Your Startup GPS: Market Analysis Part 2
Hi I'm Cate, You're Free VC, As a VC, or
venture capitalist, entrepreneur, and Fortune 500 executive, I help you go from idea to empire
in one year. Today we're diving into something that might sound intimidating at first but trust
me it's going to be fun. Yep, we're talking more about market analysis. But before you click away,
thinking this is all spreadsheets and headaches, market analysis is like the GPS for your business
journey. Just like you wouldn't set out on a road trip without knowing the route, you wouldn't want
to launch a business without having a clear idea of the market landscape. A market analysis helps
you navigate challenges, avoid detours, and reach your destination. The customers who are waiting
for exactly what you're offering are ready for you, so grab your coffee, settle in, let's make
this as simple smart and fun as possible. So what is market analysis exactly? Well, we've spoken
about that a little bit last time in my last video, but if you're joining for the first time,
think of it as your business' Survival Guide.
It's the process of figuring out who your customers
are, what they need, and what your competitors are doing. In other words, it's the thing that can
help you avoid creating a product or service that no one really wants. We don't want that right? No
one wants to be the person who invents the next shoes for cats and watches it flop because,
well, cats don't really need shoes. Anyway, a market analysis is where you gather information
about your industry, audience, and competitors so you can make smarter decisions and it is a
must if you want to be successful.
I don't care if you're planning to sell organic skincare products
in Berlin or open a taco truck in New York City, market analysis will give you the road map to
reach your customers and avoid potential pits. So you might be thinking: "do I really need to
do this market analysis or can I wing it?" You could but it's kind of like baking a cake without
following the recipe … it might turn out okay or it might end up a lopsided, half-baked mess.
Market analysis is crucial to help you answer key questions like: is there demand for what I'm
offering? Who are my potential customers? What's my competition like? And, how can I stand out?
Without these answers, you're essentially taking a shot in the dark and as fun as that might sound,
when it comes to time and money and energy, we'd all rather you have a clear path forward.
It's
like this: a business without market analysis is like a ship without a compass — you might get to
your destination, but you'd rather be sure you're steering in the right direction. So now let's
break it down into 5 easy to follow steps. We're going to cover each one and make it really simple.
Step 1: Define your purpose. First off, you've got to know why you're doing this. Are you trying to
figure out if your product has a market or are you looking for the best place to launch? Maybe you
want to understand your competitors better. For example, if you're launching a plant-based snack
brand, is your purpose to figure out how saturated the market is or what your target audience cares
about? Your purpose helps you stay focused and avoid chasing unnecessary details, so go back to
your PVG from one of our earliest videos and bring that thought and that process back now to your
market analysis. Step 2: Identify your target audience. Let's talk about people. Who are you
trying to to reach? If you say "everyone," it's a red flag.
Aiming for everyone means appealing sort
of to no one in particular. We want to focus on a specific audience and here's what you're going to
want to know: age, gender, location, income level, interests and values. Picture your perfect
customer: Maybe it's a 30-year-old vegan mom who loves yoga and sustainability, or maybe it's a
45-year-old business professional who needs quick healthy snacks on the go. Get really specific
because the better you understand your customer, the more targeted and, therefore, successful
your marketing will be. Step 3: Research your industry. Now it's time to look at the bigger
picture – your industry. Research current trends, emerging technologies, challenges. You can
find great insights from industry reports, trade publications and credible sources like
Statista or Nielsen.
Ask yourself: Is the industry growing or is it on the decline? What do the
key challenges players face? What new trends or technologies are popping up? By understanding your
industry's landscape, you can spot opportunities where you might fit in or identify areas where you
need to pivot. Step 4: Analyze your competitors. My competitive analysis videos dive deep into
this but, in a nutshell, you cannot ignore the competition. This is where you're going to take
a deep dive into what your rivals are doing, leveraging your competitive analysis. I'm
not saying you need to copy competitors by any means – no! But knowing their strengths and
weaknesses helps you determine where you should stand out by being yourself, what you believe in
and how you make that clear to customers. Create a list of your competitors and ask yourself:
What are they offering? How are they pricing their products? How do they market themselves?
What do their reviews say? And, remember, your competitors aren't just the businesses doing
exactly what you're doing.
Look broadly throughout the industry. Step 5: Understand your customers
needs. Let's zero in on your customers needs and preferences. It's so critical. You might think you
know what people want, but nothing beats hearing it straight from them. This is where surveys,
focus groups, and interviews come in handy. You can ask questions like what do you like or dislike
about existing products or services? What problems are you facing that no one's solving yet? How much
are you willing to pay for a solution? Listen to your potential customers, they are a gold mine
of insights. Their answers will help you refine your product and marketing strategy to ensure
you're giving them exactly what they need. Now that you've got the market analysis steps down,
let's talk about the tools that can make your market analysis so much easier. You don't need to
be a data genius to do this, plenty of platforms can help. For instance Google Trends — this will
show you how search volumes for different topics are trending over time.
