6 Market Analysis Steps to Building a Surefire Marketing Strategy

Natalia Zhukova

Sep 02, 202016 min read
6 Market Analysis Steps to Building a Surefire Marketing Strategy

With stiff competition and ever-evolving technology and trends, data and insights are a powerful weapon helping companies to navigate through the market. Though, it’s not always clear where to gather market insights to inform your sales, business development, and marketing strategies. 

This post will guide you through the main steps and techniques for market analysis to make sure you are embracing vital opportunities that can bring your company to the next level and help you get an edge over the competition.

What Is Market Analysis?

Market analysis is a procedure of assessing and identifying various internal and external factors and conditions in a market within a specific niche. Essentially, the key insights that are gained from market analysis relate to:

  • Evaluating the market size;
  • Pinpointing growth trends; 
  • Defining and learning about the target audience;
  • Getting an in-depth look at the competitive landscape; and
  • Identifying business goals.

Why Do Businesses Need to Conduct Market Analysis?

Carrying out market research enables companies to stay informed on the latest market trends, their audience’s buying habits, evolving technologies, and competitor activity. To be more specific, it allows businesses to uncover:

  • What products and services are already popular within your target market;
  • Which competitors are employing the most efficient marketing mixes to offer these products and services;
  • Whether there are any gaps or opportunities within your niche that will allow you to fine-tune your products and services and get a share of customers’ attention;
  • What other factors outside of competition and demand can impact your business’s success or failure.

On top of these benefits, market research provides a data-driven approach to creating a high-impact and realistic plan for better business and marketing decisions and strategy.

Market Analysis Techniques for Building a Solid Marketing Strategy 

Market Analysis Step #1: Defining Business Goals

There are many ways to arrive at business goals and your company probably has an understanding of its business objectives. Since we’re talking about data-driven approaches to market analysis, we’ve picked Critical Success Factors analysis as a “non-classical” tactic that you might not have considered before.

Critical Success Factors (CSF) Framework

In a nutshell, CSF analysis is a technique a business can use to pinpoint areas that are essential in fulfilling the business’s mission and goals.

Of course, CSF will vary from business to business, but some common patterns can be seen. Generally, CSF sources fall into the following categories:

  • Industry CSFs: factors that derive from industry characteristics. Things like technological advancements or cutting-edge business models are a part of this CSF realm. For instance, to create the first supersonic aircraft, Concorde, aviation engineers had to rely on design engineers who came up with brand-new designs for the wing. Without the double delta wing, the plane never would have taken off.
Source: Associated Press
  • Competitive strategy and industry position CSFs: depending on competitor activity and internal organizational factors such as management structure, customer demographics, company financials, and more, each business will define its own success factors in relation to its competition and the industry as a whole. We will cover this part in the next steps

  • Environmental CSFs: environmental factors are concerned with the external environment to which your business belongs. A quick PEST (political, economic, social, and technological) factors - analysis will be enough to determine your CSFs here.


MindTools provide a convenient worksheet for documenting your PEST analysis findings.

  • Temporary CSFs: these one-time factors often come as a result of a sudden or temporary event — a global pandemic or a new market expansion that requires companies to recruit new staff, go digital, etc. 

Assessing all of these factors can help your company prioritize its efforts and track and measure progress towards fulfilling your strategic goals.

How Does CSF Analysis Work in Real Life?

Let’s consider a fictional scenario:

Back in the 1950s, company X wanted to take the first human to the moon — this would be the company’s mission. And to define and prioritize precise business goals, company X could have used the CSF framework.

This is how success factors analysis could help our company X define its objectives:


Additional techniques for defining business goals:

  • Business Model Canvas can provide you with an overview of your business — from key partners to cost structure — to consolidate improvement ideas for your business model. 

  • The good old SMART goals framework will help you to ensure you are setting the right criteria to improve the likelihood of achieving your business goals.

Market Analysis Step #2: Assessing Market Size

Market size relates to the number of people or companies who can be counted as potential purchasers of a given product or service. Market size evaluation can give you an estimate on audience size, potential sales volume, and revenue stream.

There are a few measurement methods out there, but we will outline two different approaches that you can take depending on your budget, business size/type, and industry specifics.

Industry/Government Reports

Information, data and measurement firms like Gartner, Nielsen and Statista are invaluable sources of in-depth information about the market. 

On the downside, while reports from these firms are widely accessible — often, it’s only a matter of a download — the pricing tends to be less user-friendly, making it less accessible for the general public. 

