Strategic Market Analysis: Trends, Growth, and Potential
Strategic Market Dimensions
Understanding Market Dynamics and Trends
A key objective is to understand market dynamics and trends related to strategic business opportunities. This involves identifying:
- Emerging key success factors
- Trends
- Threats
- Opportunities
Developing strategic questions can guide information gathering and analysis. As T. Proctor states, “Measuring the size of the market, identifying the trends and being able to predict how the market is going to develop in the future are critical factors in understanding the state of strategic windows.”
Market Size and Forecasting
Organizations need to understand methods for assessing market size and forecasting growth. Both short-term and long-term forecasts are crucial:
- Long-term forecasts: Useful for medium- and long-term strategic planning.
- Short-term forecasts: Enable monitoring the effectiveness of earlier long-term forecasts.
Beyond size and growth rates, understanding factors influencing market profitability at various stages is also vital.
Potential Market Size (2.2)
Growth Strategies
Analyzing and discovering trends affecting growth variables like penetration and average purchase is crucial. Growth strategies include:
- Capturing new consumers: Developing the market through penetration strategies, potentially attracting consumers from substitutive markets.
- Increasing average spend: Offering added-value products, premium options, and loyalty programs.
- Stealing market share: Employing aggressive strategies against direct competitors.
These strategies require measuring effectiveness, ROI, and the ability to achieve desired results.
Market Trends and Company Performance
Predicting market sales and identifying driving factors is crucial. Market trends directly influence company results, impacting growth or decline. Companies must adapt their market position based on strategy, tactical actions, and consumer behavior.
Positive trends can contribute to company growth, but not necessarily market share increase. Company growth is directly related to performance, requiring brands to outperform the market.
Competitive Strategies
Consideration of competitor reactions is essential. Different strategies can be employed:
- Aggressive strategies: Price-based competition and promotions can increase market share but may lead to price wars and reduced profitability.
- Decreasing scenarios: Companies need to evaluate if a decline is situational or a trend of a mature market. Strategies include market redevelopment (product repositioning, new segments) or cash-cow strategies for diversification.
- Growing markets: Focus on increasing loyalty and reinforcing leadership. Understanding the source of growth is key to leveraging opportunities and anticipating new competitors.
Other Growth Strategies
Additional strategies for individual growth include:
- Increasing numeric and weighted distribution for core products.
- Differentiation strategies.
- Developing long-term loyalty programs.
Ansoff Matrix
The Ansoff Matrix illustrates strategic options for market development. It highlights:
- Penetrated markets: Current users and sales volume.
- Potential markets: Interested but non-purchasing consumers.
- Available markets: Consumers with the ability to afford the product/service.
- Served markets: The target market being addressed.
Understanding these market segments is crucial for developing effective growth strategies.