From Harish Jagtani’s Desk 

 

It is really difficult to make your business grow nowadays. The pandemic, war and inflation have made it more challenging. But you must understand that your company’s success depends upon your ability to decide which strategies will sustain growth. So, it is important that you have a better understanding of your company’s direction, capabilities, strengths and resources. This will help you evaluate the market and assess customer needs and how to meet them

Identifying Market Opportunities

1. Consumer Segmentation

Consumers can be segmented based on the traits they share. This will allow you to target the right customers effectively. Customer types can be broken down by demographic variables—such as age, gender, location, education, occupation and household income. Behavioral aspects, like lifestyle, values ​​and purchasing drive, will help you modify your marketing efforts.

Demographic variables can identify potential customers, while behavioral variables identify purchase decision impulses, including price, convenience, sustainability and so on. If your business strategy involves targeting specific age groups, it is important to customize your strategy according to their needs.

2. Purchase Situation Analysis

The buying decision-making process is very complicated. Several factors impact what, when and where consumers buy. You must understand your customer’s buying patterns to adjust your offerings to influence those decisions. Some questions to ask are:

When people buy your product or service, where people make the purchase and so forth. You can look at distribution channels and payment methods, among others, to find out customer buying patterns. This will help you position your product according to their interests. Now, consumers expect speed and convenience while buying goods. Retailers who understand these preferences have changed their business models to attract more customers.

3. Direct Competitor Analysis

Direct competitors offer similar products or services for instance, Coca-Cola and Pepsi, or Levi Strauss and Wrangler’s.

You must do comprehensive research to know where your business stands in the marketplace. You should also know what the top players are doing to build a strong competitive edge and how they are placed against your business.

Critical questions you must ask are: Which brands are growing and why and what their unique value proposition is, among others. IKEA, for instance, entered a new market last year. They opened their first store in Chile. But, before that, they did extensive research to look at leading competitors and how they were placed.

4. Indirect Competitor Analysis

Indirect competitors target a similar audience, but sell different products that satisfy the same needs, for instance, Thumps-Up and Dabur Real, or Disney+ and Marvel comics. Analyzing what companies are doing in substitute industries may help improve your offerings and reach new customers.

For instance, air carriers can look for opportunities in consumer segments supplied by other modes of transport. Effective questions to ask are: How many people travel long distances on buses and trains; what the most in-demand routes are; what the occupancy rate of long-distance buses and trains is; and how a current bus or train passenger be persuaded to travel by plane?

This type of analysis helps create competitive advantages against indirect competitors to help businesses tap into a wider customer base.

5. Complementary Product and Service Analysis

Monitoring performances of products and services that are complementary to your business is important, too. For instance, butter brands should analyze market trends in breads and cookies. This research will allow you to understand how your customers use your product along with others, find opportunities and threats, develop new offerings and sell more effectively.

6. Diversification Analysis

The big question is whether or not to diversify. When your company reaches a considerable maturity level in the market, diversification analysis can help you understand and decide how and where to grow. But you should also have the right skills, resources and business models to expand into new categories successfully. You should start by analyzing a sector that will benefit from your offering/s, understand that industry’s growth potential and the competition. Look at the market size, share, growth rate, unit price, per capita sales and brand positioning. Before taking a decision, you can ask questions like, ‘Do I have the capacity and tools to diversify and will diversifying dilute my brand reputation?’ among others. Diversification is a high-risk business development strategy. But, when done successfully, it brings in more customers, income security and consistent demand.

7. Foreign Market Analysis

If your company operates in a saturated market, exploring markets in other countries could help you achieve your financial goals. Markets in different countries grow at different paces because of gaps in economic development and local habits. Knowledge about the evolution of per capita consumption of a given product in a country can tell you the product maturity life cycle, the size of the market and its competitors to estimate the business potential. Also, study consumption models in relatively more developed countries. For instance, the percentage of people using smartphones to pay for their purchases, the market share of private labels in a certain industry and so on.

8. Environmental analysis

Do not forget to analyze external factors, including economic situations, geopolitical events, changes in market regulations, technological and scientific developments and such environmental factors as climate change that may impact business. It will allow you to assess market attractiveness and create winning strategies. Take automation and AI, for instance. Such fast-evolving technologies are disrupting markets while becoming more affordable and widely used. Many big brands are looking at this opportunity. Changes in a country’s regulatory framework can impact your business, too. This research will allow you to stay resilient amid volatility.

Conclusion

Use a variety of analyses and, once you identify an opportunity, quickly develop a value proposition, plan the commercialization chain and estimate costs, revenues, cash flows and financing needs. Remember that not all market opportunities identified will succeed. That is why investment in different kinds of research and analysis before moving into a new market is the key to success.