As you go about creating your business plan, you must first conduct a market analysis. Without this, you will not understand what your target market is and how to attract them to your business. But when you think about market analysis in a business plan, you’re often taken aback by the numerous things you have to do.
To make things easier for you, we have developed four steps through which you can ease the process of market analysis for your business. These are easy-to-follow steps to have a basic understanding of what you need to do to conduct a market analysis.
What Is A Market Analysis?
What is a market analysis anyway? It helps you understand the entire market that you will be working in. So, you will have clear knowledge about what the volume of your market is, what your target audience is, the competition, and so much more. It gives an overall picture as to what you should incorporate in your business plan.
You will end up with qualitative and quantitative data for your business plan when it comes to market analysis. Moreover, you will find this to capture the entire market’s orientation that you’re interested in.
Why Do You Need To Conduct A Market Analysis In Business Plan?
We have covered what is market analysis in a business plan. Now let’s talk about why do you need it. It is a requirement for every business that hopes to gain the best from the current market conditions. It doesn’t matter what type of business you run. A market analysis is equally befitting for any business. That is mostly because you’re able to apply the information taken from the market analysis and use it to your business advantage.
You will find that doing market research and analysis will help you in a range of ways. There are four main concepts that you will cover with this, and those are also the four steps that we present to you as an easy way to conduct a market analysis. We will get to them soon.
4 Easy Steps To Conduct A Market Analysis In Business Plan
We will now talk about the four easy steps that you will take to conduct a market analysis in a business plan. While we may have simplified it out for you, it requires a lot of research and effort to get it right. So, make sure you’re following through carefully to understand each distinct aspect of market analysis.
There are four major steps that we will cover here. These include:
- Industry Overview
- Figuring Out The Target Audience
- Knowing Your Competition
- Setting Prices And Forecasts Professionally
Each of these is discussed in detail below. So, stay tuned to get to know more about how to conduct a market analysis in the best possible way.
Step 1: Get The Industry Analysis
The first thing that you will do when it comes to the analysis is to get the industry analysis. What does this mean? Well, you will need to assess what industry you’re working in and almost everything related to it. If you’re going to create an extensive business plan, then you will have to ensure that you remarked getting the details right.
Doing so will give you an idea of where the entire market is going in terms of a range of things. So, you will be looking at certain metrics to understand this. Let’s take a look at what these are.
A driving force of your market analysis in a business plan will be the size of the market you’re working in. You will need to analyze what you are planning to sell in the current market. Keep in mind that you’re not only focusing on what the consumers need but also what potential investors might want to see in your business plan.
Since a market analysis in a business plan is different than market research when it comes to the objective, you want to make sure that you’re following the right steps. One main thing that you need to consider is the size of the market you are going to be working in. This is highly essential as it will help you come up with the ultimate business plan.
Next, you want to make sure you know what the market trends are. You don’t want to start a business that is already too widespread, or the trend for it is dying down. If you do this, then there is a fair chance that the target audience might not respond as well as they would have if you offered them something unique.
So, you will always have to make sure that you’re offering something that has a trend set in the market. You want to make sure that you’re up to date with what the customers want. Not only will this give you the right direction to implement your business, but it will also show investors that you’re in line with the trends set in the market.
As you go about analyzing the market and getting an overview of the industry, you will have to look at the potential growth of the business. You can do this by hiring a financial analyst to make the job easier for you. There is a range of CFO services available that can help you with projecting what the business or market growth might be for the long run.
Doing so will help you assess whether there are opportunities set for you in the future. Otherwise, you might start a business with little or no expected growth in the future. Therefore, projecting future growth is key to market analysis.
Step 2: Figure Out Your Target Audience
The second step revolves around understanding and defining your target audience. You do not want to start your business without any idea about market segmentation. Figuring out your target market segmentation is an essential part of conducting a market analysis. So, let’s take a look at some of the core aspects that you will have to look at to determine your target audience.
As you go about conducting market analysis in a business plan, you will have to ensure that you have all your customers’ data. This includes their ages, gender, income, education, and other similar demographics. This will allow you to set up a particular segment you wish to cater to.
Every business isn’t cut out for every market size. Here, you determine how many people are willing to buy this product currently. Knowing this is highly essential if you wish to continue your business.
To specify your target market further, you will have to figure out where they are located. Determine the country, city, region, and every other aspect to specify the location of your target market while conducting market analysis in the business plan.
You will have to take a deeper look as to what behavior patterns your target market exudes when they purchase items that are similar to yours. Doing so will allow you to understand how potential customers may shop for your goods.
Not only will you be studying their behaviors, but you will also have to get into your target market’s mind to understand what they like and dislike. The more in-depth research and analysis you do for this, the more you will understand what you need to do to become likable for your target market.
To define your target market, you will need to ensure that you’re keeping up with the trends for your target market. Since demand is always changing, you want to be ahead of the curve and know how to adapt to these changes.
Step 3: Know Your Competition
The third step revolves around you getting head-to-head with your competition analysis. You want to make sure that you have all the relevant data about your competition to make sure that you don’t lack in any aspect. That’s not all that knowing your competition will allow you; it will also help you analyze your competition’s weakness and offer something better to the audience. Here are some of the things that you will have to take a look at when conducting your competition analysis.
Direct Vs. Indirect Competition
There are two types of competition that you will need to assess; direct and indirect competition. Direct competition is when another business works in the same line as you do, offering the same products. Indirect competition would be products in the industry that you can improve on. For instance, the online task manager replaced sticky notes and paper planners.
Barrier To Entry
You will have to assess and analyze the things that can make you keep your position in the market. It is essential to keep other businesses from competing against you. To do this, you will have to take legal measures and ensure that you acquire patents for your business.
Uniqueness Of Your Business
If you and your competition offer the same thing to the audience, why would they come to you? When conducting market analysis in a business plan, make sure that you’re offering something different to your audience.
Step 4: Price And Revenue Forecast Professionally
Lastly, we have the financial bit for your market analysis in the business plan. While you will have a different financial model within the business plan, you will also need to ensure that you forecast and plan your sales forecast professionally. This will come under your market analysis in the business plan.
For your market analysis to be complete, you will have to make sure that you’re adding the right numbers to it as well. Getting your pricing done by professionals will allow you to work on the right price as various factors will be taken into account. All information from the previous steps will be used here to develop the optimal pricing for your product or service.
Market Analysis In Business Plan: Bottom Line
To make your business plan effective, your market analysis plays a major part. Following these steps will allow you to get a better understanding of the market. It will enable you to figure out the right way to carry on with your business plan.
If you’re unsure of how to do this, then it is best to leave your business plan and market analysis to professionals. We, at Oak Business Consultant, are experts in providing consultancy in such matters. From creating a business plan to nailing down the financial aspects of your market analysis, we are here to help. Visit our website at Oak Business Consultant and get a free consultation.