In the news
As you’ve no doubt seen recently, there have been articles, blog posts and social media posts about how retailers and e-Commerce stores aggressively discounted prices, offered promotions and gave away free shipping to generate holiday sales in November and December, and how profits are expected to have suffered as a result.
In many cases, this is a questionable marketing strategy. With similar economic and competitive pressure anticipated to continue for at least a while, the following is written in an effort to help you navigate these waters, based on how I’ve been able to compete and increase sales without “giving away the store.”
This is the first of five weekly blog posts that will address how to differentiate and build your brand(s) in an effort to be less dependent on discounting and promotional offers. Each post will cover one of the following strategies, including how-to and actual examples.
- Market analysis
- Product positioning
- Sales channels
- Driver items
- Multi-channel marketing
Why start with market analysis?
Experience as a consultant and department head has taught me the place to start is market analysis, including identifying and better understanding market segments, where there’s industry growth and what are the most important trends that will affect your company’s future.
With market analysis, you’ll also be better informed to complete a competitive analysis and a SWOT analysis, which would help you differentiate your products, build your brands, rely less on costly discounting and offers, and help determine how you will compete in the future…allowing your company to continue to better meet needs over time.
Ultimately, to better meet needs and grow more profitably, you will want to optimize your product mix, value proposition and possibly business model. However, there are also short-term benefits from market analysis.
For example, I worked at a company where the assumption was there was one purchase motivation for a product category, when in fact market analysis revealed there were three, two of which the company was not positioning and merchandising existing products for, and therefore wasn’t competing in.
Another short-term benefit could be had by using “Category Development / Brand Development Indexes,” which identify the industry’s best markets, and which are your best and underperforming markets. Identifying and re-allocating resources to markets you’re stronger in than your competitors, and still have opportunity to grow market share, can provide growth where you have most competitive advantage currently.
Does anyone really do this?
It would be nice if I was so smart that I invented market analysis. I didn’t. It’s been around, and many companies rely on it. Following is market analysis I led.
For a $100MM company that saturated its primary sales channel, I was brought in to find new growth opportunities for existing products through new channels and market segments. To do so, I needed to conduct market analysis of a market consisting of 65MM consumers. The analysis included:
- Market size by product categories and sales channels
- Segmentation based on purchase motivations and needs, a total of five segments
- Industry and consumer-driven drivers of sales growth
- Direct and indirect competitors
Other market analysis I’ve conducted was for a manufacturer selling through independent retailers and direct, who needed to steal share in their primary sales channel, increase sales in growing e-Commerce channels and find a less price competitive market segment. Market analysis enabling us to do so included:
- Low-cost syndicated consumer research on market segments and trends
- Our own research with consumers and retailers to better understand unmet needs
- Identifying market segments that were growing, were less price competitive and scalable
- Category / Brand Development Index analysis for sales penetration
- Trade magazine subscriber research
Come on in, the water’s fine
If you haven’t conducted market analysis, or have and want to dig deeper, here are some steps to get you started.
If you’re in multiple markets, and resource constrained, think about prioritizing the markets based on importance to you strategically and financially.
Look for existing industry information provided by associations, trade publications or syndicated research providers. Try to get industrywide information on sales by channel, product category sales, market segmentation, trends, growth drivers, and a competitive overview of direct and indirect competition.
Smaller industries, and industries with mostly privately held companies, tend to be more difficult to find existing research for from syndicated research providers. However, I know from experience with large, and not-so-large, companies, market analysis can be very beneficial.
Consider filling in gaps with your own research with customers and prospects, making sure the participants are representative and the responses statistically valid. For example, in an industry with little existing research I was able to get actionable information by partnering with one of the trade publications.
Same time, same channel
Next week’s post will build on market analysis, focusing on product positioning. Each subsequent post will also build on previous posts.
In the meantime, if you have any questions about market analysis you can reach me at email@example.com