In order for you to setup a successful business you must create a business plan. A business plan helps you come up with smart ways to achieve your goals. If you want to develop a business plan that is feasible, you must conduct a thorough market analysis. A market analysis helps you with developing a business plan that will outline how your products will be priced, who your customers are and how you can reach them. For a marketing plan to be successful, you must have clear marketing goals and objectives among other factors. Below are some of the necessary steps you can consider taking in order to carry out an effective market analysis for your business plan.

Set Clear Goals And/or Objectives

As already indicated, you should have clear goals and or objectives that will determine how you can conduct a market analysis for your product or service. For an existing business for example, some of your goals for conducting a market analysis can be determining the number of competitors you have, the demographic of your customers and your customers buying habits. If your business is a start-up, you can have similar objectives in order to understand the type of industry you will be operating in. With clear objectives, it is much easier to set up a roadmap in order to conduct an effective market analysis for your business plan.

Perform An Industry Assessment

After outlining your goals, the next step is to conduct an industry assessment. As a business owner or marketing executive, you must assess the state of your industry. An understanding of the size of your industry, past performance as well as projected growth trends are essential for you to make informed business decisions. As such, an industry assessment is vital. Ensure that you gather as much background information as you can regarding your chosen industry. Utilise supply and demand reports as well as quantitative and qualitative reports from academic institutions and other businesses for an objective assessment.

Research Your Target Market

The next step when conducting a market analysis for your business plan is determining your target market. It is important to understand that not everyone is your customer. To avoid wasting money and time trying to get every single person’s attention you must determine who your customers are. In order to do this you should determine the age of your potential customer, their gender, geographic location as well as their lifestyle among other factors. One of the best ways you can determine your target market is to segment your customers into groups based on age, purchasing power or any other demographic and then select your ideal customer from there.

Outline The Problem You Are Solving

After segmenting your market and determining your ideal customer, the next step is outlining the gap you are filling. This is essential because you can understand whether or not there is a need for your product or service and whether people will buy it. At this stage, you need to understand what drives the demand for your product or service. This assessment can also help you figure out what your current competitors lack. An effective way to identify unsolved problems in the market is to ask the customers themselves what they feel is missing from similar products or services you offer. By focusing on a specific problem, you can avoid providing a product or service that is oversaturated. In addition, getting such an in depth analysis when it comes to the gaps that are present in the market will put you in a much better position when it comes to obtaining investment.

Determine The Barriers To Entry

Having figured out the problem you intend to solve it is important to understand what your limitations are in providing a suitable solution. This is especially crucial for start-ups. If your business is easy to set up such that anyone can open a similar business because of little to no barriers to entry it may be too risky. This is because other people can easily erode your profits as soon as they find out that providing your product or service is profitable. On the other hand, if your business plan requires, a substantial investment, sophisticated technology or licenses that may be difficult to obtain it may be a challenge to setup such as business too. However, barriers to entry can help you protect yourself from competitors.

Assess Your Competition

Assessing your competitors is another important step you must take when conducting a market analysis for your business plan. Whether you are a new business or an existing business, knowing who your competitors are within your industry is vital. Take time to research your competitors’ strengths and weaknesses, and compare them with your product or service. That way you can determine what your competitive advantage is. Knowing your competitors’ weaknesses will help you gain a larger market share if you are able to capitalise on them. Some of the ways you can conduct a competitor analysis is through browsing through your competitors’ websites, reading customer reviews, finding out how they utilise their resources or assets and perform a SWOT analysis on their products and services.

Put The Data To Work

When your assessment is complete, after having determined your ideal customers, discovered a gap in the market and assessed your competitors the next thing is to put your information to work. With that information, you can either improve your product offerings if you are an existing business or create an ideal product to suit your market if you are a new business. There may be untapped markets that you may have discovered after conducting your market analysis that you can serve. Determining the correct price for your product should now be easy since you would have obtained various data on how your competitors price their products and services. Developing your business plan and implementing it will now be easy and less costly. However, it is important to note that a market analysis is an ongoing practise. You need to review your marketing plan, which in turn affects your business plan. This is because consumer tastes and preferences are constantly changing and other businesses keep coming up with different ways to gain a market share. As such, to stay competitive ensure that you stay up to date with your current industry.