How To Get the Most Out of Strategic Market Analysis

Strategic market analysis is a thorough examination of your company’s target market and the competitive landscape within a specific industry to unlock granular business insights. It spans from a broad analysis of your market to an understanding of consumer demand. Comprehensive market analysis enables you to forecast the potential success your brand, product, or services might achieve with consumers when entering a new market or competing in your current markets.

The more granular your research, the better your understanding of how a specific market moves and evolves, enabling you to be more knowledgeable when making business decisions and creating a winning strategy. Because, after all, knowledge is power.

Advancements in market analysis

In recent years, technological advancements have empowered businesses to gain a more intricate understanding of their markets, utilizing advanced market research tools to automate analytical processes within organizations. These developments in market analysis have enabled newcomer retailers like Shein and Temu to grow at unprecedented speed and disrupt the digital landscape.

As such, market analysis professionals, including consumer insights, analytics, and market research teams, can no longer rely on first-party data and panel-based research alone for their decision-making. In a digital age with fast-changing consumer trends, companies are increasingly utilizing digital intelligence to gather deep consumer and market insights that influence the future and growth of the company.

The insights gained from digital research intelligence can inform your strategic market analysis and optimize your marketing and sales strategies, audience targeting, product lines, facility and workforce expansion, and more. With fresh digital data that depicts today’s conditions — not last quarter’s or last year’s — your speed to insight is elevated, and you can take advantage of untapped consumer trends to avoid disruption. Ultimately, you want to be informed with the most accurate and updated insights to improve customer satisfaction and retention, increase sales and profits, and expand your market share.

The importance of market analysis in business growth

We all understand the importance of market analysis. Still, in today’s rapidly changing digital economy, it’s more critical than ever to stay on top of the trends and spot the possible threats before your competitors. Without deeply understanding your market and the developing needs of your consumers today, you’re going blind.

Imagine you’re in a game of laser tag in a huge, multi-floored, obstacle-filled, highly versatile location, and then someone turns off the light, and you’re in complete darkness. Without seeing, without knowing your target, how are you going to hit it?

Now imagine that your business, but only your business, obtains night vision goggles.

That is what precise market research intelligence can be for your business: A way to see in the dark. Even in a challenging environment filled with competitors, if you can identify the obstacles and clearly see your consumers, you can find growth and success as well as reduce risk.

Strategic market analysis also lets you:

• Understand the size, growth rate, and profitability of the market
• Analyze market difficulty, ad cost efficiency, price sensitivity, and consumer loyalty
• Evaluate major players, their market share, and the competitive landscape
• Leverage timely trends and untapped niche markets in your industry
• Discover the main threats, costs, and revenue drivers
• Quickly and accurately deduce the price elasticity of demand and entry potential

How to unearth trends that are shaping the market

Let’s say your company is a consumer electronics manufacturer, and you want to launch a new product or optimize the strategy for an existing product, like those night vision goggles, for example. A quick glance utilizing Similarweb’s Market Intelligence Tool can unearth the top markets for consumer electronics and the market difficulty.

You can filter by country of interest and gain fast insights. In this example, you can see that the US market difficulty is medium:

• Audience loyalty is low, and branded traffic is medium, which allows for easier market penetration of new products.
• On the flip side, there is high consolidation, with market dynamics largely influenced by key players.
• Moreover, the substantial investment in paid advertising in the industry escalates the market challenges.

These factors must be considered when building your product/market launch or optimization strategy, and their effects on your success will vary depending on your brand. If you are an established brand like Samsung, a high consolidation percentage works in your favor, but if you’re a relatively new player, like DJI Innovations (a drone for photography startup) you’ll need to invest in building up brand awareness, which will be costly due to the high average PPC spend.

As seen in the graph above, you might find exciting opportunities if you check out Japan, the fourth-largest consumer electronics market.

While the market difficulty here is also medium, the individual factors differ slightly:

• The consolidation percentage is lower in Japan than in the US at 66.6% vs. 83.3%, respectively.
• The percentage of direct and branded traffic is also lower, affording opportunities to newcomers.
• The average spend on paid advertising in Japan is 6.3% of the US market.

