Business Strategy Analysis – As market competition increases and technology shapes the future, data and insights related to market dynamics and market conditions are essential tools for any company seeking to dominate the competition. However, considering this fact, a question arises. Where can you gather the best market data? And how do you organize it in a way that leads to better insights?
In this post, we’ll guide you through the key steps and techniques for market analysis to ensure you’re ready to embrace the important opportunities that will take your company to the next level and gain an edge over the competition.
Business Strategy Analysis
Market analysis is the process of evaluating and identifying various internal and external factors and conditions in a particular market or within a particular market sector. Some of the key insights you can get from market analysis are:
Advanced Business Strategy
Conducting market research allows companies to be aware of the latest market trends, audience buying patterns, introduction of new technologies and changes in competitive activity.
On top of these benefits, market research provides a data-driven approach to creating a highly impactful and realistic plan for making better business and marketing decisions in the future.
There are many ways to achieve business goals and better understand and refine your company’s business goals. Although we are talking about data-driven methods in market analysis, we chose Critical Success Factor Analysis as a “non-classical” system to better define your business goals.
In a nutshell, CSF analysis is a method that a business uses to identify areas of need to meet the business’s mission and goals. Of course, CSFs vary from business to business, but there are some common patterns.
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Evaluating all of these factors will help you prioritize your company’s efforts and monitor and measure progress toward achieving strategic goals.
Market size can mean different things in different contexts, but in general it is the number of people or companies who can be considered potential buyers of a particular product or service. A market size estimate can give you an estimate of audience size, potential sales volume, and revenue stream.
There are several measurement methods, but we’ll outline two different methods you can use depending on your budget, business size, and industry details.
Data, information and measurement firms such as Gartner, Nielsen and Statista are invaluable sources of in-depth market information. Although the data from these sources is often expensive, they provide a lot of free information that can be useful in your market research.
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The downside is that data from these firms, especially data provided at no cost, is widely available—often it’s just a matter of downloading. This means that competitors may be aware of the information contained in these types of reports.
Also, reports created by these firms take a lot of effort and time to create, which delays the time between data collection and understanding and reaching the general public. Markets move quickly, so by the time you reach a given report, the market may have moved in a different direction. For this reason, it’s best to pair reports with real-time data.
Affordable competitive intelligence solutions can provide excellent real-time data for each market, including understanding market size and market dynamics. The latter is important because, as mentioned, industry reports are often released with a time lag and it takes time to detect industry volatility and the arrival of game-changing companies.
The Market Explorer tool helps the client estimate the total market size for a specific niche based on online traffic trends and organic keyword data. You can start by entering competitors into the tool, or you can select an entire industry, which is especially useful for a broad market assessment.
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Let’s explore market size data and consider how it can benefit the US beauty and cosmetics industry.
In the Market Summary section at the top of the overview report, we find various data points to help you better understand the market. The Market Competition section on the left shows how the market share is distributed among the various players in the market.
There is less consolidation in the beauty and cosmetics market, meaning that many smaller players own a fraction of the market share. This generally means that it will be easier for new players to enter the market. We can also see the top three players and their market share, but we will explore this figure below in the competitor analysis section.
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The market size chart shows the total addressable market (TAM) and the serviceable market (SAM). These indicators reflect the volume of demand in the beauty and cosmetics market.
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It is important to note that the numbers here are not the number of customers. Since there is no makeup or cosmetics, customers of this market can buy the products again and again. This means that a customer can create multiple units of demand.
TAM 2.1B and SAM 1.1B for the beauty and cosmetics market. With a large TAM and only half the size of SAM, the market looks healthy and still has room to grow. Also, looking at the market traffic metric above the market volume graph, it’s up 8% from last month, which is another good sign.
You cannot stop once you determine the size of the market because this indicator is never static. Market growth and market trends are factors that require you to take timely action and regularly review your business and marketing strategy to refine your business and marketing strategy accordingly.
Market growth refers to an increase in market size or total sales in a specific location over a specific period of time.
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To estimate market growth, you can look at metrics such as year-over-year (YoY) industry trends, changes in the number of customers, and number of completed purchases per customer (internal or industry report data only).
Let’s look at the example of the apparel and fashion industry using Market Explorer. Here is a summary of the market for May 2022:
In May 2022, the total addressable market of the network was 4.5B. But looking at historical data, we have a total addressable market of 2.3B in May 2021. As shown, the market has almost doubled in one year!
To understand how fast the market is growing, what its growth potential is, and whether it is generally rising or falling, you should look at market growth trends during your market analysis.
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Now we want to introduce a widely used method that will help you collect all the data to gather actionable insights for your business: the BCG matrix.
Developed in 1968, the BCG Matrix is a framework that helps large corporations manage their portfolios and prioritize budgets and operations across multiple business units based on market growth and market share.
However, the BCG matrix can be used by any business, large or small, because its logic can be used to prioritize customer segments, products, services, marketing channels, markets (GEO), and brands.
Let’s turn to the Market Explorer tool to gather all the necessary market data to create a BCG matrix. For this example, let’s say Elon Musk wants to see if Tesla should be preferred over SpaceX, SolarCity, or OpenAI.
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Side note: Of course, companies like Tesla are publicly traded on the stock market, and we can rely on their annual reports. For companies like OpenAI, we can only rely on external tools to collect various market data and interpret certain trends. In the case of Market Explorer, traffic growth numbers indicate increased interest in the product
Initially, you should gather data on the market share and growth rate of your products, business units, customer segments, and other important factors. Using Market Explorer, we see that among Musk’s businesses, Tesla has the highest traffic share of all businesses tested, despite slow growth.
Open AI, on the other hand, has seen strong growth in the past year. And when we compare Open AI to other companies in the artificial intelligence space, we see that their growth has steadily increased while the market has remained relatively stable.
Running Tesla, SolarCity, Starlink, and SpaceX for the same analysis, we found:
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The horizontal line of the BCG matrix represents market share, and the vertical line represents the growth rate. What we need to do now is put each of our research objects into a custom box that shows where they rank in terms of market share and growth.
It’s not always clear which box what you’re looking at should fall into. But when you look at each of them in relation to each other, Tesla is Musk’s cash cow, SpaceX star, OpenAI is under question marks and SolarCity could be considered a pet.
To gain an advantage over your competitors, you need to understand your competitive landscape to find the best strategy for positioning your brand in the market.
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