You could always better your firms’ overall performance and output by conducting a market share analysis. You can always improve your performance by knowing how well your competitors are doing in the market and what your weaknesses are. This article discusses how to conduct market share analysis.
What is market share analysis and how is it used?
The practice of collecting knowledge on the market within an organisation is known as market analysis. Market share analysis is a subset of market analysis that displays how well a company does in the market compared to its rivals. Your research investigates the characteristics of a market and what motivates prospective customers. A market study may appear hard, yet you may need it to guide your organisation towards success.
How do you do a market analysis?
It takes a lifetime of study to research and write a market analysis. It’s not something you can make in a hurry. Read the seven market analysis stages below to assist you throughout your market evaluation journey.
- Define the purpose of your analysis
Businesses may perform market share analysis for a variety of reasons. You can use it to analyse company risks, like threats, solve problems, or generate new possibilities. Decide if the analysis is for internal or external use before beginning any market analysis. Internal goals might include things like increasing cash flow or enhancing business processes. External purposes include persuading lenders to provide you with a company loan. Before starting your market share analysis, you must decide its purpose and define it.
- Examine the forecast for your industry
Summarise the present situation of your industry in your study. Include data such as the industry scale, patterns and predicted growth to show where the sector heads. Make certain that you have appropriate facts to back up your assertions. This part shows that you researched well about the industry your firm operates in. It helps investors or lenders to know how you operate and if they should invest or lend money to your firm or not.
- Point out target customers
When conducting a market share analysis, you must identify your target clients. A specific market analysis is a name given to this process stage. Have a thorough understanding of who your clients are and where they come from. Your research should provide you with a clear image of your prospective clients. Consider the following:
- Age and income
- Gender and location
- Occupation
- Level of education
- Marital or family status
Determine your customers’ requirements, likes, dispositions, and demographics. Consider developing client profiles based on your findings. Many companies have several consumer personas. After compiling a list of diverse client attributes, create personas to reflect your usual customers. Identifying your consumer base allows you to better respond to potential clients and effectively promote your market. Sometimes it becomes hard to identify the customers when conducting dissertation research on market share. There is an option to buy dissertation online in this regard.
- Contrast with competitors
Prepare a list of your top rivals. Examine each one on the list and identify their qualities and faults through SWOT analysis. SWOT analysis means identifying an entity’s strengths, weaknesses, opportunities, and threats. What does your rival company provide that you do not? Why would a consumer choose your rival companies but not you? Does your rival company constitute a threat to your company?
After identifying your competitors’ strengths, weaknesses, opportunities, and threats, rate them from most risky to least risky. Next, assess your start-up’s comparative advantages and promotional stance. Your market share analysis is effective when you know what makes your rivals appealing so that you may bring changes to your firm.
- Gather more data
When it comes to doing a market share analysis, gathering data is your strongest asset. The more information you collect and own, the more equipped your company will be. Ensure that the information you collect is neutral, pertinent and accurate. Prepare your analysis and back it up with reliable statistics. To get further information, consult reputable sources. You can use various resources, including The BLS or the Bureau of Labour Statistics, state and local business websites maintained by the Census Bureau and the articles in trade journals. Other companies’ SWOT analyses can also serve as a guide to your market share analysis.
- Evaluate your results
It is time to check through your results once you analyse the market. Lay down all your research and divide it into pieces. Include areas for your mission, target market and competitors. Based on your results, analyse the following:
- A summary of the size and growth pace of your sector
- Your predicted per cent share of the market
- Your assessment of the industry
- Deals you intend to provide
- Purchasing patterns
- The expected expansion of your company
- Your products’ costs
- How much are consumers ready to pay?
- Your cash flow forecast
- Your target demographics
- The outcomes of your other studies
Based on these evaluations, you can predict other aspects of your organisation, such as your cash flow pattern, revenue growth and client purchasing behaviours.
- Turn your evaluations into action.
Consider how you may use your results to improve your organisation for internal goals. Employ your market share analysis to determine if you can improve the efficiency of any of your company’s operations. Try to communicate with lending institutions about your study and results if your analysis is for external objectives.
What is a market share example?
The proportion of a customer’s total investment in a service or product that goes to a firm is its market share. In precise terms, if consumers altogether buy 100 detergents, 40 of them belong to one business. So, that one business’s market share is 40 per cent. Another example of market share is:
Levi’s sold 760 pieces, but the sportswear industry overall sold 10,000 pieces. Dividing 760 by 10,000 yields 0.076, which means Levi’s had a 7.6% market share for the items sold.
Conclusion
Market share analysis is a type of market analysis that shows how well a firm performs compared to its competitors. When doing a market share study, you must first identify your target customers. Use your market share study to see if you can make any of your company’s activities more efficient.