These factors could make it easier for a new brand to launch into the market and build a following through paid ads, which average $76K per site in Japan vs. $1.2M in the US.

Ready to delve deeper into market research? Download our exclusive 90-page State of Ecommerce flagship report to uncover the most important trends shaping today’s market.

Types of strategic market analysis

There are many approaches to market analysis, and you’ve probably leveraged one or a combination of commonly used methods such as SWOT Analysis, PEST Analysis,Porter’s Five Forces Analysis, Four Corners Analysis, and Value-Chain Analysis.

In today’s digital age, a strategic understanding of how the online marketplace evolves can not only enhance traditional methods but also uncover insights your business had no access to until recently.

In the following sections, we’ll dive into the 5 main types of strategic market analysis, providing examples from Similarweb’s Market Intelligence tool.

1. Market Dynamics

Understanding the potential size of your market is critical when estimating the success of your new product, its relaunch, and even optimizing your marketing strategies. Market sizing enables you to make informed business decisions and involves measuring your PAM, TAM, SAM, and SOM.

To clarify:

• PAM: Potential Addressable Market — Includes consumers that are not in your current target market but could be in the future with the proper marketing and product adjustments or as consumer trends change.

• TAM: Total Addressable Market — The total market size of your target market to which you devote most of your marketing and targeting efforts today.
• SAM: Serviceable Addressable Market — The market your company can reach with its marketing, distribution channels, and current business models.
• SOM: Share of Market — Also known as Serviceable Obtainable Market, this is your share of the market in a category or for a particular product or service, which you can benchmark against the industry and competitors.

Earlier, we peeked into the Potential Addressable Market of the consumer electronics industry, but we can delve deeper into this analysis using Similarweb’s Market Research Add-on.

For example, using the Market Analysis Tool, we’ll evaluate the top players in the industry to examine their market share over the last year. Alternatively, we could pick any time frame within the last two years if we want to see how the market conditions have changed.

In this product feature, you can also benchmark your website against the leading players or select a custom list of up to ten websites of your choice to benchmark against.

2. Market Segmentation

Market segmentation is crucial to your market analysis. It is a powerful method of analyzing your Total Addressable Market, enabling you to identify your ideal customer profile (ICP) and inform your product and marketing strategies.

When segmenting your market with Similarweb, you can:

• Identify your target audience → To customize your marketing and sales strategies

• Analyze consumer behavior → To spot untapped trends and opportunities

• Tailor your business strategies → To optimize your product lines and capture opportunities

3. Target Audience Identification

Your target audience and market segmentation can be identified using various parameters, but they usually fall under five main categories: demographic, geographic, firmographic, psychographic, and behavioral. Each one of these categories offers a plethora of insights that can shape your business strategy. Let’s quickly dive into the most commonly utilized one—audience demographics.

For example, Shein is a relatively new online fashion retailer that launched in the US market in May 2022 and has quickly become one of the top players in the fashion industry.

On the surface, you might expect Shein to cater mainly to Generation Z with its online presence, marketing strategies, and overall visual style. However, a deeper dive into audience traffic data highlights that it is also top-of-mind across older age groups, ranking in the top five most visited sites in the US over the twelve months after its launch.

By understanding Shein’s audience demographics better, product and brand managers in competing companies can cater their targeting efforts to reach different audience demographics. In addition, marketing and content strategies can be adjusted, and new product lines can be introduced.

Marketing teams interested in learning from Shein’s success can also perform a quick website analysis to benchmark the fashion disruptor against its leading competitors and discern their marketing strategies to uncover how to reach a wider audience demographic.

4. Real-user Digital Data Analysis

Businesses have relied on a wide range of survey practices to analyze changing consumer interests, especially during periods of uncertainty. However, a notable gap exists between what consumers claim and their real-time consumer behavior, often due to financial constraints, rapid trend shifts, or lack of awareness.

