Plotting a successful strategy to grow a new business requires much more than capital and goodwill. Market analysis is essential since it provides a business plan or road map for running a business. The analysis cuts across several elements, including target market, market profitability, market size and competition. Spotting competition, substitutes and disruptors in a market can help an entrepreneur come up with effective counter measures to maintain a viable and successful business. According to Decision Making Solutions, the following are the key markers of a competitor:
- Firms offering similar products or services
- Businesses operating in adjacent markets and offer similar products or services
- Businesses that offer competing substitutes
- Strategic ventures developed to eliminate customer need
Having firms offering the same type of products or services such as yours in the same market is considered direct competition. The same can be said about companies operating in nearby markets who offer parallel products or services. The analysis above is especially critical for a business that is starting up or wants to grow since it can help such a business leverage its current capabilities, identify new competition strategies, and work out ways to “stave off” competition. The latter is likely to happen in large markets with noticeably lower trade barriers.
Businesses that offer substitute products and services can easily turn into serious threats, especially if the products offered are in direct competition with your products. A superior substitute can be a real threat if customers see it as a great improvement to other products or services selling in the same market. This scenario can easily happen if businesses operating in a market start looking for ways to create a combination of products that meet various market needs. The ventures with the potential to better address customer needs are often called disruptors.
Competing with a disruptive product can be a tricky affair. It is important to recognize that some disruptors have the ability to transform an entire industry, so a lot of caution is needed. To compete effectively in a disruptive market, a thorough market analysis must be conducted. The solutions include undertaking product or service diversification and putting more money in research and development to improve product quality. A thorough analysis of the competition can also help a business improve marketing strategies and entrench proactive responses.
The Market Research Industry
Research companies across the world generate billions of dollars in revenue each year. Most of these funds are collected from service fees. A 2018 report by Consultancy.org places the size of the global market research industry at $76 billion. The biggest and fastest growing markets are located in the US, UK, Asia Pacific and the Middle East. The US share of the global market research industry stands at a staggering 44% while the UK accounts for 14% share, which is a drop from 17% recorded in 2017. The other big markets include France, Germany and China.
Companies that offer market research services are often tasked with gathering and translating information on behalf of clients who come from different sectors of the economy, including media, mining, advertising, manufacturing and healthcare. The market parameters that form the basis of research include consumer behavior, market size, market need and competition. Several scientific, mathematical and logical methodologies are used in the assessment. The following qualitative and quantitative techniques are widely used by data research firms:
Qualitative Techniques
- Focus groups
- Ethnography
- In-depth interviews
Quantitative Techniques
- Customer surveys
- Secondary data analysis
- Statistic or analytical methodology
Statistics from Consultancy.org show the biggest share of research dollars across the globe go towards quantitative research at over 80% while qualitative research accounts for a paltry 14% of the total spending. The remaining 6% is divided among the other research methods.
How to Choose A Market Research and Analysis Firm
Picking a market research company to perform market analysis on behalf of your business is a delicate balancing act. This is largely because several things must be brought into perspective, from the methodology used for research to company reputation and competence. According to Research and Marketing Strategies, the search criterion should focus on the following key areas:
- Financial stability and ability to deliver results in time
- Industry knowledge and responsiveness
- Staff experience and consultative skills
- Pricing and market access
- Use of quality data collection methods
When it comes to competence, the staff working at the company should be able to translate data into useful and adaptable market insights. Although low service cost doesn’t always mean poor quality of service, it is important to choose a research firm that offers cost–efficient service without compromising quality of work or turnaround timetable. To be on the safe side, always do thorough research before enlisting the services of a marketing analyst or research firm. This might take time, but you will get the results you need to grow your business to the next level.
The Insights You Need to Invest Your Money!
Investors are constantly bombarded by news and information that impact the market in many different ways. Making sense of this information can make the difference to an investor looking for profitable trades and investments in the short and long term. If you are a keen investor, you can follow the analysis of trending financial topics from Fisher Investments. This is just one of the many tools available online for those looking to become better informed and take control of their market research.
