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The Secret to Generating More Demand? Start with Market Analysis
Forget everything you’ve ever heard about “first steps.”
Don’t think about it as the hardest, the most difficult, or even the most intimidating.
When it comes to demand generation, the first step is the one that makes everything easier.
And that first step? It’s a market analysis. By evaluating the market forces at play, collecting performance data, identifying trends, and understanding the competition, a thorough market analysis lays the groundwork to ensure the effectiveness of your marketing channels in driving profitable revenue.
This step provides the clarity needed to recognize what’s working, what’s not, and where opportunities or gaps exist in your ability to generate demand.
In this article, we’ll walk you through a step-by-step guide on how to conduct a comprehensive market analysis, empowering you to make informed decisions, refine your strategies, and eventually set the stage for a powerful demand generation plan.
What is a Market Analysis?
No business operates in isolation; all are influenced by external market forces that can either accelerate or impede strategic growth.
A market analysis helps you understand these external pressures, enabling you to make informed decisions about the demand generation strategies available to you.
Simply put, a market analysis evaluates your current market landscape in relation to demand generation. Its goal is to uncover the challenges your teams face and identify new opportunities for growth and improvement.
Key Marketing Questions to Ask Yourself
Effective analysis starts with self-reflection—you need a clear understanding of who you are before you can assess your position in the broader landscape.
When conducting a market analysis, here are specific marketing-relevant questions you should ask yourself:
- What are your core product or service offerings?
- Based on those offerings, what is your market opportunity (market cap)?
- Who is your target audience? What are their demographic details?
- What competitors exist in your market?
- What is your market share?
4 Steps to Perform a Market Analysis
With these important marketing questions in mind—ranging from your core offerings to your market share—you’re now prepared to take a closer look at your market environment.
Here are the four steps to conducting a thorough market analysis:
Step #1: Mine Your Data and Assess Performance
Before you can accurately analyze the market surrounding your business, it’s important to first assess the performance of your business within that market. This helps identify both shortcomings and opportunities in your current business environment.
Key Business Areas to Review
Financial Performance
Start by reviewing your business finances. Examine revenue, profit margins, costs, and trends over time to assess whether or not your business is growing sustainably.
Marketing and Sales Performance
Are you effectively acquiring new customers for your product or service? What is your cost of acquisition? What is the lifetime value of your average customer? What are you spending on sales and marketing activities? Assess whether your strategies are working or need improvement.
Product Development/Quality Control
Is your product or service meeting consumer needs? Are customers satisfied? If not, identify areas for improvement.
Operations and Logistics
If you have a service-based business, this step may be simpler. For product-based businesses, assess your ability to deliver products to customers in a timely and efficient manner.
Human Resource Management
Ensure that your employees are well-compensated, aware of (and using) their benefits, and feel valued and fulfilled in their work.
SWOT Analysis
Once you’ve collected all your performance data, perform a SWOT analysis, identifying your Strengths, Weaknesses, Opportunities, and Threats.
This model helps assess your current business standing based on the information you have gathered.
Step #2: Research Your Industry
After the self-reflection of step one, the next step is to conduct an industry analysis that will help you understand the broader external forces that influence your business.
PESTEL Analysis
One of the most effective frameworks for this is PESTEL (Political, Economic, Social, Technological, Environmental, Legal).
By answering questions in each of these six categories, you create a holistic view of the industry in which your business operates.
Step #3: Understand Your Competitors
Once you’ve analyzed the broader industry, the next step is to dive deeper into the competitive environment. Competitor research not only helps you see where you stand but also reveals gaps in your own offerings and opportunities for differentiation.
To conduct effective competitor research, follow these six steps to gain a clearer understanding of your market position and discover areas for growth.
How to Conduct Competitor Research in 6 Steps:
- Use technology to identify your primary competitors using websites like Crunchbase or Product Hunt.
- Assess your competitors' online presence, including their websites, social platforms, promotional strategies, etc.
- Evaluate your competitors' physical presence by sending an undercover shopper to their stores to evaluate customer service, product mix, and more.
- Evaluate their sales and marketing mixes, including channels they use and tactics for acquiring customers.
- Analyze their pricing strategy, especially if you offer a similar product.
- Find out their technology stack using tools like Zoominfo to learn the technologies driving their operations.
Even though these are your competitors, it’s important to take an unbiased approach to determine their true strengths and weaknesses. Being objective is the only way to see how they actually stack up against your business.
Step #4: Create Detailed Buyer Personas
After analyzing your competitors, the next step is to focus on your target audience.
Creating detailed buyer personas allows you to gain a deeper understanding of your customers, their specific needs, and the most effective ways to engage with them.
This section of the guide is designed for organizations that haven’t yet developed buyer personas for their brands. However, it’s also useful for brands needing to reassess or refine their buyer personas to improve their demand generation strategy.
Here’s how to create detailed buyer personas for your brand:
Review Your Current Customer Data
Start by examining the information you already have about your customers.
Important insights to consider include: their age, employment, location, education level, and other demographic details.
Additionally, ask yourself what motivates them to use your product or service. Do you know what needs they’re trying to meet or goals they’re working to achieve? If you don’t have all these answers, dig into your customer relationship management (CRM) system to uncover as much as possible.
Solicit Feedback From Your Prospects and Customers
While data from your CRM can be powerful, some insights are best gained through direct conversations.
Talk to current customers, prospects in your funnel, and even referral partners or third-party networks to gather more in-depth, psychographic information about your customers’ needs and challenges.
Organize Customer Insights into Groups
Once you’ve collected data from your CRM and interviews, look for patterns among your buyers.
Group similar profiles together, as these clusters will form the foundation of your buyer personas. You can group buyers based on business function (e.g., HR managers), need (e.g., personal financial management), shopping preferences (e.g., buying groceries online), lifestyle (e.g., young, single, outgoing), or interests (e.g., passionate about cars).
Turn Groups into Persona Templates
Now, transform these groups into actionable persona templates.
These templates typically include key demographic and psychographic details such as age, job role, location, goals, challenges, and purchasing behavior. Whether your business is B2B or B2C, persona templates provide a structured way to capture the unique traits of your target audience.
You can use these to outline the specific needs, motivations, and preferences of each persona, ensuring they reflect the diverse characteristics of your customer base.
Craft Persona-Based Messaging
The final step in developing your buyer personas is crafting messaging tailored to each group.
This messaging should reflect the key motivations and needs of your personas. While customer data provides a foundation, interviews can offer deeper insights into the specific needs your product or service fulfills.
Use these insights to develop messaging that resonates with each persona, ensuring your demand generation efforts are aligned with their specific expectations and pain points.
Turning Insights into Action: The Power of a Market Analysis
Conducting a thorough market analysis is the crucial first step in developing a full demand generation strategy.
By laying the groundwork with a deep understanding of the external forces shaping your market, your competition, and your customer base, you’re making it easier for your business to gain the insights needed to create a strategy that works.
In this article, we outlined the most important steps to performing a market analysis—from gathering internal data, researching industry trends, analyzing competitors, and building detailed buyer personas.
However, this is just the beginning. The next step is a comprehensive audit of your marketing channels to ensure they are optimized to reach your target audience and drive results. This is where you take your market insights and put them into action, refining your messaging, tactics, and strategies.
Ready to Drive Profitable Revenue?
The end result is generating demand that leads to real, profitable revenue.
This is Hypelocal’s specialty. With our results-oriented solutions, we deliver tailored strategies that have already generated more than $600 million in sales and brought 30,000+ sales-qualified leads to our clients.
Create a custom plan to fuel your growth by booking a strategy session with Hypelocal today.