Typically, companies commission market analyses in order to determine the viability of a business opportunity under consideration. Almost invariably, businesspeople are pleasantly surprised to learn that a well-prepared assessment delivers value far beyond that immediate need. Besides providing invaluable data and context for evaluating an opportunity, as will be explained in this article, a market assessment reveals much more. If acted upon appropriately, a strong market assessment acts as a compass navigating the enterprise away from ill-conceived initiatives (or just inertia) toward more suitable & rewarding market opportunities.
Among other objectives, the market assessment provides a comprehensive picture of the current state of the market in question. Therefore, the first step in the assessment is defining the market under consideration as precisely as possible. After all, the less ambiguous the parameters of the market are, the more meaningful the market assessment will be. Often, especially if there was some ambiguity regarding the composition of the market in question, the market definition process itself can prove very enlightening. Once the market has been defined properly, all aspects of the current market are researched and revealed within the context of the enterprise’s particular objectives.
Subsequently, the market is segmented according to all relevant quantitative & qualitative factors. This is among the most important practical aspects of the market assessment. Often, enterprises launch product development, promotional, and other initiatives based upon faulty assumptions about the nature of their market. In some cases, it is a failure to realize that the product/service offering is only appropriate for a specific segment within the targeted market. However, in other cases, the reverse is true -- the offering has applicability to market segments that are being overlooked. A well-researched and thoroughly prepared market assessment will illuminate these critical issues for management’s consideration.
Another highly beneficial outcome of a well-prepared market assessment is the identification and quantification of trends and other developments (e.g. pending legislation) that may affect the market under consideration. For example, a certain market may currently enjoy a certain level of demand that, for various factors, is actually anticipated to diminish gradually over the next 10 years to a level that will not be sufficient to sustain the product line in question. Conversely, there may be a piece of legislation in the works which, if passed, will dramatically increase the need for a particular service that is now only a nominal source of profit. Of course, in some cases, market conditions are relatively static. Nevertheless, awareness of salient trends and potential future developments is invaluable for staying ahead of (and, where possible, capitalizing upon) shifting market dynamics.
As well, a well-researched market assessment provides the data with which to formulate sound sales projections. Multiple studies throughout the world have proven that, although sales may not always conform to projections, the effort to meet higher yet attainable targets spurs greater productivity and, ultimately, superior bottom-line results. Indeed, sales projections should stretch the company to some degree but still remain within the realm of feasibility as established by the results of the assessment. Indeed, such a sweet spot can only be identified in the context of both the business’ operations and the overall market environment during the period being forecasted.
Strategy regarding the critical areas of market identification, market adaptation, setting sales targets, and other salient issues, is only as effective as the data that forms its basis. If strategy is reliant upon assumptions and past experience, the enterprise is always vulnerable to conditions that were unanticipated by management – but apparent to an objective market analyst. That is why, to a large degree, the effectiveness of a firm’s marketing mechanisms is dictated by the thoroughness and independence of its market intelligence. The best navigators only use the highest quality maps and navigational equipment to reach their destinations. Similarly, success-oriented firms rely upon professional market assessments to help navigate their way to desired results.