Why is market analysis important?

Market analyses should be conducted on an ongoing basis and as a natural part of the business process. To understand the potential of conducting analyses and teach the organisation to use the insights is crucial to being competitive over time. On the international market the right knowledge is crucial when deciding whether or not to enter a new market, when to do it and which customer group to target.
Man by desk

The building and construction market is constantly changing. Globalisation, economic fluctuations, national regulations or targeted support, changing consumption patterns and demographics and an increasing environmental awareness tighten the requirements on company’s ability to act and react to the changes taking place.

 

Companies spend a lot of resources on streamlining and modernising their system support, but what good does it do if they base their work on dubious or incorrect assumptions about the market?

 

Through well-defined analyses the chances of achieving goals increase and the risk of incorrect or unfounded decisions decreases. Analyses of a company’s operating environment and market and the customer’s values and preferences ensure that the organisation has the necessary and specific knowledge. This can mean the difference between success and failure.

 

Here we list the most important reasons for conducting market analyses.

Reduce business risk

Reduced risk exposure includes for example ensuring dissemination or diversity in Board composition, reducing dependence on individual employees and reducing the risk in the customer base or exposure to individual markets and segments.

 

By reducing the risks or at least being aware of what they are, it is possible to make the necessary decisions to enable continued growth.

Doing business without market analysis is like sailing without a compass.

Identify growth opportunities

Insights into the needs of customers, how they behave and where they purchase their products and services create opportunities to improve operations. It can also open your eyes for new markets or segments that have not previously been identified.

Pinpoint customer needs

Each company is dependent on being able to produce services or products demanded by customers. On the other hand, customers may have latent or unexpressed needs they do not even know themselves. The customers do not always know what they want until they see it.

 

“You’ve got to start with the customer experience and work backwards to the technology. You cannot start with the technology and try to figure out where you are going to sell it.” (Steve Jobs)

 

By understanding their customers’ basic needs companies can identify new services and products – before the customers, and before the competitors.

Establish strategic competitive advantages

In theory companies can generate competitive power by choosing between producing products or services that are cheaper than their competitors, offering something the market is prepared to pay more for or by targeting selected segments of the market.

 

However, the reality is challenging and in order to know how to position oneself you need to know how your competitors act, what the market looks like and what your potential customers want.

Follow up your performance

Measuring performance is natural in many contexts and there are many clichéd sayings such as “What gets measured gets done” or “If you can measure it, you can manage it.” Of course it is not that easy, but undoubtedly every organisation needs to understand what impression it makes on the market.

 

To make improvement possible it is important to understand the connection between the company’s quality and the objectives to be achieved. This creates opportunities to optimise how the resources are used.