The late Dr. Edwards Deming, a respected American author, statistician, and management consultant quoted “Without data, you are just another person with an opinion”. The statement is an absolute truth in business, particularly at the start of a business or when introducing a new product. Many business decisions are made on gut reactions rather than a proper analysis of the market. Market analysis in business is one of the most important criteria of sustainability of a business.
Market research helps businesses to identify and understand the marketplace from the very start, enabling the entrepreneur to create suitable strategies that allow a business to grow. By researching the market trends before investing time and money in a new business, the entrepreneur is assured that the products will be placed in the correct position and reach out to the most suitable market.
Nobody usually makes a booking for a holiday without researching for the best and most cost-effective locations. Similarly, when someone needs to buy a house, he or she looks at hundreds of options available in the market. The list goes on endlessly. Therefore, to place the business and its products properly in the competitive business landscape, the entrepreneurs should lay the foundation of the business by analysing the market from all possible angles.
The importance of market analysis does not seem to be taken seriously by the majority of Sri Lankan small and medium-scale entrepreneurs. This must not be underestimated, especially when starting a new business as the information derived through an analysis builds the sturdiest foundation for the business.
By doing the homework, the business can be prepared for threats in the market and identify existing weaknesses. Besides, getting to know the target market in advance can pay off lavishly at later stages. Additionally, getting to know about the real competition can give the required edge when the product is marketed.
Research
Market analysis makes sure that the business has an audience to sell to. Proper research will tell the entrepreneur to whom to sell the products and where the customers are now. Also, it tells the marketers how they should be reached and what type of message to give them to be interested in your product. Market analysis can identify these criteria and indicate whether the product has a promising audience in the market.
In any business, finding customers from day one is the priority. Buying behaviour of any customer segment can change overnight. Hence, identifying customers and their conduct at any given time is imperative to an organisation. The customers will not reach out to you if they are not aware of the existence of the product.
Therefore, marketing and advertising are essential ingredients for an organisation. Market analysis helps businesses to determine who to sell and how to approach the customers. Through good research, the company can decide what its audience needs and how to strategise marketing and advertising campaigns.
In business, competition is one of the most vital areas that have to be kept closely in check throughout the lifespan of the business. “Know your competitors better than they know themselves” is a common anonymous statement looming around the marketing circles that shows the importance of knowledge about competition. Underestimating the competition is one of the key mistakes entrepreneurs very often make, particularly those who are engaged in small or medium-sized businesses in Sri Lanka. Whether the competition is direct, indirect, small, or big, it can be a threat sooner or later. Also, with the right knowledge of the competitive products and competing companies, many things such as price, positioning, placing, and even marketing campaigns can be appropriately and timely adjusted. Market surveys and analysis can bring this important information to make strategic decisions correctly and give you an edge over the others.
Risk factor
Periodical analysis of market conditions lowers the risk factor considerably. Based on the important data available, an organisation can measure the risks involved with various business decisions and actions that are taken almost daily. Most successful businesses make important decisions on the information derived through market research.
Many successful marketing companies use information collected by market analysis to improve customer relations management. Through constant research and surveys, companies keep track of consumer behavior changes to amend and adjust strategies. Usually, customer surveys provide the most valuable feedback on the products and services of a company. Responding to customer views positively can keep the image of the company and its products in a high position. Concerning start-ups, the investment for a business initially is done with extreme uncertainty. Several uncertainties prevail in new business investment. Market acceptance of the product and the organisation, target customer segment and how to reach them, and even the business model to apply is a question that needs answers before the investment. Therefore, the first act of a new commercial entity is to find answers to these pertinent questions by doing research.
Entrepreneurs, as daring risk-takers, generally believe that they have come up with a fine idea or a perfect product to sell that would be accepted by customers without any problem. However, such an idea or the product can be a total failure if not the market feasibility is not thoroughly investigated. Therefore, the first move of an entrepreneur is to find out whether the customers will accept his product. This knowledge can be harnessed only through pragmatic research.
Market research does not have a tangible return on investment. Thus, investors perceive market research as a cost that does not generate revenue in return. This is common particularly when the investment is large and the research is done through professionals. Most often, although buildings, office furniture, machinery, etc. are considered inevitable start-up costs, entrepreneurs deem research as trivial and secondary.
Cost
However, alternatively, the market analysis can be done in-house by using the organisation’s own staff although the quality of information may not be as accurate or factual. Nevertheless, self-designed market research is less costly and perhaps less cumbersome. Online research has become popular since recently. However, the setback in online research is whether the data available on the websites is precise and whether proper insight into the information is available. Besides, the overwhelming data available online can generate unwanted confusion. Often, the data available in online sources are without reliable evidence and are based on the subjective opinions of individuals. However, online research is important to gather secondary information easily and that can provide different viewpoints of different stakeholders that can be used in marketing planning.
Keeping pace with market trends is not easy at the start-up time or the maturity of a business. The industry, technology, economy, and society is persistently changing. Thus the market conditions as well. Hence, in order to stay ahead of the competition and stay on top of other market conditions, a business requires constant feedback on market information. Hence, if the costs are acceptable, spending on research to strategise long-term business planning is beneficial in the long run. Market trend analysis is not complex. It is a comparison of industry information over a specified period of time, predominantly aimed at consumer behaviour and habits of the planned product or service.
Markets consist of different kinds of trends that evolve relentlessly. It is a primary task of a business entity to keep track of the changing market conditions to be on top.
The only way to do is continuous assessments about the market through research and analysis,