business advantage, know your market a guide to market analysis, november 2009.pdf

7/30/2019 Business Advantage, Know Your Market A Guide to Market Analysis, November 2009.pdf

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Know Your Market

A Guide to Market Analysis


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ContentsA Guide to Market Analysis

Introduction ...................................................................................4

Define Your Approach ....................................................................5

Identify Your Target Market............................................................6

Who are Your Customers? .............................................................8

Market Sizing .................................................................................9

Segmentation ...............................................................................11

Market Opportunity Studies .........................................................13

Competitor Analysis .....................................................................14

Benchmarking ..............................................................................16

Usage and Attitude .......................................................................17

A Guide to Market Analysis 2


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Image and Awareness .................................................................18

Customer Satisfaction ..................................................................20

Competitor Customer Satisfaction ................................................22

Summary ......................................................................................23



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IntroductionA successful business will have extensive knowledge about theircustomers and competitors - that is a fact. Whether you arestarting a new business, looking at a new geographic region orlaunching a new product or service, conducting a Market

Analysis is essential to determine if there is a need for youridea, and to determine the correct approach to fulfilling thisneed.

Launching into a new market requires an understanding of theopportunities and risks; the first step in developing yourmarketing plan, and the ongoing development and/ordiversification of your product or services portfolio mustbegaining accurate and in depth information about your existingcustomers, potential clients, competitors and trends in yourtarget markets.

Dont confuse market analysis with marketing the latter beingthe management process responsible for identifying,anticipating and satisfying customer requirements profitably(Source: CIM); the assessment of the target audience,competition and determining the needfor marketing is themarket analysis. The goal of a market analysis is to determinethe attractiveness of a market, understand current and futureopportunities and assess the potential threats in short to helpyou make the right decisions and develop your sales andmarketing strategies.

Since 1992 Business Advantage has been helping hundreds ofIT vendors and their channel partners make informed decisionsabout new market opportunities, assess market sizes and trendsand plan their marketing strategies. Our specialist researchersare skilled at obtaining detailed information and providingaccurate analysis of complex data sets; they are also wellversed in collecting and processing trends analysis information.

ALL MATERIALS ARE THE COPYRIGHT OF BUSINESS ADVANTAGE AND ARE NOT TO BEUSED WITHOUT EXPRESS PERMISSION OF THE AUTHOR


Know

Your

Market
http://www.cim.co.uk/resources/understandingmarket/definitionmkting.aspxhttp://www.cim.co.uk/resources/understandingmarket/definitionmkting.aspx


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Define YourApproach

Traditional qualitative and quantitative methodologies can apply

to B2B market research and analysis but must be usedcreatively to obtain the best results.

Qualitative ResearchOften not enough is known about a potential marketing situationto be able to design a structured study that yieldsrepresentative or quantifiable results. A qualitative approachwill allow you to explore issues in depth in a relativelyunstructured manner, giving you insight into how people reallythink and behave and more importantly why. Qualitativeresearch tends to use open ended questions to obtain detailedanswers, closed ended questions with yes or no answers are

avoided, with the idea that people are encouraged to share theirviews and thoughts without giving them extensive directions orguidelines. In depth individual interviews, focus groups orsmaller mini-groups can be utilised for qualitative research.Only this approach will help you discover what is in arespondents mind emotions, perceptions, beliefs, intentionsand so on, and is usually a fore-runner to - but not a substitutefor - larger scale quantitative surveys.

Quantitative ResearchQuantitative studies involve the collection of statistically reliabledata from a larger sample group, and the analysis of theresultant data using, for example, tabulations, charts andgraphs amongst other forms of statistical analysis. This type ofapproach may be applied to customer or employee satisfactionstudies, channel partner research, image and awareness,usage and attitude, new market opportunities etc.



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Identify YourTarget MarketAlways remember what the ultimate objectives of your

marketing plan are:

increasing your sales

increasing your market share

increasing your brand awareness

raising your company profile

achieving competitive advantage

Identify who, what, where and why:

Who are you aiming at?o A new product or service to existing customerso Existing or new product or service to potential

new customerso Existing products or services to a new

sector/market

What are you offering?o Your entire product/services portfolio

o A selected range from the portfolio

o A specific product/service

o A customised product/service

o A new product/serviceo An add-on to or diversification of an existing

product or service (for example servicesassociated with your product range)

Where are you aiming?o A new industry or business sector

o A new customer size category

o A new geographic market



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o Why would a customer buy your product?

o Evaluate the competitive landscape

o Why customers in key segments buy competing

products to yours

Before you formulate your plan ensure you understand theneeds of the customer and market, and develop your offeringand marketing material accordingly.