Survey Monkey or Typeform
— great for creating surveys to gather customer feedback. Similarweb — use this to analyze
traffic on competitors websites and understand where their customers are coming from. IBIS World
— a treasure trove for detailed industry reports and insights. Crunchbase — if you want to check
out what other startups are doing and who's investing in them. These tools are like having
a secret weapon, making your research faster, more efficient, and super insightful. Now,
we've gathered all of this amazing data, what do we do with it? The key is to turn this
data into actionable insights, We want to make sense of our data. If you've discovered that your
target audience is health conscious millennials, maybe focusing your messaging on wellness and
sustainability makes sense.
If competitors are overpricing their products, this could be your
opportunity to undercut them or offer something with better value. Take your findings and use them
to tweak your business plan, marketing strategy, pricing, and even your product itself. It's not
that just that your MVP strategy informs your product, your competitive analysis and, now, your
market analysis also inform your product. This is where the magic happens! You take the raw data and
you turn it into smart decisions. Many companies, even some of the biggest and best in the world,
have faced challenges due to poor or incomplete market analysis, leading to product or business
failures.
A famous example of this is Blockbuster, so let's go over that as well as a few more
noteworthy cases. We can call our first case "Blockbuster: Ignoring market trends." What
happened? Blockbuster was a dominant player in the video rental market during
the 1990s and early 2000s; however, the company failed to anticipate the shift towards
digital streaming and on-demand services, while Netflix was offering an alternative with DVDs by
mail and, later, streaming services. Blockbuster stuck to its traditional brick and mortar model
and it ignored clear signs that consumers were moving towards more convenient technology-driven
solutions like Netflix's subscription-based service and streaming. Blockbuster also failed to
address customer pain points and, particularly, customer dissatisfaction with late fees and the
inconvenience of physical stores … something Netflix capitalized on with its "no late fees"
and subscription-based model. As a result, Blockbuster filed for bankruptcy in 2010,
while Netflix went on to revolutionize the entertainment industry. Similarly, we can look at
Kodak. You remember the camera company that was the dominant market player? Its case study can be
called "failure to embrace digital photography." What happened? Kodak was once synonymous with
photography but the company's downfall was largely due to its reluctance to transition from film
to digital photography, even though it invented the first digital camera in 1975.
When we look
at Kodak's market analysis failure, well Kodak failed to understand change in consumer behavior.
It underestimated how quickly the digital camera market would grow and how consumers would switch
from film to digital. And it focused too heavily on existing revenue streams. The company was
too focused on protecting its film sales, which were highly profitable, and it didn't invest
enough in digital technologies early on, even though market trends showed film usage declining.
As a result, by the time Kodak tried to catch up, companies like Canon and Sony had taken over
the digital photography market. Kodak filed for bankruptcy in 2012. Finally, let's talk about
Coke. Coke's case study, which we could call "New Coke: not understanding brand loyalty" is a
lesson in understanding your consumer.
In 1985, Coca-Cola made one of the most infamous marketing
missteps in history when it replaced its flagship product with new Coke, a sweeter formula designed
to compete with Pepsi's popularity. Coke's market analysis failure? Well, first, focusing on taste
tests. Coca-Cola made the decision based on taste tests, which showed that consumers prefer the
sweetertaste of Pepsi. However, Coke didn't take into account the emotional connection and loyalty
that people had with the original Coca-Cola. Coke also underestimated consumer backlash. When Coke
launched the new formula, consumers were outraged. Customers felt betrayed by the brand for changing
a product they loved and there were even protests and boycotts. As a result, Coca-Cola had to bring
back the original formula as Coca-Cola classic just three months later, while New Coke eventually
faded away. Lessons from all of these failures: 1. market trends change rapidly. Companies
must continually research and adapt to shifting consumer preferences, technological
advancements and industry changes. 2. understand your customers. It's critical to
align product decisions with what your core customers actually want and value, rather than
making assumptions. 3. conduct thorough market research. Even big companies with strong brands
need to deeply understand their market before launching new products or making significant
changes to their business.
4. don't ignore customer feedback. It's essential to listen to
your customers, especially in the testing phase, to avoid launching a product that fails to
resonate with your audience. These case studies show that even large, well-established companies
can fail if they don't properly understand their market, customer preferences, and competitive
landscape. And that, my friends, is a wrap on market analysis. It might seem like a lot of
work but trust me it's worth every bit of effort. Understanding your market means you're not just
throwing spaghetti at the wall to see what sticks, you're launching your business with purpose,
confidence, and direction.
So whether you're starting a coffee shop, a tech startup, or the
next big fashion brand, market analysis will be your compass. Keep exploring, keep learning, and
remember — you can do this. I believe in you. My call to action for you today is to use these 5
steps to create your market analysis. Leverage the MVP and competitive analysis information and other
information that we've already worked on together. It will make this easier for you. Comment how
your market analysis is working out for you and, in the meantime, please subscribe
and thanks for getting started with me..
