A market analysis studies the attractiveness and the dynamics of a special market within a special industry. It is part of the industry analysis and this in turn of the global environmental analysis. Through all these analyses the chances, strengths, weaknesses and risks of a company can be identified. Finally, with the help of a SWOT analysis, adequate business strategies of a company will be defined. The market analysis is also known as a documented investigation of a market that is used to inform a firm's planning activities, particularly around decisions of inventory, purchase, work force expansion/contraction, facility expansion, purchases of capital equipment, promotional activities, and many other aspects of a company.
Market segmentation is the basis for a differentiated market analysis. Differentiation is important. One main reason is the saturation of consumption, which exists due to the increasing competition in offered products. Consumers ask
for more individual products and services and are better informed about the range of products than before. As a consequence, market segmentation is indispensable.Segmentation includes a lot of market research, since a lot of market knowledge is required to segment the market. Market research about market structures and processes must be done to define the “relevant market”. The relevant market is a part of the whole market, on which the company focuses its activities. To identify and classify the relevant market, a market classification or segmentation has to be done.
Dimensions of market analysis
David A. Aaker outlined the following dimensions of a market analysisMarket size (current and future)
Market growth rate Market profitability Industry cost structure Distribution channels
Market trends Key success factors
The goal of a market analysis is to determine the attractiveness of a market, both now and in the future. Organizations evaluate the...