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Who are YourCustomers?Knowledge of your existing and/or potential customers gives

you a picture of the size of the market, what product or serviceto offer, where to target, the price, market and internalinfluences on buying and so on. Think about who currentlybuys from you and whether their type of profile is your optimummarket, or whether you can diversify into new territory. Factorsto consider include:

company size

location of the headquarters

number size and location of branch offices

who their customers are

vertical sector

their buying cycle

who and what influences their purchases

changes in the market and the impact this may have onsales/buying power (environmental, economic etc)

Keeping the customer satisfied is also a mantra for anybusiness seeking sustained success. See section 11Customer Satisfactionon how to keep in touch with the viewsof the people that really matter your customers!



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Market SizingTo realise the optimum profit potential of your products andservices you need to know the size and characteristics of yourpotential markets, and understand what trends are shaping thedevelopment of those markets.

A market sizing study forms part of your overall marketanalysis - which in turns forms the basis for your marketingplan. Establishing the size, shape, characteristics anddirection of a targeted market enables you to:

identify key objectives

set realistic targets

determine optimum routes to market

plan your sales and marketing activity

tailor your actions according to characteristics and trendsof particular market groups

maximise revenue and profit potential make yourmarketing spend effective

Be sure to keep the cost of the exercise down by making deskresearch your first approach (a qualitative assessment) tounderstand what current data may already be available on themarket. Even in a new market there is very rarely no dataavailable. Gathering opinions from industry experts, businesslibraries, trade associations and other published data such asmajor market player financial reports establishes the value ofinformation available. To support the desk research talk to

other vendors, the industry experts you have determined,journalists, the channel etc test the hypotheses developedfrom the desk research. The more one explores thehypotheses, the more clarity is obtained.

To gain a more accurate estimate this will usually need to befollowed up by primary research, this would involve:



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defining the universe in which your market exists bylisting all the companies to which your product or servicecould be relevant

interviewing a sample from these to assess the potentialpenetration of the product or service and identify keyplayers already present in that market

using these figures to estimate the total market size your addressable market

researching shifts in behaviours and attitudes amongstkey market players across time to identify variousmovement trends

establishing predicted growth rates

identifying any relevant regulatory factors

When looking at your existing customers and researching newpotential, analysing changes in the market is important, thiscan often give indications of new opportunities and threats.Trends should be assessed both geographically and byindustry.



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SegmentationSegmentation is a way of dividing up a market to identify trendsin it; the analysis is used to create a profile of the target market:

industry segments and sub segments are identified using sic

codes, company size, employment codes etc. which segments to address and how best to address them may be

determined, and include recommendations on optimum offering foreach area

using advanced statistical analysis, profiles of customerclusters may be developed by grouping togetherindividuals with similar needs/differences by geographicalregion, country or industry type

An overview of the market should be conducted primarily viasecondary research in order to identify key sub sectors withinindustry segments; foreach sub segment identify:

the leading vendors

the market size and potential

the target audience

There are various ways of segmenting a market according to thelevel of precision you require and the type of data and analysisavailable about your customers. In finding different marketsegments it is important to keep in mind that the objective is toeffectively use the segments. Important questions are therefore:

how are you going to place customers into each group? how are you going to target and track each group?

do you have specific segment sales managers?

The type of segmentation you use will depend on a lot of factors,including the cost not only of conducting the research, but also ofimplementing the solution and the business impact.Consequently ideally for each segment sub segment you want toknow what the economic value and the economic potential foreach group is and have some idea as to whether this is



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increasing or falling. Consequently most quantitativesegmentation studies are detailed and complex.

A more cost-effective approach is to develop groups based onqualitative research. Typically a business wants to minimisethe number of segments it has, as each costs money to targetproperly. With small numbers of big segments, a goodresearcher will be able to identify these groups within a

programme of qualitative research. This will not gather economicdata, but it enables deeper insight into each group and, ifmonitored over time, provides core information about howsegments change and develop.

Broadly, the advantages of segmentation can be:

more efficient use of marketing resources/budgets

the opportunity to gain competitive advantage in a particularsegment or sub segment

marketing initiatives are more targeted

product or service can be modified to match customerrequirements

The purpose of segmenting a market is to allow your marketingplan to focus on the sub segments that are most likely topurchase your goods or services, thus delivering the highestreturn on your investment.