Real-user digital data allows you to examine what consumers are actually doing online today and adjust your product, sales, and marketing strategies to win more conversions.

Let’s analyze and benchmark Shein’s website using Similarweb’s Website Analysis tool.

First, let’s identify the marketing channels driving the most traffic for the sites in the competitive set. As seen below, Nordstrom stands out with a strong organic search strategy that Shein could adopt. In paid search, Shein leads the way, closely followed by JC Penney and Nike.

Next, let’s look at the social media outlets that are being utilized the most. Nike and JCPenney have a strong presence on YouTube, while Nordstrom is leveraging Pinterest. Surprisingly, none of these brands are on Instagram.

The top publishers and ads that drive the most traffic to the five sites are YouTube (meaning video ads), Yahoo!, and MSN.com. Notably, Macy’s holds a 55.3% market share in advertising on Yahoo.com.

Macy’s has a dominant 56.6% market share for Critero ads, whereas Shein has a smaller share at 7.1%. Macy’s is Shein’s most prominent competitor, ranking first for all age demographics other than 18-24 years. This data underscores the importance of studying Macy’s marketing techniques and leveraging similar strategies for Shein’s benefit.

In conclusion, analyzing Shein’s competitors reveals valuable insights into their marketing strategies. This example also highlights how today’s technological advancements empower businesses to make smarter, data-driven decisions.

Similarweb offers a powerful tool for real-user digital analytics across websites, apps, industries, and segments. Watch this video to see how.

5. Consumer Behavior Analysis

Audience analysis is a key part of optimizing your offering and meeting consumer demand. Consumer trends are changing rapidly, and the business strategies that worked last quarter may not be effective anymore.

For example, Vectra, a veterinary medicine, only had a 1% market share in flea treatments in 2023, but its products were affordably priced. Analyzing consumer demand for flea treatments empowers businesses to spot the strategies that increase sales.

Benchmarking against the top 20 best-selling products in the market, we can spot that the top brands sold packages with a one-month supply, while Vectra sold three and six-month supply packages.

While the average listing price for the product clearly shows that Vectra’s monthly price was lower, offering a six-month supply did not align with consumer demand at the time — most pet owners shopping on Amazon preferred to purchase single-dose packs to save on immediate expenses due to the rising cost of living.

How to leverage market analysis for a winning business strategy

When creating or updating your business strategy, it’s vital to consider all the elements that contribute to the business costs and the opportunities that will drive profit in your particular category. You’ll need granular insights into your categories, products, and audiences to make more accurate and faster decisions. Traditional-only market analysis will not lead to growth in an age filled with micro-consumer demand, niche markets, private labels, dupes, and an on-demand shopper mentality.

Understanding your brand strength, the cost efficiency of your ad spend, and how to increase customer loyalty and retention could mean the difference between a diminishing customer base and a growing market share.

Similarweb’s Market Intelligence Add-On lets you unlock more market and consumer insights for your company, brand, or client by:

• Analyzing your market
• Benchmarking your business performance
• Tracking consumer trends

Let’s take a look at the Home & Garden category and see what that might look like.

1. Analyze your market

Utilizing the market research tool, you can analyze a specific segment within the industry to get more granular insights about your products. We’ll look at the gardening segment.

You can delve into global demand or choose any geography, whether a current market or one you want to enter and adjust the period you want to analyze to spot current or seasonal trends.

Here’s a quick look at the market’s year-over-year (YoY) change and website traffic metrics.

Understand the market difficulty by analyzing audience loyalty, consolidation, average PPC investment, and direct and branded traffic percentage.

Segment the industry into categories to see which are in demand so you can optimize your product lines and marketing strategy.

2. Benchmark your business performance

Evaluate your performance using the Market Quadrant Analysis tool, which gives you visibility into audience growth, brand strength, PPC cost efficiency, as well as loyalty and retention metrics.

Choose your industry and geography, benchmark the leading players in your market, or benchmark your website against up to 14 competitors to identify their strategies and optimize your sales and marketing strategies.

