that a ‘shopper’ will look at include cleanliness, service levels, staff knowledge and helpfulness, and product availability.

‘Secret shopping’ can also be used on competitors to get more insight into how their operations work. The information is then passed on to you so you can compete and be more successful while knowing the competition's weaknesses and strengths. The great thing about mystery shopping is that it can be used quantitatively or qualitatively, depending on need.

 

Online Research

Online research is also an essential part of market research and analysis. This includes both primary and secondary research. Primary research is done by your company using the resources available to you. It can take the form of online questionaries and surveys, in-depth in-person interviews, and online focus groups.

Secondary research means looking at insights and data that others have products. For instance, you can use government statistics about the industry to gain more information. Industry statistics can be used to dig into information about specific markets. Industry reports are also essential for understanding the latest trends and research.

 

Using an Agency for a Market Analysis

While some companies choose to do competitive market analysis in an internal capacity, this is not the only option available. Turning to a third-party market analysis agency that has experience in doing thorough research for businesses and analyzing the results to give you the data you need to expand and succeed in your industry.

 

Confidentiality

When deciding to go with an agency to conduct your market analysis, this process can be confidential. Many customers don’t like to provide feedback if their names are attached to the information provided, especially if the company asking for the feedback is the same company providing products. It might make customers wonder whether their service will be impacted when offering honest feedback. Confidentiality is valuable in terms of brand awareness and employee surveys.

Marketing agencies can blind a study as well. This makes it easier to measure awareness or perception of a brand. When names and logos are on surveys, it can provide skewed results. A third-party leaves respondents unaware of who is sponsoring the survey for more accurate results.

 

Perspective

When working with an agency, often they bring a new perspective to the brand. Those who are affiliated with a company may have difficulty viewing things from an outside perspective. With surveys, perspective is crucial. Some companies don’t collect all the feedback available. They assume they know enough information about their customers to improve retention and satisfaction rates without talking to customers.

 

Time Savings

An agency can also assist by saving you time. Your internal team can work within their scope, while a partner handles writing, programming, fielding, and analyzing surveys and other items for market research. An agency has the proper resources needed to cut down on the same project takes.

For instance, if the project takes around two months to finish with an internal team, it might take half that time through an agency. With the experience that an agency can provide to a business, often there is a formula they use to get started on an analysis cutting down the time it takes to start from the very beginning.

 

 

Experience

When you choose an agency to carry out your competitive market analysis, you get experience and expertise that might not be found in-house. This could be something as simple as having a moderator handle focus group sessions or through a unique analysis technique or methodologies like discrete choice or regression.

However, the main benefit is that an agency can offer concepts of how to conduct a market analysis. Many of them are experienced in specific industries, such as manufacturing, financial services, consumer packaged goods, higher education, automotive, or healthcare. The agency can use its years of experience in the market analysis field to ensure a project is executed correctly from start to finish.

 

Return on Investment

Working with an agency on market analysis can also bring a great return on investment (ROI). While you’ll be paying the agency to make the market analysis, you don’t need to invest in training or tools that the agency’s employees already possess. Market research resources and survey tools will already be available.

The insights that an agency can provide to you can also deliver a better ROI. These professionals are experts at analyzing data and providing insights that help businesses be more successful. Additionally, many of these firms have inexpensive products and services, so the costs may not be as high as initially expected.

When considering monetary gain through a professional market analysis from an agency, the return on investment can be exponential. There are many benefits to selecting a reputable agency that holds experience and knowledge in market research and analysis. Making a relationship with an agency could create lower project costs and increase your revenue.

 

What Businesses Need to Use a Market Analysis?

Businesses across industries can benefit from the use of market analysis. Several famous brands that you already know are using market analysis as a critical part of their business strategy and seeing great success. Some of them include giants like LEGO, McDonald’s, Apple, and Starbucks. Each of these brands uses data to win customers and challenge competitors.

Most businesses in various industries can benefit from a market analysis regardless of the services or products being provided. Below, you can see the questions McDonald’s uses to show how this works.

Four key questions are included in the McDonald’s market analysis approach.