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Market OpportunityStudies

In a fiercely competitive industry the ability to carve out a newmarket can be the key to success. But launching into a new

market requires an understanding of the opportunities, risks,competitors, potential customers and other key players.

To make an informed decision about a new market, you need toquantify the potential demand for your product or service and findout how this need is currently being met; a Market OpportunityStudy will determine which geographical or industry segmentshould be targeted for future investment.

Research into the potential of new markets can enable you to:

better understand your current market

identify other niches within this market identify a new market altogether

understand characteristics/needs of prospects in the new marketand plan a marketing strategy

understand the threats you will face and plan to counter themaccordingly

ultimately achieve the objective of increased revenue.



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CompetitorAnalysis

To compete successfully you have to know who you are up

against! Access to in depth analysis on your major competitors,or new players entering your target markets such as theirstructure, products/services, strategy, strengths andweaknesses, opportunities and threats enables you to reallyfocus on targeting resources where they will have the mostimpact.

Analysis of the competitive landscape will help you to:

understand competitors objectives and strategy anddevelop your own accordingly

develop realistic sales targets through understandingthe scale of competitors operations and turnover

identify relative market positions

identify each competitors market share

identify the split of competitors by product

conduct a gap analysis on product features

implement product or service improvements to counterstrengths/weaknesses and innovations in their productportfolio

position your products/services appropriately

understand the distribution strategies of yourcompetitors, and optimise your own

offer competitive pricing discounts and payment terms develop a marketing communications strategy with

messages that resonate effectively with yourcompetitors messages

strengthen your products/services and marketingstrategy according to how your competitors and theirproducts are perceived by customers

identify new product development and competitiveproduct road maps



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develop sales guides highlighting sales kill points, i.e.points designed to counter specific competitorcommunications

understand competitor customer satisfaction levels

conduct lost bid analysis

define research and development investment.

Competitor analysis is a large, complex and specialist study;

decide first what your needs are, and therefore which avenuesyou need to explore, and plan your research in detail ensuringyou apply the appropriate technique or methodology to gain thebest results. Approaching various sources will be necessary competitors employees and customers, channel partners, andmaybe former employees make sure you have the expertiseavailable to conduct these to maximise the informationgathered, and ensure you are aware of ethical and legalconsiderations.

Effectively completed, this is technically challenging,complicated and resource-hungry work that is best left to

experts that specialise in the competitor intelligence andanalysis field.



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BenchmarkingIt isnt enough just to know what your own sales figures are, orthat the average battery life on your product is 11 hours beforerecharging is required, or the fact that 95% of your customersupport calls are resolved within 48 hours. In an ever

increasingly competitive world, you need to know what thestandard expectations of your customers are, how you rankagainst this and also how your competitors rate if theirfigures show that their average battery life is 22 hours, and99.5% of customer support calls are resolved within 24 hourswho looks the more attractive to the potential customer?

Benchmarking is the process of comparing factors such ascost, quality, scope, service, response and availability of youroffering against competitors in the same market whether thatbe geographic or industry sector. By creating a comparativematrix of your competitors product or service offerings you

have the beginnings of a business case to make anynecessary improvements and develop an optimum offering.

As with most other elements of a market analysis study,benchmarking will include both secondary and primaryresearch methodologies.

Benchmarking yourself not only against competitors but alsoagainst companies of a similar standing to yours in otherindustries will provide you with additional valuable insight.

A note of caution - speaking with competitor personnel or with

personnel from companies in other industries must be handledsensitively and it is recommended this stage of an analysisproject be conducted by highly trained and experiencedinterviewers.



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Usage and AttitudeUsage and attitude studies investigate all aspects of therelationship between your customers and your product orservice. They can provide the basic foundations for much ofyour marketing activity by giving you a full understanding of the

market you are currently selling into, or planning to target,reveal trends, identify current or possible future problems andestablish the demand for related products.

It is onlyby understanding your customers or prospects needsand what they are doing and why, that you can deliver the rightproduct or service to them in the rightplace at the righttime.Usage and attitude studies will recognise that as markets havebecome more complex, and niche marketing morecommonplace, so brand usage, habits and attitudes may differaccording to different types of use or different user groups.Such a study will give you the ability to segment your chosen

market according to particular types of use or user groups,thus identifying potential gaps in the market.

For example, you may wish to establish:

who is already using a specific technology/software

who is planning to and why

what they are using it for or planning to use it for

why they chose that solution over any other

why they use their current supplier

any planned changes in use or supplier

the perceived image of the current supplier an understanding of the decision making process.



