“Hey, I think there’s a market for this product and I’m going to open a store to sell this product”. Half a year later, due to poor sales, the product was unsalable, and the store had no choice but to close. Brutal but true. Sometimes we find something that might have market potential, and we’re so excited that we’re ready to act. Starting a business can be exciting, but it can also be a lot of work — if you do it right. Market analysis is one of the first hurdles you need to overcome when you’re taking a business or product idea out of your head and onto paper. An accurate market assessment is your first step towards a successful business. What is A Market Assessment? A market assessment (or analysis) is an assessment or study of the market available in a particular niche or industry. The term “market” broadly refers to the state of who and how many people buy and sell a particular product or service. The idea is to study the dynamics of the field in which you intend to do business. It contains many aspects. You need to understand who your customers are, their spending habits and specific needs, the size of the market and other businesses you will be competing with. Whether you are starting a brand new business or an existing business is looking to enter a new market, market assessment is one of the essential steps. It will provide real data support for your business, not empty “I think”. These are the questions you need to focus on: The search index size of the product. Product search trends. The audience of the product. Including gender, age, income, and geographic location. Your potential competitors. Upfront investment. Payback period. . . Benefits of Conducting A Market Assessment: There’s a good reason that most, if not all, business loan providers need a business plan that includes market analysis — and it brings a lot of benefits. Let’s take a look at some of the key benefits below: It helps you identify market trends. Conducting market analysis allows you to see the entire market – which helps your business stay on top of or stay ahead of trends emerging within it. For example, trending products in your niche or gaps that offer opportunities. You find potential customers and how to communicate with them. Perhaps the most obvious benefit is that you can identify exactly who your customers are and develop a marketing strategy that fits your target market. It reduces your business risk. Building a new business can be risky, especially if you start running before you walk, i.e. planning your business strategy before investing too much can help you identify where your pain points might be and if the risk is too great, as well as help you validate your product ideas. It provides a benchmark for evaluation. Through comparative market analysis, you’ll be able to identify the minimum KPIs your business needs to execute – from there you can set goals to exceed them. It provides direction for business decisions. A complete market analysis document can help you become the “North Star” – and you can base your business decisions on it. It’s much easier than guessing your way. It provides better revenue and cash flow forecasting. It’s hard to guess how much your business will make until you start selling, but market analysis can help you make predictions based on market trends. These are some of the many benefits you will gain from conducting a market assessment or appraisal. Disadvantages of Conducting A Market Assessment The benefits of conducting a market assessment cannot be overemphasized. But it’s not all glitter and rainbows – there are some downsides to running a market assessment, especially with your first business. Here are some common drawbacks: This can take a lot of time and effort. If you choose to do a market assessment, you will have to devote a lot of time and effort to doing it – you can dedicate your time to other important business tasks. Everything from market quotes to customer profiles takes a lot of time and effort. Market analysis may be limited. If you are running your first market assessment, you have little practical knowledge to help guide the content of the assessment. Many businesses rely on customer surveys or existing customer feedback that you may not have access to. So your evaluation will be limited to what you can observe. The more your customers accumulate, the more comprehensive your market analysis will be. Depending on your method, it can be expensive. If you do not choose to do the assessment yourself, you will need to hire someone to do the assessment for you. There are two main options: hire freelance consultants or hire in-house marketers. Both of these options will affect your budget to start your business upfront, but they can provide better insights if you’re not well versed in market research. This isn’t an exhaustive list of potential headwinds for market assessments, but you shouldn’t take it lightly — each one could prove to be a challenging hurdle. However, in most cases, the benefits outweigh the disadvantages. How to Conduct A Market Assessment Determine market conditions Research your target customers Run a competitor analysis Build financial forecasts Understand industry regulations and barriers to entry 1. Determine Market Conditions. The first part of your market analysis should contain an overview or description of the industry you wish to operate in. Take a look at where the industry is headed. Are there current trends affecting the industry? What is the market growth rate? What is the life cycle of products and services in the industry? These are the questions your market overview should answer. However, while this section is always at the front of the document, it can be done more easily after you’ve done other research. You have multiple channels to investigate market conditions, such as Google Trends and the Keyword … Continue reading How to Market Assessment for Your Product in 2023