When you are running a business, you need to monitor and scrutinize both internal and external factors to make sound decisions regarding its aspect, most notably product development, pricing, distribution, and promotion. If the business simply relies on guesswork instead of facts and figures that can be put down on paper and analyzed, it will soon find itself run over by competitors. However, merely analyzing these factors is not enough, for you also need to communicate this information to all your managers, departments, and other stakeholders as well.
This is where templates come in.
In the following paragraphs, we will discuss the importance of doing market analysis and using templates to convey the findings.
The Importance of Doing Market Analysis
As mentioned at the outset you cannot make sound business decisions without first doing marketing analysis. Doing market research helps you stay updated on the latest trends in the market, such as general buying habits, changing technologies, and competitor activity. Specifically, you will be able to see:
- What products and services your target market is already using
- Which businesses are using the best marketing mix to provide these products and services
- If there are any shortcomings in these products and services that you can fix to gain the attention of customers
- What external factors apart from competition and demand can affect the success or failure of your business (e.g. government economic policies)
If you do not take these factors into account and perform market analysis at crucial junctions in your business cycle (before launching a product or implementing an expansion strategy etc.), you will miss out on vital opportunities that can take your company to the next level, or ignore significant threats that can significantly harm your operations.
Tools Used for Market Analysis: SWOT and PEST
The abbreviation stands for:
- Strengths: The competitive advantage you have in the marketplace (e.g. customer service, better access to raw materials)
- Weakness: All things with which your competitors are able to grab your market share
- Opportunities: Unexplored market trends and untapped market niches that waiting to be taken advantage of
- Threats: Political, climatic, technological, and other external factors that can cause a problem for your business and get in the way of its long term goals
The benefit of SWOT is that it can be done by your business managers and you do not necessarily have to hire an analyst. And once the analysis is done, you can straight to the action and address the complex situation at hand.
- Political: Government legal factors that can affect the success and profitability of a business. Examples include political stability, employment laws, safety regulations and trade regulations.
- Economic: This encompasses all the economic aspects that can play a role in the success of a business. Examples include economic growth, unemployment policies, business cycle of the country, as well as economic, interest and inflation rates need to be taken into consideration.
- Social: These are all the cultural and demographic aspects that determine whether the business can compete in the market. Examples include age distribution, lifestyle changes, population growth, demographics, environmental, health and educational consciousness.
- Technological: This factor analyzes the factors which affect the means it can bring its product or service to the market. Examples include government expenditure on technology, technological advancements, life cycle of technology available, as well as the role of internet.
PEST provides a simple framework for market analysis, and also helps reduce the impact and effects of potential threats to your business.
Why Use Templates?
To start off, templates help to save time. When you are presenting information in standardized template that everyone is familiar with, they will find it easy to pick out the necessary information without going through all primary data that was used to make the analysis. This is crucial for businesses that operate in a highly competitive marketplace where decisions have to be made on an emergency basis.
This in turn helps to make your workforce more productive, as they will no longer spend hours upon hours to create analysis reports from scratch when they are following a template. This also ensures that all necessary information is easily accessible. Not to mention, all major operating systems offer you various options to create professional templates that can be used in corporate settings without any hassle.
Sample SWOT and PEST Analysis Templates
Finally, here are some basic templates for SWOT and PEST analysis that you can use in your business:
SWOT Analysis for a Fictional Online Fashion Store
PEST Analysis for Fictional Food Retail Chain