A market is a place where sellers and buyers meet. The process of identifying and quantifying the principal characteristics of a market by making use of market research techniques is known as Business Market Analysis. Market analysis leads to a better understanding of the competitors, customers, consumers, distributors, etc... The features of a market that are most commonly taken into account are: Market Classification, Market Size and Trends, Market Segmentation and Market Share.

The first step in market analysis is to recognize the market in which the business wishes to operate. For example, one might want to function in the realm of selling cars. The next step would be to learn the current market size as well as predict the future market size. The current size of the market is determined by measuring the total yearly sales within the market. This, in our example, would be the number of cars sold in a fiscal year.

Breaking the market into segments would help one to understand where a particular product fits into a specific market. This will also help one identify the potential customers. Market segmentation can be done in two important ways, one based on the customer segments and the other, based on location and geography. All people who buy cars are the customers for that market. But people buy different kinds of cars for different reasons. Further segmentation of the customer base is called for. There would be different segments for people who buy small cars, some would go for the luxury cars, some would choose sedans and there would be others who prefer SUVs. Local geography and topology play an important role in deciding the market segments. Staying with the example of cars, the market size for luxury cars would be small in places high up in the mountains; residents would prefer SUVs. In farmlands, people would prefer to buy trailers. Customers must be analyzed on their sex, lifestyle, age and occupation apart from their geographical location. Other factors based on which market segmentation is done are profits, type of the organization, price sensitivity and loyalty.

Once the market is classified and segmented, trends of a particular product in the market should be analyzed. Trend analysis would provide the statistics needed to predict the growth curve of the product. This should support the positioning of the product as well as marketing strategy. Understanding the industry as a whole would give a broader perspective to market analysis. One must know who the participants in the industry are and who the distributors are. If one wants to sell cars through a distributor he must know who the players are. He must know which distributor has performed well in the last fiscal year. Such an analysis will help him know who the competitors are.

Competitor analysis and external market analysis are very important to design a marketing strategy. External market analysis is used to evaluate the investment decisions of a business, where to compete, and what parts of the business must be liquidated. Competitor analysis involves the evaluation of the competitor’s strategies, objectives, and costs, level of commitment, advantages and disadvantages. Such analysis must be done in the realm of management, finance, marketing, innovation, customer base and manufacturing.

Market analysis properly done is an essential component of the success of a business. Numbers accompanied by proper analysis will help a business go long way.