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4.3.3 Perform a Market Analysis

It is true that the strength or failure of any type of business you start depends on your market. If you choose the right market for your items, where there are many customers who understand and need your product, you’ll have a head start on success. If you choose the right market at the wrong time, or the right market at the wrong place, you can find yourself competing for every transaction.

The market analysis section of your business plan is essential, whether or not you ever want anybody else to see it.

Because of this, market research and analysis should be included in your company plan. A study of your company’s position in the market, an assessment of the size of the market for your products, and a review of the competitive landscape should all be included. It’s essential to perform extensive research as you implement your strategy to support your conclusions in order to persuade investors and validate your own hypotheses.

How big could your market be?

An evaluation of the potential market includes determining how many individuals require your product. Even though it’s exciting to picture sky-high sales figures, you should verify your predicted potential market using as much important, unbiased data as you can.

In order to help you get started on your research because this can be a difficult process, here are some general guidelines:

Understand who your ideal clients are. You may start by seeking for official data on the size of the South African millennial market. You might also take into account any changes in the demographics of the people in your target age group.

Examine the trajectories and trends of the relevant sector. If your product is aimed at seniors, find out how many people will be retiring in the next five years and discover as much as you can about their purchasing patterns. If you’re selling fitness equipment, you may look at how common gym memberships are among your target market or the broader public, as well as their general levels of fitness and health. Last but not least, find out whether there are any forecasts for future growth or decline in your industry.

Make informed judgments. It’s impossible to possess complete, accurate knowledge of the size of your addressable market as a whole. You should base your predictions on as many independently verifiable data points as you can in order to make a valid prediction.

Search for market data in reliable news outlets that cover your industry, business associations, university research, and government statistics offices.

SWOT Analysis

Your strengths, weaknesses, opportunities, and threats are examined in a SWOT analysis. What aspects of your company stand out as being the best? What are your weaknesses? Which market or business shifts can you capitalize upon to create opportunities? Are you being hindered from success by outside forces?

These assessments are commonly presented as a grid with bullet points that break down the most crucial facts in each segment, so you can usually avoid writing lengthy paragraphs at this point. The company’s internal strengths and weaknesses are listed first, while opportunities and threats are shown in the row below. Thanks to this visual presentation, your reader will be able to comprehend the factors that might have an impact on your business and recognize your competitive advantage in the market.

Competitive research

The three general traits listed below can help you differentiate your business from the competition:

cost management. You can increase profits by providing lower prices than most of your competitors.

Differentiation. Due to how distinct it is from the current market leaders in your industry, the success of your company depends on standing out from the competitors.

Segmentation. You focus on a very specific target market, or niche, with the goal of finding success with a smaller audience before branching out to a bigger one.

You must comprehend your organization as well as the marketplace’s competitors in order to determine which fit is best.

It is crucial to incorporate a competitive analysis into your business strategy because there will always be competition in the market, even if your product is unique. If you’re entering an established market, pick a few companies you think are direct competitors and explain how you plan to differentiate your products and business from theirs.

There will always be competitors in the market, despite the fact that your product is cutting-edge.

For instance, if you sell jewelry, you may have a competitive advantage over many high-end rivals if you donate a portion of your profits to a respected organization or offer discounts to your customers.

If you’re entering a market where it’s challenging to identify your rivals, consider your indirect rivals—firms that offer products that can be utilized as a substitute for your own. For instance, if you’re selling a cutting-edge new piece of cooking equipment, it’s too easy to assert that you have no competition. Consider what your target market is doing to solve the problems your product aims to address.