Market Analysis: Definition, Examples, and Methods

Do you know how Tiger Woods became the best golfer of all time? His secret is that he meticulously studies and analyzes the course and the competition before each tournament.

He knows the number of bushes in each rough and the exact angle variations in each fairway. It’s what allows him to find the perfect move and react to every scenario.

Now imagine the golf course was the market and you want to conquer it.

What do you do? You study the landscape and the competition before making your move. You know, you can’t outperform the competition without analyzing the market first. Here’s how.

What is market analysis?

The definition of market analysis is an assessment of a market within a specific industry. It examines all aspects that impact the relevant market, or a segment of it, and evaluates the size, value, and trends.

For your company’s growth, market analysis means evaluating the market potential and your odds against the risks and rivals. Based on the analysis, you develop an effective strategy to win it over.

The difference is, industry competition is continuous, and you don’t get a time-out to reassess. You need to analyze the markets you want to enter and the market you’re already in, and keep on going.

But before we jump into the juicy stuff, let’s clarify s few things first. When we say market analysis, it’s not the same as market research, market mapping, or market intelligence, though they’re often used interchangeably.

How is market analysis different from market research?

Market research collects data from the market to understand how it got to where it is.

Market analysis collects data about the market and aims to understand where it’s going.

Let us explain.

When doing market research, you typically interact directly with those involved using market research surveys, polls, interviews, focus groups, and observation to gather information. Because research is based on historic data up to a specific point, it’s often a one-time or periodic task.

A strategic market analysis might involve market research but also employs external sources that provide quantifiable measures of market activity. In a market analysis, you can keep collecting data as you go. The goal is to be able to predict future developments.

Another differentiation might be granularity. Conducting market analysis can provide the maximum granularity in a specific area or focal point. You want to pinpoint a competitor’s next move, discover your unique strength at this time, or understand how a current event shifted market forces and how to use it to your advantage.

There’s no market analysis without market research. But not every market research is done to support competitive market analysis.

Where do market mapping, market intelligence, and market survey fit in? These are elements of market analysis. Market mapping is a visualization of the market based on market research. A market survey is a method used to do research and is often aimed at qualitative insights. Market intelligence refers to the actual collection of information, not the evaluation. Still following? Good.

Enough beating around the bush; let’s get down to business: how to conduct market analysis that puts you in front of the competition.

3 main types of market analysis

You want to pick a model suited to meet your objectives and fine-tune the methods for your business plan. There are several types and endless variations., but here are three we recommend:

SWOT analysis – Strengths, Weaknesses, Opportunities, Threats

In this framework, you collect information and data to determine the above four factors for your business. Then you weigh strengths against weaknesses and match them with the opportunities and threats.

For example, a company could have developed a mind-blowing technology, (S) but have limited resources to support extensive marketing campaigns (W). Now you identify opportunities the market offers and threats that could put your business endeavor at risk. Let’s say competitors are passive, not realizing that consumers are hungry for something new (O). On the other hand, there’s a rise in Asian tech companies developing similar solutions at lower cost (T).

The SWOT model can be applied to any business decision. You can analyze competitors to better understand their position in the market or various market segments to get a granular view of what’s really going on. You can analyze websites, marketing campaigns, and even internal processes.

With the Market Quadrant Analysis tool, you can easily identify the market leaders and rising players in your market to benchmark your company’s strengths relative to your competitor’s weaknesses. Here we can see that CNN.com has the largest audience with 350M in the last three months in the United States, but NY Times and USA Today have seen the faster growth in terms of MoM change.

PEST analysis – Political, Economical, Social, Technological

In this model, you look at the market from a different angle to gain a different perspective. The PEST analysis aims at evaluating the forces that determine the direction of a market.

It relies on the presumption that business success isn’t solely the result of performance and competitiveness. Take the health and financial industries, for example, which are heavily regulated by government agencies. Compliance plays a significant role in business decisions and has financial implications.

When it comes to social influences, think of the growing demand for diversity, equality, and inclusion, not to mention sustainability issues that affect competition and development.

Porter’s Five Forces analysis

This is another method that analyzes the forces impacting an industry and its players. The goal here is to assess how competitiveness and profitability are related.

The underlying assumption is that the more competitive the market, the lower its profit potential. The five forces describe the factors that influence both competitiveness and profitability:

• The number of existing competitors in a market
• The bargaining power of suppliers
• The consumers’ power
• The ease of entry of newcomers
• The ease of replaceability of existing ones

Regardless of the type of market analysis you choose, you must have a structure for your analysis based on the insights you’re trying to get. Make sure to collect and monitor data systematically and follow the steps you’ve laid out for yourself. Collect, correlate, conclude.