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Image andAwareness

Understanding how you and your competitors are perceived in

the market has profound implications for the development ofyour marketing strategy. Seeing your business through themarkets eyes and measuring awareness of your brand will bethe basis for highly targeted action that leads to sustainedcompetitive advantage and an increase in brand value.

Those having decision maker influence on the purchasingprocess often make their decisions based partly on theirperception of the market position of supplier brands. They willtend to favour brands that closely match their desired attributes- determining which attributes are currently most valued bythe market will enable market positioning to meet those needs

and better equip you to develop positioning statements.

As well as the standard brand image type questions to pose tothe selected target recipient audience such as:

how do they perceive your company/product/service?

how do you compare with your market competitors?

what attributes and values are most associated withyour company within the target group?

what is the general level of awareness of yourcompany?

Consider breaking awareness questions down further:

Unaided or spontaneous awareness the extent towhich customers/users think of your company orproduct/service on a top-of-mind basis who comesto mind first

Aided awareness the extent to which those whoknow of your company or product/service are familiarwith who you actually are or what you provide.



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You should then be able to start building a picture of youroverall reputation, the quality and appeal of yourproduct/service, the effectiveness of your sales, marketing andcustomer service/support and how receptive the market is toyour cost model. From there, this information can form thebasis of your future marketing and operational strategies,targets, product and service design and market presentation,costs and staff/internal infrastructure.



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CustomerSatisfaction

It is vital to understand your customers views of the product or

service you are offering whether your existing customer baseis global, confined to a particular country or region, nichemarket or cross sector. You have to know what the key driversfor customer loyalty are and conversely what the causes andeffects of customer dissatisfaction are as the basis for yourmarketing plans.

A two-staged approach firstly establishing which areas ofproducts or services are important to your customers(qualitative) and secondly conducting detailed interviews with alarge sample of your customers to provide statistically reliabledata on the areas identified in the first stage (quantitative) will

maximise your chances of:

understanding how your customers perceive yourbusiness

improving on areas that are failing to match the qualityof product or service demanded

taking urgent action on groups of customers identifiedas at risk

setting realistic targets and effectively monitoring themto be able to react to early warnings of a change incustomer expectations

monitoring customer loyalty

increasing your active customer base decreasecustomer acquisition costs while increasing repeatbusiness



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Customer satisfaction should not be viewed as a one-offproject, but an ongoing and integral part of yourmarketing/business development plan. Levels of performanceshould be tracked over time so that any changes in satisfactioncan be monitored, any danger signs detected quickly and anychanges to product or service portfolio or business strategyimplemented.



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Competitor CustomerSatisfaction

This type of research aims to identify what is important to acompetitor's customers, and provides an insight into how they

would evaluate their supplier. Consider a mix of targets forinterview by company type, company size, industry sector,respondent job function etc.

Include points such as:

how satisfied/dissatisfied are they with the product orservice deployed?

would they buy from this company again?

why/why not?

how likely/unlikely are they to recommend the supplier?

what would they like to see improved in the competitor's

products/services? what are the best and worst features/elements of the

existing product or service?

Would they consider using an alternative companysproduct or service?

Answers to these and other questions will provide you with bothmarket intelligence and specific knowledge of existingopportunities to win competitors customers. Specific areas tofocus on internally in order to develop winning strategies, andincrease market share and customer satisfaction will behighlighted.



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SummaryThis White Paper has addressed the key components of MarketAnalysis. In an ideal world and for best results, full marketanalysis studies ought to include all of the components; however,elements such as usage and attitude, image and awareness, and

customer satisfaction - all stand-alone research studies in theirown right - can sometimes be left out without too much detrimentto the overall outcome.

Remember however, research and analysis aids strategic thinkingand decision making. Good market research and analysis reducesthe risk of making the wrong decision. So, whether you wish tolaunch a new product, extend an established brand, plan marketdiversification or simply assess a current situation or trend, youraim will be to maximise your penetration and profits in existing ornew markets.

Business Advantage has helped many companies make thatjourney. We not only provide market research and analysis butare able to provide actionable recommendations andimplementation strategies. We stand ready to assist youtoo..

If you would like more information on this or other research andbusiness development matters, please email [email protected] or call +44 1689 873636

mailto:[email protected]:[email protected]:[email protected]:[email protected]

business advantage, know your market a guide to market analysis, november 2009.pdf

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