A Level Business Studies: What is market analysis and why is it important?
- Market analysis is the process of collecting, analyzing, and interpreting data about a particular market, including its size, segmentation, growth potential, trends, and competition, in order to inform business decisions.
- Market analysis is a crucial step in the marketing process that helps businesses understand the needs and wants of their target customers and identify opportunities and threats in the market.
- Market analysis involves several aspects including:
- Looking at Market Share
- Market Segmentation
- Competitor Analysis
- Location evaluation
- Refers to the total value or volume of a specific market.
- Provides an estimate of the potential revenue that can be generated from the market.
- Example: The global market size for smartphones was valued at $522.0 billion in 2019.
- Refers to the percentage of total sales in a market that is held by a particular company or brand.
- Provides an indication of a company’s position in the market relative to its competitors.
- Example: Samsung had a 20.9% market share of the global smartphone market in Q2 2021.
- Refers to the process of dividing a larger market into smaller groups of consumers with similar needs or characteristics.
- Helps businesses identify specific customer groups to target with marketing efforts.
- Example: A clothing company may segment its market based on age, gender, income, and lifestyle.
- We will explore this topic on its own later on
- Refers to other businesses or brands that operate in the same market and offer similar products or services.
- Provides insight into the competitive landscape and helps businesses identify strengths and weaknesses.
- Example: Coca-Cola and Pepsi are direct competitors in the soft drink industry.
- Refers to the geographic area where a market is located.
- Helps businesses understand the specific needs and preferences of customers in different regions.
- Example: A fast-food chain may have different menu items and promotional campaigns for customers in different countries.
- We explore this topic more under Marketing Mix
Importance of Market Analysis:
- Helps businesses make informed decisions about product development, pricing, promotion, and distribution.
- Provides insights into customer needs and preferences, which can improve customer satisfaction and loyalty.
- Helps businesses identify new opportunities and threats in the market, which can inform strategic planning.
- Example: Market analysis can help a company identify a gap in the market for a new product that meets the needs of a specific customer group.
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