In order to start a business you need to write a business plan. An integral ingredient of every business plan is the market analysis. This would show your would-be investor(s) that you understand and know the market in which you wish to sell in.
In the next few minutes I would be sharing with you how to write a market analysis.
Get the necessary information
Your market analysis will include some very vital information about your market, the first step towards writing a quality market analysis is to get the necessary information. At this point you should know that when we talk about ‘your market’ it is not the people you have reached or that you serve, instead it is your potential customer; people who have a tendency of buying your products or patronizing your service. For example, if you own a barbing salon in a local town, then your market would be every male within walking or driving distance of your salon.
The information you require includes the number of your potential customers, their behavior towards your product and that of your competitor etc.
This is the act of dividing your target or potential market into segments or sections. The reason for this is so you can focus specifically on each segment and offer them service that they want and is unique to them. For example, if you are a telecommunication provider, your potential market is everyone who can use a phone. But then you segment this huge population into segments, e.g. young people/older people, knowing fully well that young people would love to make calls all night and love to use mobile data for chatting and surfing the internet, while the older population would make more of daytime calls and only use data for business. Segmentation would enable you to target this groups differently and offer them services unique to their behavior.
Market size and growth
Like I said earlier, in order to write a market analysis you must know the size of your potential market; what is the actual number of people that can buy your product or would be interested in your service. You should know the market size for your product or service and state it in your analysis.
Market growth refers to a percentage change as a market forecast. What is your target market? Is the number increasing or decreasing? If you are restaurant owner, then you may want to know if the percentage of people eating out is increasing or decreasing. To estimate your market growth you must know your current market size and then project percentage change over the next three or five years.
Market trend refers to the changes in the purchasing behavior of your target market. As a car seller, are people changing from buying new cars to old ones due to an economic downturn? Are they switching from food high in sugar to those low in sugar? The market is continually changing, taste and fashion of consumers constantly change. You must be aware of this, and state it in your market analysis, highlighting how this change may favor you.