Understanding Your Small Business Market
Understanding the market your business resides in, and the strategies therein, is crucial to maintaining a competitive advantage over your market peers. A market framework can be divided into seven broad categories which include demographic trends, technology, rules and regulations, economic climate, customer needs, competitors and even uncertainties.
1. Demographic Trends: This analyzes data and the impacts of education, employment, gender, age and cultural background. The information is particularly useful when creating a market strategy. For example, a company who produces high-end cars can identify a target market by researching income, lifestyles and the interest to purchase luxury cars. This would then be used to develop a marketing plan that caters to that specific segment. Additionally, it provides a better understanding of how these buying habits affect your business.
2. Technology: This focuses on big technological changes that directly impact how you run your business. Trends including cloud storage, AI, big data, mobile and wearable tech and virtual reality are all being actively used in today’s world. Understanding how they could benefit your business is necessary in order to remain both effective and efficient within your market.
3. Rules and Regulations: This includes new and existing rules that play a part in how you run your business. By staying informed on consumer/employee laws, security procedures and local building codes, you are ensuring your organizational structure is intact. This also prepares you for any unexpected changes in the market.
4. Economic Climate: This goes beyond direct competition and analyzes the economy as a whole. Do consumers, loan rates, gas and transportation prices play into your business? Will you have to change your prices or marketing tactics? Is there a shift in consumption? An external analysis is sometimes just as important as an internal one.
5. Customer Needs: Understanding your customers wants and needs are everything. What high-level needs exist in your market and how are you catering to them? How are your consumers benefiting from your product or service?
6. Competitors: Knowing what your competition looks like and what they are doing is important. This includes well-known big competitors and unexpected smaller competition as well. By understanding their strengths and weaknesses, you are able to mimic beneficial practices and avoid poor ones.
7. Uncertainties: Any true assessment of your market will include uncertainties. It is impossible to know how the future will affect your market and COVID is a perfect example of that.
By mapping out these seven categories, you will have a clear picture of your market and current trends. It is, however, important to note that the market is not static and it changes constantly. A continuous understanding of your market is necessary.