3. Track consumer trends

Understand how consumer demand is changing in your market or new markets, and find untapped opportunities by leveraging the Demand Trends tool.

Analyze what customers in your industry were searching – in the last month or up to 12 months – and uncover volume trends, changes in traffic, and traffic leaders for the top 100 keywords.

Adding a list of specific keywords to the search tool allows you to get more granular insights about your company’s services to understand consumer demand and even spot new vs. trending search terms.

You can also discover how many of your visitors are cross-shopping at competing sites to find opportunities to steal traffic.

Temu: Strategic market analysis example

Temu has disrupted the US ecommerce market, with 50% of Americans using its app and converted visits growing thirteen-fold since its launch in October 2022. Temu has also seen global success with over a billion website visits and a 307% traffic growth period-over-period (PoP). Understanding the newcomer’s success and learning how to emulate it in your own domain can be highly beneficial for your brand.

Upon launching into the US market, Temu’s PPC spend was high relative to the competitive landscape, outpacing established marketplaces such as Walmart, eBay, and Costco – overshadowed only by Amazon’s budget.

This marketing investment fueled massive growth, resulting in unprecedented period-over-period changes in visits to Temu’s website and increased brand awareness. Its online marketing investments paid off, with its audience growing by over 50% between Q1 and Q2 of 2023, making it a strong emerging player.

During this period of growth (Q1 and Q2, 2023), Temu invested in keywords such as alibaba, amazon, and wish, which stole traffic from competitors, investing up to $10.45 per click to steal traffic from Bed Bath and Beyond.

Temu offers discovery-based shopping, which leverages digital data to analyze its audience and algorithms to suggest products based on the consumer’s online behavior and shopping preferences, enabling it to draw in new customers.

However, as of Q3 2023, the Chinese ecommerce platform is benchmarking below its competitors, displaying low rates of exclusive visitors and returning users. Temu’s loyalty and retention metrics highlight some issues that need to be addressed for the newcomer to retain its market share. By better understanding its customers, the Chinese ecommerce platform could anticipate their needs better and improve its customer journey.

Temu’s competitive set loyalty and retention quadrant, Q3 2O23

By analyzing your competitive landscape and its barriers to entry, such as ad cost efficiency, price sensitivity for a category, and loyalty and retention, you can learn from your competitors’ mistakes and emulate their successes.

Consumer insights and demand analysis would inform your:

• Product development, as seen in the Vectra example highlighting product package sizes
• Distribution plan, including the marketing channels and publishers you leverage
• Marketing strategies, as seen in Temu’s paid keyword strategy

From good to great: Elevating your strategic market analysis

In the dynamic landscape of today’s economy, businesses that leverage digital web analytics are at an advantage because they can promptly grasp what consumers are looking for today. Digital intelligence enables them to immediately enhance their first-party and survey data to shift strategies and capture consumer demand quickly, which is particularly critical in a fast-changing economy with an on-demand consumer mentality.

By aggregating critical digital signals and presenting them in a meaningful, digestible way, Similarweb’s Market Research tools enable companies to easily understand the market and generate actionable market and consumer insights to gain a competitive edge and grow their brand.

Explore how to use Similarweb Digital Data for your market and audience research. Click below to learn more. 

FAQ

What is strategic market analysis?

Strategic market analysis is a detailed investigation of your target market and competitive landscape, ranging from broad market trends to consumer demand. It enables you to forecast the potential success of your brand, product, or services.

What are the types of strategic market analysis?

There are five essential types of strategic market analysis:

• Market Dynamics
• Market Segmentation
• Target Audience Identification
• Real-User Digital Data Analysis
• Consumer Behavior Analysis

What is market segmentation?

Market segmentation is an intricate way of understanding your target market by dividing the market into subdivisions of customers with common characteristics.

What is consumer behavior?

Consumer behavior is the actions that individuals, groups, or organizations take when purchasing and using goods and services. These can be measured using digital signals that measure website traffic, loyalty and retention, conversion rates, and popular keywords online.