Market analysis is one of the most important components of planning and managing a business. Market analysis will help you make your product more competitive and obtain your place in the market. While market research may seem like a simple formality, keep in mind that market analysis plays a huge role in running a business smoothly. The planning process will go with ease if you try to follow the basic components of market analysis.

First of all, it is necessary to know what questions effective market research answers so that you can then select the optimal techniques or strategies to quickly achieve your priority goals. Successful market research will give you the opportunity to answer the following key questions:

• Who is a potential customer of your product or service?
• What is the behavior of potential customers and what do they pay the most attention to when purchasing a product?
• How big is your business target market and is their number enough for your business to succeed?
• How much will they pay to buy your product?
• What are your potential customer's problems and challenges that you might be able to solve with your product?
• Who are your competitors, how do they operate in the market and what are their strengths and weaknesses?

Once you find the answers to these questions, you will be able to save resources, reduce costs and deliver your product or service directly to the customers who truly need it. In addition, market research can help you predict the size of your target market and calculate your estimated revenue accordingly. Apart from that, market analysis is an important mechanism for attracting and convincing potential sponsors to invest in your business 

What components should a market analysis consist of?

Result-oriented market analysis should include industry review, evaluation of the target market, competitor analysis, assessment of the regulations needed to operate in the industry, and forecasting revenues and expenses of a business.

Industry Description and Overview

In this part of the market analysis, try to briefly discuss the size of the relevant industry, how it is developing and what are the expectations for the future. You need to explore if this market has the potential to grow and how profitable the existing conditions are for attracting investment. Studying such indicators clearly shows that your business plan is based on real data.

Finding similar information is much easier than expected. Nowadays, information about industries is openly available in the internet space. You can also use the data available on the website of the National Statistics Center of Georgia (https://www.geostat.ge/ka) when preparing this part of the market analysis. In addition, there are already a large number of reports and studies on various sectors - including large industries such as tourism and hospitality, food production and winemaking, etc.

Select and analyze the target market

Choosing the right target market can be said to be one of the key factors in the success of your business. In this part of the market analysis, try to specifically identify the group of customers for whom your product or service will be in demand and desired. Too often start-up entrepreneurs think that their product is more desirable to more people than it is. Therefore, try to identify specific groups and tailor your marketing plan to them. By defining a target market, you will be able to create a better action plan, set more realistic goals, and direct your resources to them. In addition, by narrowing the target market you will be able to avoid the wasteful costs associated with advertising and delivering the product.

There are several criteria you can consider when filtering a large group of customers and reaching the relevant target market for you:

• What age category will your product or service target?
•  What income requirements does your product or service meet?
•  At what location and in what period will your product be demanded the most?

By answering these questions, you will be able to choose the target group. This will allow you to additionally answer the most important questions for operating a business such as:

• Approximately how much do potential buyers spend buying a product like yours? How much will they pay for the product or service you offer?
• How big is your target market? Will your business be able to survive given the volume of this demand?

Keep in mind that similar issues can be explored through your observations. In particular, by evaluating consumer behavior and characteristics and observing market prices, you will be able to better understand who needs your product and approximately how much they are willing to pay to get that product.

Competitors analysis

No less important part of the business plan is the analysis of your main direct or indirect competitors. By observing them you will be able to understand what the strengths and weaknesses of your opponent are. Consequently, you can change your product or business management accordingly, so that you become superior compared to your competitors. For example, you can offer customers something that others do not. This will also assist you in finding the right path for business development.

Observing your main competitors will allow you to know:

• What are the acceptable prices for consumers?
• Which distribution channels are most effective?
• How do your competitors use advertising to spread information about the product and what methods are most effective?

This can be achieved by observing the strategies of your competing companies. The internet will allow you to do this again, but, if necessary, get the help of a group of professionals as market analysis is one of the most important components of a business plan and plays a huge role in the success of the business.

Understanding the regulations and legal requirements

Before starting a business, be sure to research what responsibilities you will face and what regulations will apply to you when you become part of the industry. This part of the market research will help you better define your costs and avoid legal problems. For example, if you plan to produce and sell alcoholic beverages, you will not have an official right to operate without a permit and license. You can get additional information about this topic on the website of the Legislative Herald of Georgia (https://matsne.gov.ge/)

Forecasting

Analyzing all the above parts will help you to present your future income and expenses more realistically. When you are aware of how your target market will look like and how much they will pay to buy your product, you will be able to easily calculate the estimated revenue of your business. Keep in mind that basing your forecasts on data will make your calculations more realistic, which will have a positive impact on the processes of obtaining funds and planning business processes.

Finally, remember that evaluating and studying the target market is one of the most important determinants for business success. Market research is not just a formal document, and it is not as difficult to write as it seems at first glance. Going through the above-mentioned steps and following the tips will help you better plan your business, reduce costs and increase revenues.