How To Get the Most Out of Strategic Market Analysis
The Need for Strategic Market Analysis
This is because strategic market analysis offers several important advantages beyond simply detailing the motion of business markets. Some of these advantages are:
- Strategic Financial Analysis. This form of market analysis delves into the particulars of how an organisation’s finances are being prepared, based on sales factors and expenses.
- Strategic Cost Analysis: This form of market analysis focuses more heavily on the costs of doing business, tallying and comparing every expense, so as to provide an accurate picture of how competitive one organisation’s costs are to another’s.
- Strategic Fit Analysis. This form of market analysis allows businesses to evaluate their own capabilities, by evaluating not only external considerations, but also internal ones, such as resources.
And as advances in technology have enabled businesses to more-closely analyse their markets, advanced applications and tools are making it possible for organisations to automate their analysis processes. When used correctly, strategic analysis tools allow businesses of all sizes the opportunity to see exactly what factors are influencing the market, as well as their position in it—while still maintaining an easy learning curve.
Strategic Analysis Methods and Tools
In order to be able to perform an accurate strategic analysis of any kind, a business should consider various methods. The most widely recognised analysis methods are:
- SWOT Analysis
The most common of business methods,SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This method identifies and plots all of the internal and external factors that may have either a positive or negative impact on the strategy.
- PEST Analysis
Focusing on the Political, Economical, Social, and Technological factors at play, the PEST analysis is a variation of the SWOT analysis, and is often performed in preparation for a typical SWOT.
- Porter’s Five Forces Analysis
This method is used to determine whether a new product or service will be profitable. It focuses on evaluating supplier power, buyer power, competitive rivalry, threat of substitution, and threat of new entry.
- Four Corner’s Analysis
This method is more focused on analysing competitors, and determining what actions they may take in various circumstances. The four key focuses are future goals, current strategy, assumptions, and capabilities.
- Value-Chain Analysis
A value-chain analysis is used to break down and quantify the activities that a company undertakes in order to create value for their customers, thus analysing its overall competitive advantage. This is done by dividing an organisation's actions into primary and support activities, assigning a cost to each activity, and identifying which activities are and are not essential to success.
- Early Warning Scans
In order to identify and prepare for important events before they occur, early warning scans are used. These use several key variables, such as….. to assess the likelihood that a given scenario may occur.
- War Gaming
Organisations may use war games to create simulations with which to test specific scenarios, and to gather data about potential outcomes, all without actually putting any aspect of the business at risk.
Additionally, certain applications and tools may provide significant strategic market analysis benefits. These tools often use intelligent automation to assist in locating market opportunities, pinpointing motivators, identifying target clients, improving value propositions, comparing competitors, and more. Of the tools available, the most effective ones offer certain features:
- Ease of use
More than anything else, data analysis should aid businesses in locating potential obstacles to success; it should never create obstacles. A such, using only analysis tools that are designed with ease of use in mind helps to ensure that adoption rates are high, and that the tools themselves are being used properly.
- Compatibility with Multiple Platforms
In order to be effective, analysis tools need to be able to function across a variety of platforms, hand-in-hand with databases of various sizes, and with various other applications and programs.
- Real-Time Processing
By utilising constantly-updated information (rather than batch-processed information), market analysis tools are able to provide up-to-the-minute data, ensuring a more-accurate analysis.
- Cloud-Based Application
By using a cloud-based analysis program, organisations are able to save on cost and labor associated with hardware or software installation, and can access the tools at any time, from any location, provided that users have access to the internet.
The Era of Analytics
Across businesses large and small, 65% of those surveyed in the 2015 Salesforce State of Analytics report are confident that the importance of analytics is on the rise, and will increase substantially over the next two years.
Those organisations that embrace strategic analytics will experience a significant advantage over their less analytically-minded competition. Because even though the market is always changing, the need to be able to identify and prepare for those changes will always remain.