- Step 1: Give a brief overview of the industry. …
- Step 2: Review trends and growth patterns that have existed within the industry.
- Step 3: Identify factors that influence the industry. …
- Step 4: Using data gathered through research, the industry forecast anticipated growth.
It is crucial for every business to research market trends and the level of competition. It aids in laying the firm groundwork for a company’s future. Before starting a new business venture, you must conduct preliminary research if you have that thought. A thorough industry analysis enables you to gauge the market environment and adjust your business plan as necessary.
Industry analysis reports provide insight into a company’s general state of health. It helps your stakeholders and investors evaluate the potential of your business venture. It also allows you to learn more about the obstacles to entry into the market. In addition, a well-done industry analysis suggests corrective actions to be taken in the event of any unforeseen developments.
Industry Analysis
Why is conducting an industry analysis important?
Companies must conduct an industry analysis to understand how market conditions impact their operations. Although industry analyses may be subjective and thus not always guarantee success, they can offer a framework when attempting to make informed market and business decisions. These types of assessments can help:
What is an industry analysis?
Businesses and entrepreneurs use industry analysis as a tool for market evaluation to show how a company or potential company stacks up against others in its industry or niche. Industry analyses go above and beyond simple market research to demonstrate how every facet of the business relates to its rivals or broader market trends. These evaluations seek to ascertain how to most successfully compete with the biggest businesses in your sector and generate the profits you desire.
Industry analyses can be carried out by both big and small companies in a range of industries, from manufacturing to retail, either independently or as part of a business plan. Markets can change quickly, so previous industry analyses could be out of date in a matter of days or weeks.
How do you do an industry analysis?
Learn how to conduct an industry analysis for your company or a potential employer using the steps below:
1. Conduct background research
To understand your market, conduct in-depth background research on your industry and competitors. Decide whether you want to study every aspect of your industry or just one particular subset. Choose the questions you want your analysis to address, such as how your competitors behave, the expansion of the market, or industry standards. Make a list of your rivals and explore your options for accessing research on them.
2. Collect your data
Gather information that can be used to respond to inquiries about the market and your rivals. To understand current market trends, look at the most recent industry analysis reports from your business or others that are currently available. To find out about competitors’ profits or intended consumer segments, you can also check out their advertisements, marketing materials, product placement in stores, and publicly available financial information. To gather more data on the market or any other topics for which you require more information, you may also decide to use secondary sources like government statistics and data, marketing reports, and journal articles.
3. Analyze your data
Utilize one kind of industry analysis model to examine the information you have gathered. You could compare your products or marketing initiatives to those of a competitor in this step. Additionally, you can assess how your advantages stack up against those of rivals by contrasting them. When analyzing data, consider variables that could have an impact on the results, such as:
4. Write your analysis
To make your analysis easy to read and share with others, present your findings in a written report. To write and publish your findings, you might use a template that includes the following:
5. Evaluate your business
Use your report’s analysis section, in particular, to determine the company’s course with regard to your area of focus. For instance, if you performed an industry analysis to determine how quickly a competitor is expanding their business and you discovered they are doing so at a rate of 12% annually, you might look for ways to outpace that growth in your own business. You may conduct a second analysis that is focused on another industry factor if you discover after finishing your analysis that you still have questions.
Types of industry analysis
Your focus questions or desired outcomes may have an impact on the type of industry analysis you choose. Numerous types of industry analysis can be qualitative, which uses experience and personal judgment to analyze data, or quantitative, which uses mathematical forecasting to analyze data. Three popular types of industry analysis include:
Competitive Forces Model
One of the most well-known industry analysis models is the Competitive Forces Model, also referred to as Porter’s Five Forces. Its nickname comes from its creator, business professor Michael Porter. Instead of focusing on a competitor’s specific actions, this model examines five outside factors that could have an impact on a market. The five factors include:
Broad Factor Analysis
The Broad Factor Analysis is used to evaluate four distinct external factors that might have an impact on a company’s market value. PEST Analysis, an acronym for the factors it considers, stands for political, economic, social, and technological. Examples of these factors include:
SWOT analysis
SWOT analysis stands for strengths, weaknesses, opportunities and threats. This kind of analysis shows how four industry forces directly affect a company by summarizing their effects. This kind of analysis focuses on the elements of just one business. You can create two industry analyses, one for each competitor, if you decide to compare the SWOT analyses of your company and competitors. Items to include within each category may be:
FAQ
What are some examples of industry analysis?
Three main components make up an industry analysis: the driving forces behind the industry, its overall attractiveness, and the crucial elements that determine a company’s success within the industry.
What does an industry analysis consist of?
An industry analysis report, which is frequently included in a business plan, aims to determine how your company can gain an edge in a market by learning about the history, trends, rivals, goods, and clientele of that market.
What is an industry analysis report?
An industry analysis is a marketing technique that provides data on the market potential for the goods and services offered by your company. You must include specific details in this section of your plan regarding the state of the industry and its target markets.
What is an industry analysis in business?
An industry analysis is a marketing technique that provides data on the market potential for the goods and services offered by your company. You must include specific details in this section of your plan regarding the state of the industry and its target markets.
