Is there demand for my business idea? This question should be answered at the outset when setting up any company. When drawing up a business plan, it is important to obtain information on the sector, competitors and customers and to evaluate it as part of comprehensive market analysis. Market analysis consists of three actual sub-analyses. The competitive analysis evaluates the market and its conditions. Competitive intelligence scrutinizes competitors on the market. Finally, customers and their requirements are analysed. The aim of all of this is to ensure your company stands out from the competition and is ultimately successful.
Market analysis – does my idea have a chance of succeeding?
Even the very best business ideas are doomed to fail unless the market environment is carefully analysed beforehand. Systematic market analysis is therefore the key to success. It provides an insight into market conditions, the competition, direct competitors and potential customers.
Competitive analysis: gain an insight into your environment
Every sector has its own particular characteristics. Different conditions prevail depending on the competition, market entry barriers and the negotiating power of customers and suppliers. In order to determine and understand them, the first step is to carry out a competitive analysis – the key part of any market analysis. But where can I find the relevant information? You don’t have to commission market research right away. This is usually expensive for start-ups. There is a wide range of freely accessible data available which may help you with your analysis. Consult industry, business or professional associations or the Swiss Federal Statistical Office to find study results or research articles on trends in the sector online and in the media. Specialist institutes at traditional universities and universities of applied sciences are good starting points for gathering information. But don’t just rely on figures and studies when carrying out your competitive analysis. Also speak to industry experts if you get the chance. In a personal conversation, they may outline their own experience or provide forecasts.
The competitive analysis should provide you with answers to questions like:
- How large is the market potential?
- What are the growth rates?
- Are there any gaps in the market?
- Which needs are not being met?
- Which market trends can be observed?
Competitive intelligence: the competition’s weaknesses can become your strengths
Competition between market players is a major driving force in the free market. You therefore need to understand the plans and objectives of your competitors and be aware of the approach they are adopting. Competitive intelligence can help in this respect.It is not just a matter of establishing who the direct and indirect competition is, but also their market positioning and target groups. The strengths and weaknesses of the competition are scrutinized more closely using a SWOT analysis. Evaluation of your competitors is often not an easy task. Smaller companies, in particular, often do not publish figures on either their revenue or market share, let alone margins and profit. Annual reports, brochures, company documentation, websites and customer magazines may nevertheless provide a good insight. Visit trade fairs and public exhibitions to collect information material and to speak with industry representatives, buy from your competitors, test out their products and obtain offers. Compare the competition’s products and services in detail. For example, how many shops are there nearby? Which customer group is the competition focusing on? The knowledge about your competitors obtained through competitive intelligence will help you to define your own market position and develop a highly successful strategy. Specifically take advantage of the weaknesses of other providers and use them to derive your own strengths.
Comprehensive competitive intelligence will provide you with answers to questions like:
- What range of products do my competitors offer?
- What differences exist between the competition’s products or services?
- How does the competition meet customer requirements?
- How do your solutions differ from those of the competition?
- What prices are the competition selling at?
- What terms of payment are being offered by the competition (this includes, for example, discounts, special offers, guarantees and payment options)?
- What methods is the competition using?
- How are your competitors selling their products (in their own physical shops, online shops, department stores or distributors, etc.)?
- What factors need to be taken into account with distribution (monopolies, contracts, margins, etc.)?
- What trends can be observed in terms of supply, pricing, market development and distribution?
Customer analysis: who are your customers and what are their needs?
Whether or not your business idea succeeds on the market ultimately depends on customer demand. Will people buy your products or services? You need to reflect on who your potential customers are and what their requirements are. Consider exactly who your product or service is intended to appeal to, who your target group is and what their customer requirements are. It is not just a question of determining demographic characteristics, such as the age, gender, income and place of residence of the defined target group, but also establishing what their values, preferences and purchasing behaviour are. This knowledge will help you to appeal to potential customers and to align your marketing activities as effectively as possible. While the target group initially remains a fictitious construct due to a lack of empirical data, key information from customer surveys and online evaluations can help you later on to find out more about the target group. This may also mean that the definition of the target group has to be reviewed.
Your customer analysis will help you to answer the following questions:
- Who will buy my products and services? And who is buying them now?
- For what purpose are they being bought?
- What are their purchasing habits?
- What trends can be observed (collection service, same-day delivery, DIY, payment methods, quality awareness, etc.)?
A thorough analysis is the key to success
A comprehensive market analysis is top priority when setting up any business. Only by obtaining sufficient information about the market, the competition and customers and by analysing it in-depth can companies successfully position themselves on the market, develop their own strategy and ensure sustainable business development. This means that large-scale market research is not required immediately. The key elements of the market can also be determined on a small budget using freely accessible information. By carrying out a market analysis, you can condense this information into a comprehensive overview.