1. What products are performing well?
2. Which prices are currently most affordable for customers?
3. Which restaurants are the most successful?
4. What are consumers are watching and reading so the corporation can advertise most effectively?

Market analysis can also be used to strengthen the credibility and reputation of a brand. It can enhance brand awareness and be a way to obtain information on what customers prefer. It offers an approach to understanding and using market segments and trends in your own marketing to create customers. Additionally, it can establish the effectiveness of product promotion, advertising, and marketing strategies.

 

What are the Challenges of a Market Analysis?

Conducting market research can be challenging with the modern demand to find meaningful, deep insights to developing new strategies using the research. The pandemic has amplified some challenges while creating new ones, and it’s important to be conscious of them moving forward.

One of the most pressing challenges is addressing market uncertainty. While some companies may wish to pause and end initiatives and projects, it’s better to push on and have confidence in research to gain awareness into how customer and business mindsets have changed. Qualtrics notes that 67% are investing more into specialized market research technology than before, and 77% see these new technologies as crucial.

The next challenge lies in improving the quality of data and the insights found from it. About 31% of survey respondents noted that automated data quality solutions could be the best innovation today. Lacking the right tools is only one part of the problem. Many companies also do not have the resources and expertise needed to utilize the assets they have.

Finally, the last challenge is often getting leaders to invest. The report noted above shows that 21% find that one of the largest challenges of market research is communicating business impact. The impact of market research on the outcomes of the business is essential to get leaders to invest. In particular, you might provide executives with summaries of how these projects have improved business outcomes in the past.

 

How Long Does a Market Analysis Take?

The length of time to expect for a market analysis varies based on whether you’re doing it in-house or working with an agency. In-house could take weeks, possibly months, dependent on resources available and how quickly someone can be educated on all the nuances of market analysis. This process will be timely if someone is already skilled and experienced with the necessary tools for a market research analysis.

When an agency conducts the market analysis, the process can often be done quickly and more efficiently. It can still be time-intensive, depending on the needs of the brand or business. However, if the agency you choose specializes in this work and has experience within the industry, expect to have the results of the market analysis in days/weeks and to have the information you need to create a business strategy going forward.

 

How Often Should I Do a Market Analysis?

Since the business market is ever changing, a market analysis is something that must be done more than once to be constantly adapting to new information.

Throughout all industries, the market is inevitably going to go through changes. The only thing that stays the same in business is…change. Since the industry has differences based on time, market analysis should be an ongoing process.

Our recommendation is to conduct a market analysis at various stages of your business. If there are major changes in the industry, new market analysis should be done to ensure you stay abreast of new information that can affect the business. In the absence of these huge changes, it’s still useful to conduct a market analysis at least once a year to ensure you remain competitive and flexible.

 

How Much Does a Market Analysis Cost?

For businesses that wish to do their own market analysis, costs can fluctuate wildly. The cost will be determined by the type of research method used, the sample size needs, tools required by the business, and any specialized training costs that go into creating and analyzing the research to get the best results. Costs typically range from $10,000 to $60,000, depending on the specifics mentioned above.

On average, market research analysis through an agency costs around $20,000 to $100,000, whether quantitative or qualitative. When using an agency that specializes in an industry niche, the cost tends to be at the higher end of the range. This is due to the knowledge and experience the agency brings to you. You can expect to save time, get proper interpretation of data, and enhanced design based on past experiences.

One example of a market analysis narrows in on a large business with revenue of over $200 million a year that needs a single round of research. The price for this will often be $60,000 or more. In comparison, a small business making under $5 million in revenue a year that might spend only $20,000 for a round of research from an agency.

 

Run a Detailed Market Analysis with Matrix Point

Matrix Point is a business consulting firm that is in a prime position to help with your market research and analysis needs. A data-centric agency that specializes in media and marketing support and efficiency, analytics, and data privacy compliance. The goal of each of our services is to provide businesses with sustainable and meaningful results based on each business’ needs.

Are you ready to get high-quality market analysis research done? Contact us today for a free consultation. We’d be happy to share more about market analysis and how it can help you understand your customers and what they want as well as the ways it can assist you with outperforming your competition.