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A Beginner’s Guide to Conducting Market Analysis – Part 2

by Content Team | Last Updated: December 29, 2021

Considering we didn’t get to cover everything in our last article, it’s time to discuss the other aspects of market analysis. If you haven’t read the first half of this guide, we suggest going to our site and reading that before beginning this article. If you’ve already read it, it wouldn’t hurt to go back and skim through it to ensure that we’re all on the same page. Once you’re all caught up, read on for part two of our beginner’s guide on conducting market analysis.

1. Identifying the Competition

Now, we need to understand who your competition is, what they’re doing right, and how you can enter the market safely. The main point of this step is for you to identify points of entry for your business so that you won’t have to fight an uphill battle. Of course, this isn’t as simple as it initially sounds. 

It would help if you can ask yourself, “How can I be different?”. Once you answer this, you should have a better idea of how to approach the situation.

You will have to approach this carefully and be as detail-oriented as you can. Because of this, we’ll need to break down some of the components of this step. We’ll start with identifying where they fall under these two categories:

Direct Competition

A direct competitor is a business offering a similar menu or catalog. These will be the businesses that you will special attention to as their sales and behavior will directly affect your business.

Keep in mind that your identified target market will most probably be already customers of your direct competition. As early as now you should start figuring out how to work around this.

Indirect Competition

Indirect competitors, meanwhile, will not affect you as badly as direct competitors will but should still be identified. These will be the businesses providing alternatives to what you and your direct competition are offering. 

Think of them as fall-back options for customers should your business be closed. Try to understand what makes them work and see how you can limit the need for your customers to visit them. 

2. Determining the Right Price and Forecasting

Finally, we get to the step where you get a better idea of what your pricing options will be once your business begins operating. This will be based on much of the previous steps, with some flexibility allowed for the final details. 

At this point, it should be important to understand as well that your declared price is a message in itself. Price too high, and your customers might find you too expensive and pretentious. Price too low, and your customers might think that you don’t see much value in your products or services.

It’s a gentle balance between the two and will depend on what your competitors are up to and what prices they have. You will most probably want to remain in the same price range though as deviating too far may throw off your potential customers. 

This will be followed by a forecast of your initial sales volume. The data here will give you and your investors a better idea of just how much money you can make, when you can pay off your debts, and how quickly your ROI can be achieved. 

This can often be the point at which you can strategize better as this will give you a range where your initial revenue might float around. Otherwise, if the numbers aren’t in your favor, it might be time to think twice about your other plans. 

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Conclusion

We hope this article proves to be useful when it comes to helping you figure out how to best approach market analysis. While this is a lot of information to take in, it’s all incredibly important if you want to ensure the success of your business. Indeed, a lot of work, time, and resources are required to run a successful business. By making all the necessary preparations, you’re essentially putting your business in the best position to succeed.

If you need help with your market analysis or any other aspect of your business, then you’ve come to the right place. Luxury Sandbox offers full-service digital marketing services in Kona. Contact our digital marketing experts who specialize in jewelry marketing to discover more about how we can help your business.

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