- Elon Musk, Investor & Entrepreneur
A market audit can help you understand your industry and your place within it. It’s an essential insight that can help you define your best practices. You can use a market analysis to pinpoint areas where your operation could improve. This is a process every business owner should be able to perform with confidence.
WHAT IS A MARKET ANALYSIS
A market analysis is an in-depth examination of a specific industry or market. It’s meant to discover behaviors of your core customer, such as buying patterns and brand loyalty choices. These studies can provide a road map for your business. There are many insights a market audit can provide:
- Competitor Info: learn who else is in your market and what they’re doing right. Identify opportunities for your business to meet a need or stand out.
- Valuation: Gauge how much you can charge for your products and services.
- Customer Insights: Learn who your core customer is. Study their buying habits, learn about their motivations, needs, and what they’re looking for next.
- Discover Potential Markets: You may be surprised to discover untapped markets that are interested in your product and services.
A thorough market analysis can inform your business decisions for years to come. Each new analysis provides greater insight. You can fine-tune your business in response to market changes. Knowing how to conduct a great market audit is a valuable tool.
HOW TO THEY BENEFIT YOUR BUSINESS
There is a lot to be gained from a thorough market audit. This is an invaluable tool to target your marketing strategies. You can also better understand your place in your market. Some of the benefits of performing regular market audits are:
- Hone in on customer needs
- Identify risky areas or ventures
- Chart your growth
- Notice trends
- Create revenue projections
- Analyse past sticking points
With each market audit, you perform, you’ll hone your research skills. It will become clear which data are valuable and which are not. Your skills in data analysis will improve, as well. Compiling your findings into an organized report gets easier each time.
HOW TO PERFORM A MARKET ANALYSIS
DETERMINE YOUR GOAL
There are many reasons to perform a market audit. It’s important to clearly define exactly what you’re hoping to achieve at the onset. Be sure you know what you’re looking for before you begin. Create a list of questions you want to be answered at the end of your analysis.
Ask yourself what you need from this audit. Are you hoping to prove valuation to obtain an investment? Maybe you want to increase cash flow to your business. Define what this data will be used for and design your plan forward.
RESEARCH YOUR INDUSTRY
Clearly define the current state of your industry in the introduction of your audit. Include measurable results and specifics. Projections of market activity are helpful as well. Don’t be afraid to visually represent the data gathered here.
CREATE A CUSTOMER PERSONA
Clearly define exactly who your core customer is. When creating a person, be as detailed as possible. Give your customer a backstory. Tailor them to your industry.
You want to get specific. Break down your clients by region, demographics, and more. Don’t be afraid to narrow it down too far. You don’t want to waste your time marketing to anyone else.
What Is Your Core Customer’s:
Get to know who you’re looking for. Only compile and analyze data that directly relates to your potential customers. If your product is for senior citizens, you don’t need to survey people under 30. Filter your data, so only the most relevant information remains.
GET TO KNOW YOUR COMPETITORS
The most important step to beating your competition is understanding them. You’ll want to explore your competitor’s market saturation. Define where your business fits into your space. Find opportunities to set yourself apart.
Identify the key competitors in your industry. Regularly analyze these competitors and stay aware of market shifts. Keeping up with your competitor’s practices and results can help you write a roadmap for your business. You don’t want to lose your edge in the market.
GATHER AVAILABLE STATISTICS
The most important part of a market audit is data. You’ll want as much relevant information as possible. It’s vital that the data be trustworthy and as accurate as possible. Some reliable sources of data are:
- The U.S. Census Bureau
- Trade Papers and Journals
- Market Surveys
- State and Local Commerce Organizations
- The U.S. Bureau of Labor Statistics
Once you’ve gathered all of the relevant data, you’ll need to verify it’s accuracy. Fact-checking is an important step in a market audit. Analyzing inaccurate data won’t produce any valuable insight. Make sure you trust all of the information you gather.
With your data gathered and verified, you’ll need to organize it. You’ll want to analyze your competitors, core customer, and data pertaining to your goals separately. Ensure you have enough research to completely satisfy your goal. Your data should include information about:
- The current market rate for your products and services
- Your growth projections
- Customer buying trends
- The outlook for your entire industry
- Your projected market share
- Your industry’s projected growth rate and current size
Make sure all data is clearly labeled and well organized. You’ll come back to these audits year after year. You may want to make a template from your first audit to expedite the process going forward. Keeping up with your market doesn’t have to be hard work.
IMPLEMENT YOUR FINDINGS
You’ve analyzed the data, and now it’s time to put it in practice to improve your business. Create a series of goals and plans to reach them based on your findings. You’ll want to retain your research for use in next year’s market audit. Make an annual appointment with yourself to perform another.
Market audits are absolutely essential research. They provide valuable insights into failures, successes, and potential growth opportunities. Every business owner should know how to perform this research and analyze the data. It’s an invaluable skill.
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Thought leaders & celebrities share their tactics for success on the Lisnic podcast by Lisa Teh & Nick Bell