Industrial trade associations and financial data released by big-name publicly listed competitors can also include some market size numbers.

Semrush’s more affordable competitive intelligence suite can provide great real-time insights into the market, including market size assessment and market dynamics. The latter is important as industry reports are often released with a time lag, and timing is essential for spotting industry fluctuations and any signs of the arrival of game-changers.

To continue with our space theme, let’s pretend that a company named SpaceY wants to enter the market and beat Elon Musk’s SpaceX in efforts to privatize the space industry. 

The Market Explorer tool will estimate the overall market size for a particular niche based on online traffic trends: 


The overall audience base interested in the industry seems to be steadily expanding, with specific interest spikes occurring in May 2020 when CrewDragon made its historic launch.

The Traffic Analytics tool reveals that SpaceX’s victorious launch also affected its competitors’ market size. For example, shortly after the launch, earthsky.org saw their average audience’s interest double:


The Market Explorer tool will also give you a breakdown of where your target audience comes from, pinpointing the share of each traffic source — direct, referral, social, paid, or search. These insights can inform your marketing strategy, helping you to prioritize your marketing efforts and focus on marketing channels that can potentially expand your market share.


You cannot stop once you identify the market size, as it is never constant. Market growth and market trends are essential steps to regularly revisit so you can take timely action and fine-tune your business and marketing strategies accordingly.

Market growth refers to an increase in market size or overall sales within a given niche over a certain period of time.

You need to consider market growth trends throughout the market analysis process to get an understanding of how fast the market is growing, what its growth potential is, and whether it is generally on the rise or in decline. 

To estimate market growth, you can look at indicators such as the year-on-year (YoY) industry trend, shifts in the number of customers, and the number of complete purchases per client (internal or industry report data only).

We now draw your attention to a widely employed technique that helps you assemble all the data to gather actionable insights for your business.

Boston Consulting Group Matrix and the Market Explorer Tool

Developed back in 1968, the BCG matrix is a framework that helps large corporations manage their portfolio and prioritize budgets and operations across multiple business units based on market growth and market share numbers. 

However, the BCG matrix can be employed by any business, large or small, as its logic can be applied to prioritizing customer segments, products, services, marketing channels, markets (GEO), and brands.

We will also be using the Semrush Market Explorer tool to gather all the necessary market data to build up a BCG matrix for Elon Musk, who, let’s imagine, wants to see if he should prioritize Tesla over SpaceX, SolarCity, or OpenAI. 

Side note: Of course, with companies like Tesla who are publicly listed on stock markets, we can rely on their annual reports to do the measurements. As for companies like OpenAI, we can only rely on external tools that gather various market data to spot and interpret some trends. In Market Explorer’s case, traffic growth numbers can potentially indicate a rising interest in the product/business category, and traffic share can imply market share.

Building a Boston Consulting Group Matrix

1. Collect all the necessary market growth and market share data

Initially, you’ll need to collect data on your market share and the growth rate of your products/business units/customer segment, etc. 

With the help of Market Explorer, we can see that within the aerospace market, SpaceX has seen a 50% traffic growth YoY:


Interestingly, though their spike in traffic had a large impact on the market as a whole, SpaceX comes in seventh in terms of traffic (market) share. Being a relatively new industry player — compared to NASA or Boeing, which comes in third — this may not be surprising. Based on their influence on the market however, it seems things are looking bright for SpaceX's future.


Running Tesla, SolarCity and OpenAI through the tool to get a similar analysis, we discovered that:

  • Within the electric vehicle market, Tesla’s traffic increased by 20% YoY, while it takes the top spot with regard to traffic share worldwide. 
  • SolarCity (now a part of Tesla — Solar Panels) has seen a double decline in traffic rate, yet it still has a large market share, being the second most visited solar panel site.
  • As for the AI research market, Elon Musk’s OpenAI’s YoY traffic has quadrupled, yet it doesn’t even make it into the top 20 of the most visited sites.

2. Apply the Data to the BCG Matrix and Prioritize Your Business and Marketing Efforts Accordingly

The BCG matrix’s horizontal line represents the market share, and its vertical line stands for the growth rate. What we should do now is place each of our research items within the designated box, reflecting how they rank in terms of market share and growth.


BCG’s definition for the terms within the matrix are:

  • Pets represent items with both a low growth rate and low market share;
  • Question mark stands for products with a small market share but with high growth rates;
  • Stars indicate that a product has a high market share and a fast rate of growth ;
  • Cash cows are businesses with high market shares but lower growth expectations.

