What is market analysis?
When a company wants to sell a product, it must first consider the market (or marketplace) where similar products are sold. A market analysis examines factors like market size, competitors, pricing, and customers. It includes both quantitative data, such as the actual size of the market you want to serve and prices consumers are willing to pay, and qualitative data, such as consumers’ values, desires, and buying motives.
In researching this topic, you may come across terms with similar meanings, including market research and marketing analytics. Here are some important distinctions:
Market research is the process of gathering information about a target market, including its customers’ needs and behaviors, in order to market products more effectively.
Marketing analytics is the process of studying the metrics of specific marketing efforts, such as landing page sign-ups and social media engagement, in order to increase return on investment.
Benefits of a market analysis
Conducting a market analysis can benefit you in several ways by helping you to:
Spot trends and opportunities in your industry
Differentiate your business from competitors
Reduce the risks and costs of launching a new business (or pivoting an existing one)
Tailor products and services to your target customers’ needs
Analyze successes and failures
Optimize your marketing efforts
Reach new market segments
Monitor your business’s performance
Pivot your business in new directions
