In this section, we will look at the second element of External Analysis. This includes analyzing two key components:
- Industry analysis: involves conducting market research to analyze key industry trends related to marketer’s product/service on digital platforms.
- Competition analysis: includes researching direct and indirect competitors to compare a marketer’s product portfolio. It also helps assess the leverage digital marketing can provide to a brand’s objective of positioning itself online.
Application of Market Research
To begin understanding how we analyze these two elements—industry and competition—we need to go through a few basics of the vast field of study called market research, which is defined as an organized effort to gather information about target markets or customers. Market research is not only important to understand and analyze the present market situation, but as we would see in the next chapter, it also provides qualitative and quantitative tools and frameworks which help create and validate the overall business and marketing strategies too.
For this section, we need to be familiar with two basic kinds of market research:
- Primary research: consists of a collection of original primary data collected from the field by the researcher using questionnaires, focus group discussions, interviews, etc.
- Secondary research: involves the summary, collation and synthesis of existing research available from multiple sources like research papers, previous experiments, articles, etc.
These days with the amount of data available and being generated in large amounts even at an hourly basis, market research matched with statistics is an emerging field across businesses. Even more than traditional marketing, digital marketing relies on sound data-driven market research to understand its present industry and competitive environment, hence it is crucial for any marketer to be aware of basic market research techniques if they want to be present online and operate successfully.
With a basic introduction to market research, let us look at the key market situation components discussed earlier to understand the analysis that goes behind them.
Industry analysis
The two key elements behind an industry analysis includes:
- Market segment analysis: Let us suppose, a firm XYZ plans to launch a new mobile phone in the market. Even before it starts to develop a product, the firm needs to conduct enough research to understand the market segment and its data points. This includes:
- Market data on the primary and secondary industry segments they would operate in (which in this case would be telecom hardware and mid-range smartphone category)
- Key customer segments to target online (includes gender, demographic, psychographic differences)
- Top partner and intermediary firms to tie up with online, to market the products
- Key market trends, industry compliances, digital platform presence, etc.
- Primary research conducted by firm (surveys, focus groups, interviews)
- Secondary research consisting of analyst reports, surveys, industry association reports, mergers and acquisitions, consumer social mentions, major blogs, etc.
- Opportunity analysis: Apart from research on industry and specific market segment, the firm would also need a market opportunity sizing exercise with the help of the following research data:
- Total market size for the category (including all types of mobile phones)
- Growth of particular market segment in the past two to three years (specific segment includes smartphone mobile category)
- Sales growth of mid-range smartphone segments on all digital channels
- Comparison on price points and ranges of similar mid-range smartphones
- International sales figures for similar smartphones across key geographies
With support of the data collected through market research on areas similar as above, XYZ should be able to perform analysis to make decisions on the following questions:
- What is the market they can capture with the launch of their new mobile in short and long term?
- What sales target should they plan for the initial period of the launch phase?
- What key customer segments would be most open to purchasing their product?
- What level of growth can they expect with the launch of their smartphone?
- Which key stakeholders would they need to partner with to grow their sales on digital platforms?
- Which platforms would be the best suited to market their products to?
By gathering such segment and industry-based market research and analysis of data points,firms like XYZ can answer a lot of similar market assessment questions. What is not included in the above coverage though is an analysis of the competition and intangible factors relating to branding and product imagery for which we would need to conduct the second component of the Market Situation Analysis which is Competition Analysis.
Competition analysis
After a high-level industry and segment analysis, let us get down to category-level analysis where a product’s standing with respect to direct and indirect competition and its brand positioning should be studied through a brand audit. The key elements of competition analysis include:
- Category analysis: This element of competition analysis maps the specific category of product (which in our present example is the mid-range smartphone category) to understand key competitors and defining elements which would make the product stand apart in the wake of competition. Key elements of the category analysis include:
- Number of competitors in the specific product category
- Presence of competitors in the specific market (years of presence)
- Top competitive players in the category for firm XYZ
- Competitor profiling, including top product analysis, and depth and breadth of product line
- Entrenchment of key competitors across target customer segment
- Key customer segments served, market share, and growth rate
- Competitors’ digital marketing spend, promotional mix, and budgets
- Brand audit: It involves conducting an analysis of key brand attributes against competing brands to realize intangible factors like brand value, imagery, perception, and other unique value elements which differentiate it in the market and would make it stand out in its category. A brand audit would typically include:
- Comparison of brand attributes and positioning
- Key brand values and unique selling proposition
- Brand communication voice and related cultural attributes
- Benefits-based comparison of brand usage output
- Perception of target consumer segment of the brand in comparison with other competing products in the category
With all the factors collated through category competition analysis and brand audit elements as above, the XYZ firm discussed above would be able to uniquely position its mid-range smart-phone across specifically targeted customer segments by countering competition and positioning its brand in the most appealing manner.
With an understanding of the key components of external analysis and their unique elements, in the next section we would go through a detailed analysis of key internal analysis elements, which together combined, can provide any marketer with the best set of data to form their digital marketing objectives and plan for an appropriate budget to achieve desired RoI (Return on Investment) over short and long-term periods.
Leave a Reply