Certainly, it will not always be immediately obvious into which box your products/research items should fall. Yet, when you look at each of them in relation to the other, you can see that Tesla is Musk’s Cash cow, SpaceX is a Star, OpenAI falls under the Question mark, and SolarCity can be considered a Pet.


Additional techniques for spotting market trends and growth rate:

  • McKinsey’s Three Horizons of Growth model helps companies manage their current performance while keeping an eye open for innovation and growth opportunities. 

  • Airtable’s Growth Experiments template offers a structure for running growth experiments that can potentially scale your business.

Market Analysis Step #4: Getting an In-Depth Look at Competitors

To get an edge over your competitors, you need to have an understanding of your competitive landscape to find the best spot for your brand in the market. 

Porter’s Five Forces analysis offers a strong foundation for analyzing not only competitors but also factors that affect competition — from new entrants to existing rivals to additional products and services you might not have considered. 

Porter’s Five Forces Analysis

Porter’s five forces analysis evaluates opportunity and risk based on five essential industry factors:

  • The intensity of the competitive landscape;
  • Level of supplier power;
  • Buyer’s entry/exit costs;
  • The threat of substitute products;
  • Access to the market for new entrants.

The intensity of the competitive landscape

The first thing to look into is how intense the competition is within your niche. The key insights you should gather at this stage are:

  • The competition level within the marketplace;

  • Key competitors;

  • A clear understanding of your competitive strategy.

Taking a data-driven approach, we will be employing the Market Explorer tool once again to get an overview on the competitive landscape for SpaceX. 


We’ve only picked the top 10 competitors to show on the graph. You can always go deeper and take a look at more rivals, However, for an in-depth look, it’s always a good idea to narrow down the scope of research.

With space, SpaceX won’t have too many direct competitors — just because the entry bar is very high, with high fixed costs, government regulations, and more. Yet, for most industries, looking at the range of competition and its intensity is a starting point for solid market analysis. 

Then, you have to double-check whether you are sharing a similar audience with your competitors — you may have the same product but be targeting a very different customer base.

Having discovered that NASA and Boeing are SpaceX’s key competitors, we will run the three companies through Traffic Analytics’ Audience Insights report to see if their audiences match.


We can see that Boeing and SpaceX/NASA barely have any audience overlaps, which can be explained by the fact that Boeing has other business units (aviation, for instance), while NASA and SpaceX’s high match comes as no surprise. 

Audience analysis on top of a simple competitive analysis shows opportunities and threats that may come from your competitors. 

If you are attracting different types of customers, you are less of a threat to each other but may start getting ideas about targeting your rivals’ consumers. This post will walk you through the ways to shape a stronger marketing strategy to attract competitor audiences.

Level of Supplier Power

Online or offline, businesses are heavily reliant on other businesses in their operations. This factor examines the power a supplier might hold over your business.

Your procurement, security, and other departments will have information about the following factors you should consider when it comes to assessing the threat of overdependence on suppliers:

  • The number of suppliers within the market (from your anti-DDoS software to steel mills);
  • The range of existing suppliers — the more backup suppliers you manage to secure, the more bargaining power your business will have;
  • The costs of switching to other suppliers — from rewiring all the hardware to establishing new supply chains, you should consider all the factors and expenditures.

Buyer’s Entry/Exit Costs

Now, with consumers, they can also have some bargaining power over your business. While this may seem like a customer-centric factor, you should be looking at your competitive landscape once again to determine the costs of the buyer’s entry and exit. 

The overall audience size, the number of competitors, their pricing, and quality factors will matter when you are shaping or reshaping your business and marketing strategies.

This post will help you find the right tactics that enable you to:

  • Analyze your competitors’ overall online performance;
  • Get a glimpse at their online advertising strategies;
  • Pinpoint your rivals’ SEO, content and PR strategies;
  • Reveal their activity across social media channels.

The threat of substitute products

On top of keeping an eye on competitors and their marketing strategies, you should also be aware of the fact that you might be competing with substitute products too. An indirect competitor might be impacting your profitability as your customers are switching to a different product or service. 

Normally, a substitute product constitutes a threat if:

  • It comes at a lower price but with a similar function or quality.
  • It offers a similar price but is of higher quality or is more functional.

Access to the Market for New Entrants

  • This factor considers how easy or difficult it is to enter the market for upcoming brands. While you may be all set with your market analysis, this factor requires ongoing market monitoring.

While SpaceX’s position is fairly stable, Asian competitors like Interstellar Technologies may be posing a threat in years to come. 

