Market analysis is like doing a thorough investigation of the market. The investigation is done to find out the quantitative and qualitative aspects of the market and planning a road map for a company to formally enter into the new market. While doing market research for your marketing assignment, your major goal is to determine the attractiveness of a market and understand the existing opportunities and threats.
To study a market, you may take help from professional researchers who are experts of the given market and also understand the dynamics of market research. Also working professionals who are part of the market under study and may have a much deeper understanding can provide consulting which can be very beneficial. Sometimes even reading articles, interviews, white papers of these researchers and experienced professionals can be great resources to start with.
Some of the fundamental dimensions often studied in market analysis are listed below. Understanding these terms in detail can be very helpful if you are about to write a marketing research assignment or conduct market research:
1. Size of the market: To judge size of the market and future business potential, you can look at data from various resources. It could be articles, research reports, interviews of researches and industry experts. You can also look for data published by government, trade organizations, central banks and even customer surveys of country under investigation.
2. Current trends: Understanding the market trend is very crucial for your market research. Market trends which can be industry specific or general can be a huge factor in determining your success in the given market. As the name suggests, industry specific trends affects only specific industries eg: trend such as reduction in cotton production or increase in import tax on cotton will effect cloth and garment related industries only where as increasing interest rate trend can increase the cost of borrowing and can therefore effect every industry. Some of the most used methods to find out the market trend includes market mix model, risk analysis, choice modeling, product research and observations of consumer behavior.
3. Growth rate analysis: One of the easiest methods to calculate and find out the market growth rate is by extrapolating the historical data. However extrapolation is very crude way of determine the future market growth rate as it cannot account for vagaries in growth drivers such as technology, demography, consumer behavior, changing lifestyles and income levels, etc.
4. Current opportunity and Industry cost structure: Market opportunity for a product or service is sometimes based on a technological advantage of a company. That particular technology advantage creates something that actually satisfies the requirements of a particular market. Whereas to determine the cost structure of a product/service, porter's five forces play a crucial role.
5. Scope of profitability: Different market conditions provide different scope for profitability. Michael Porter gave an exceptional framework to evaluate the profitability of a specified industry under the given market conditions. The framework explains 5 forces which basically explain the ways to measure a market situation. Porter five forces are:
a) Bargaining power of buyers
b) Bargaining power of suppliers
c) Competition in the industry
d) Threat of substitute products
e) Potential of new entrants into the industry
6. Channels: Understanding the current distribution channels can provide basic information about how products and services reach their target customers. One can work towards optimizing existing distribution channels which can lead to a fair amount of reduction in operational cost. By innovating new distribution channels a company can gain competitive advantage over competition and can have great margins due to first mover advantage.
7. Success factor: In order to achieve its business objectives, there are a number of factors that can help an organization. Factors like patented technology, accessibility to unique talent, resources, innovative channels of distribution can be great boosters and give specific advantage over competition.
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