How market analysis can help grow your business

Once a small business is up and running, a common challenge owners face is identifying how best to attract new customers. Market analysis, which helps a business gather and analyze information about its target market, is one of the most effective tools used to identify potential customers. It helps business owners to make informed decisions about their products, services, marketing, and pricing.

There are many ways to conduct a market analysis, and the best approach varies depending on a business’s specific needs. However, there are some common steps:

  • Define your target market: Who is your business targeting? Identify your those customers most likely to buy your product or service, the size of the market, and the competitive landscape. For example, suppose you have a business that sells sports products. Here, your target customers will be people interested in sports. You’ll identify whether the market is contracting, stable, or growing (luckily, in Kigali, it is increasing due to heavy investment in the sports industry) and look for other businesses offering similar products so you can see how yours might compare.
  • Gather data: What can you learn about your target market? Once your target market has been defined, the next step is to gather data to learn how to provide the product or service customers are most likely to purchase. This data can be collected from various sources, including events, customer surveys, networking with stakeholders in the industry, or public and private sources like newspapers. The data gathered can be qualitative or quantitative. Using our sports example, this may mean scoping out events where industry players are present to collect data on which sports equipment will most likely be in high demand for a certain period (qualitative) and how much will likely be required to satisfy your target market (quantitative).
  • Analyze the data: What does this data tell you and how can that inform your business decisions? Once data has been collected, it needs to be analyzed. Look for trends and patterns from what has happened in the industry so far and think ahead about what that may mean for your business for the next few months. Here, a sports business could look at recurring sports events like the Basketball Africa League to see what products were most sold during this period to then make decisions about which products to stock and how best to promote them.
  • Develop a plan: What’s next? Once the data has been analyzed, the next step is to develop a plan. Here, you want to focus on setting a budget, purchasing the items you expect to sell well in advance, and identifying marketing messages and tactics.

Market analysis is less complicated than it sounds – follow the four steps above, and you’ll be on a good track to better understand your target customers, the competitive landscape, and different opportunities and challenges in the market.