  • Though, if you’re not in Aerospace or another niche that is difficult to enter, you should consider the market entry barriers and establish the frequency of your market monitoring accordingly — the lower the entry bar, the higher the monitoring frequency.

Here is a live example of Porter’s Five Forces analysis:


Tools like Tuzzit or Upboard.io have pre-built templates that can be filled in with your insights about the factors that affect your business and marketing strategies.

Additional technique for analyzing the competitive landscape:

  • Competitive Perceptual Mapping can help you to assess how customers perceive a certain product/service and evaluate the strengths/weaknesses of comparing brands within a given niche.

Market Analysis Step #5: Identifying the Right Demographic

 Defining the right customer has to start with such basics as geographic, demographic, psychographic and other characteristics. Essentially, all things that have to do with buyer persona description.

Once you have buyer personas defined, you have to start segmenting your target audience based on similar needs or demand features to provide tailored and more targeted customer experiences.

Buyer Persona Definition

Buyer persona research is a thorough process that helps you understand who your target customers are and how to reach them.

Essentially, this so-far fictional character has to get the following features:


This comprehensive post will walk you through the entire buyer persona creation process, uncover where you can gather your data from, and provide a template that you can use to fill in all the details.

Hooley’s Segment Attractiveness and Resource Strength Framework 

Now, once you have identified all imaginable buyer personas, you have to break down your customers into separate segments to tailor more relevant messaging, solve different problems, and offer different product features.

You can divide your customers however you'd like, but here are the key customer segmentation criteria widely used across various companies:

  • Geographic: country/city, urban/rural etc.
  • Demographic: age, religion, gender, income, socio-economic type, education, family size/status.
  • Psychographic: lifestyle, interests, hobbies, opinions, influencers.
  • Behavioral: buyer journey stage, brand loyalty traits, price sensitivity, purchasing style, usage rate.
  • Media: social media/TV/newspapers/search engine preferences.
  • Benefit: customer service, quality, and other specific expectations.

Using Hooley’s Segment Attractiveness and Resource Strength framework, you can assess the appeal of each market segment before setting your priorities to address budget, employee resources, product, or other limiting factors.

Create a matrix similar to the BCG one used earlier — with market segment appeal reflected in the vertical line, and the horizontal line reflecting your resource capabilities:


All that’s left for you to determine is which customer segments fit within any of the boxes of your matrix.

Market Analysis Step #6: Accounting for Internal and External Factors

The steps you previously took to carry out a market analysis should have uncovered a wide range of insights you need to consider before finalizing your business, sales, and marketing plans and strategies. 

The very last step is to gather your findings and organize them to assess how to:

  • Capitalize on your advantages;
  • Eliminate your weaknesses;
  • Seize market opportunities; and
  • Minimize the impact of any threats.

Essentially, what you have to undertake is a SWOT analysis. 

SWOT analysis

SWOT analysis is probably the most popular strategic analysis framework. It involves considering your business’s strengths and weaknesses while staying alert to opportunities and threats.

The upside of SWOT analysis is that it gives you an overview of both internal and external factors that can affect your business and marketing models. 

  • Within the Strengths, list business characteristics that give you a competitive advantage.
  • Under Weaknesses, outline features that put you in a weaker position compared to your competitors.
  • The Opportunities box should be filled with data-driven insights that your business can embrace to increase sales, boost profitability, and expand market share.
  • Threats imply both internal and external elements that can potentially negatively affect your business — from the arrival of industry game-changers to changing Government regulations.

While SWOT analysis is fairly straightforward, tools like Miro allow you to create a comprehensive illustration of your insights that you can share with the entire staff and edit with the key stakeholders.

Additional technique for assessing risks and opportunities:

  • Scenario planning can help you to build different plausible options of what can go wrong or right for your business as well as identify triggers that can point towards which scenario is more likely to come up.

Final Words

Gaining sufficient market understanding is a prerequisite for business growth and success. Without deep insight into market characteristics and nuances, your business ideas and expectations will have little value. 

Your business and marketing plan should be based on market research, otherwise, you might end up like the Detroit Three automakers, who failed to account for scenarios other than low fuel prices and traditional customer preferences. With exploding fuel prices and a shift in customer demand towards smaller vehicles, the Detroit Three’s market failure paved the way towards the fall of the Motor City. And, according to Forbes, it’s all because they didn’t run through all the scenarios you see while carrying out market research.

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Natalia is a data-driven marketer focusing on market research and strategy development. Having a solid experience in digital marketing, Natalia has a passion in SEO, content marketing and multilingual website creation and optimization.