What are market analysis methods of data collection?

The big question now is: Where and how do you collect the information for your analysis?

Traditionally, we differentiate between primary and secondary research.

Primary research refers to information that you gather yourself. This type of research is time-consuming and resource-rich. Creating surveys is complex and getting people to respond to questionnaires etc., is a challenge in itself. In the end, the results may not represent the entire market but only a specific fraction.

Secondary research means you track down data or insights that others have found in their research. This includes official statistics, business reports, industry and government records, research results from agencies or universities, and so on.

Some of this info is available free of charge, but to get deep insights, you need to put money on the table. Keep in mind that it’s historical data, so you need to keep track and make sure it’s not outdated. Most of the stats are valid for periodic monitoring that goes into your analysis, but not necessarily for your ongoing work.

Data analytics add another dimension. A business analytics tool lets you monitor ongoing activities and trends. You no longer rely on historical data only. In addition, you get to determine what kind of data you want to receive; you can set the time frame, the market segment or specific competitors, the audience demographics or characteristics, and simply grab the data you need for your industry market analysis.

Here you can see the demographics for the Top 100 sites in the Technology industry during the past 3 months, in the United States. In this snapshot, 65% of website visitors to this category are male vs 35% female, with the average age group 25-34-year-olds (28% of website visitors during this period).

“Always-on” market analysis for winning strategies

Unlike sports, industry competition is always in season. As such, your competitive market analysis needs to be continuous. So here are a few tips on how you can master that.

First tip? Easy, check out Similarweb Digital Research to get the data that keeps you on track. Let’s look at some examples of how to use the data to make smarter go-to-market decisions, so you can compete, grow, and adapt in the digital world.

Using Similarweb Digital Research Intelligence, you can quickly evaluate the market size and your share. Then, deep-dive into competitor data to compare strengths and weaknesses. Finally, find opportunities to launch new products or features, enter new markets, and expand your market share.

With our market analysis tools, you can get an instant overview of market behavior and size the opportunity based on how many people visited a specific category over time, plus identify whether the market is growing or shrinking. Here we can see that the travel and tourism industry in the U.K. grew by 35% YoY, with an audience of 3.2 billion in the last 12 months.

How do you identify market trends to find opportunities? You can monitor and track the traffic and engagement metrics of any website, as well as the industry average. Additionally, you should monitor metrics on a month-over-month or year-over-year basis. This lets you identify changing market dynamics and potential threats so you can pivot your strategy accordingly.

Using the Search Interest Analysis, you can analyze what people are searching for on the web to evaluate market potential and demand. Here you can see the search volume for “hampers” in the U.K. was 132,000 over the last 12 months and identify the surge in demand over the November and December period, which can help you plan your go-to-market strategy based on seasonal behavior and search trends.

Benchmarking digital performance against your competition and industry standards allows you to pinpoint your market position. You can detect “digital blindspots”, optimize your digital strategy, and take full advantage of your opportunities.

Benchmark your website’s traffic and engagement metrics against your direct competitors to see how you stack up and where you can improve your digital performance. Here you can see fast-growth health startup Noom.com leading on Monthly Unique Visitors worldwide (6.9M), though Weight Watchers has the lowest bounce rate at 39%, which may indicate its visitors are getting more value from its site.

For example, you may be growing, but do you know if that’s enough? Maybe your competition is growing faster, and you need to discover how they’re doing that to keep pace.

Get started with market analysis

OK, Tiger Woods never did all this, and he’s still a winner. Or maybe he did? A SWOT analysis to gauge the odds is useful in every area of life.

The point is to know your environment and what you’re up against. It’s critical not to reach decisions based on vague assumptions or wishful thinking. Here’s the thing: A market analysis is vital, but it’s only as good as the data you use. Reliable and accurate data is key to the success of your strategy.

Market Analysis FAQs

What is market analysis for business?

A market analysis is an assessment of a market within a specific industry that your business is in or intends to enter.

How do you analyze the market?

The market analysis begins with collecting data about a market or market to examine all aspects that impact it. The goal is to evaluate the market size, value, and trends and gauge its business potential.

What are the main types of market analysis?

The most common type of market analysis is a SWOT analysis. To focus on external factors that impact the market, you can apply a PEST analysis. Porter’s Five Forces is another model you can tap to analyze the market.

What is the importance of analyzing the market?

To survive and strive in a competitive environment, you need to know the forces at work. The better you understand the factors and dynamics, the higher your chances for profitability.