By Bandhana Katoch
For any business to be sustainable, they have to ask a critical question: “Is there a market for the existing or new products and services?” Sometimes the critical question only occurs early in the business cycle. There is an opportunity to increase customer engagement through periodic assessments as the business evolves. Customers already engaged with the business and fans of the business are valuable. They know the business and what it represents. It’s an opportunity to show customers and fans that you value their opinion and are willing to listen to their feedback. Market assessment is a tool to consider and utilize when making strategic decisions for your business.
Why is market assessment important?
Market assessment is an objective analysis of market trends, barriers to entry, the competitive landscape, opportunities and challenges (external to the business), and strengths and weaknesses (internal to the business). Many businesses start with a hunch that there is a need for their product/service, but a hunch is not enough to substantiate an investment of time and capital in the business. The results of the market assessment can help to retain customers, attract new customers, support internal resource allocations, evaluate the business environment, avoid decisions that may be detrimental to the health of the business, etc.
Conducting a market assessment
Market assessment starts with the following:
· Identify and define the market need for the products/services
· Identify and define the market opportunity or potential demand
· Estimate the market size for the products/services
· Identify market trends
· Define the target markets with characteristics and other attributes
Key questions to consider for the market assessment:
1. What industry does the business operate in? Who are potential customers?
2. What are the customer segments? Will the product launch in all segments or only some of them?
3. What is the current market size and estimated size of the market in the next 5 or more years?
4. Are there any market trends affecting or expected to affect market size?
5. Who are the key players in the current market? How can customers be gained from competitors?
6. How much market share can be acquired conservatively in the next 1 to 5 years?
7. What is the competitive advantage? How can the benefits be communicated to potential customers?
8. Can the products/services create a new market or is it an existing need in the market?
9. What are the successes/challenges with existing products/services? Can lessons be learned from competitors?
10. Are there any barriers to entry (research and development, marketing, access to distribution channels, or regulatory, etc.)? If so, how can the barriers be reduced/eliminated?
Resources for Market Assessment:
· Customer feedback
· Industry experts
· Market research companies
· Social media platforms
· Online research
Market assessment can be conducted with a specific purpose of finding answers by gathering data, analyzing it and generating insights that can be applied to support making strategic decisions in the best interest of the business. Businesses of any size can benefit from the Market Assessment, but it becomes a decision point to determine the resources and time that should be invested to support the long term strategy with sustainability and profitability of the business.
Bandhana Katoch is a Business Advisor with the Small Business Development Center (SBDC) hosted by College of the Canyons (COC), serving Northern Los Angeles County – the Antelope Valley, San Fernando Valley, and Santa Clarita Valley. The column reflects the author’s views and not necessarily those of the Signal. For more information about how the SBDC can help your business, please call 661-362-5900, or visit www.cocsbdc.org.