Every business needs to make informed decisions about market entry, product development, and overall strategy. A key prerequisite to making the right decisions is an understanding of the target market(s). A comprehensive market assessment is essential to gaining that understanding.

In large-scale industries, market assessment can be based on readily available reports that are jointly commissioned by key players. These provide an entire industry with a baseline understanding of market size and growth data. In other instances, especially in niche markets, it can be very hard to find reliable or even any data.

In these instances, it’s necessary to conduct or commission a custom market assessment as a baseline for informed decision making.

What Is a Market Assessment?

Market assessment is a comprehensive evaluation of the potential market demand for a product or service. It often combines quantitative and qualitative data and insights.

Market assessment involves analyzing market trends, industry statistics, and customer behavior to determine the viability of a product or service in a market. The goal is to provide businesses with a clear understanding of the market they are entering, their target audience, and the competitive landscape.

A comprehensive market assessment consists of five key components:

1. Market trends and drivers: Understanding the trends and drivers within a market can help businesses anticipate changes in demand and adjust their strategies accordingly. This information can also help businesses identify new market opportunities.
2. Market size and growth potential: Understanding the size and growth potential of a market is crucial for businesses to determine the overall demand for their product or service. This information can help businesses make informed decisions about the scale of their operation, as well as the potential for growth.
3. Competitive analysis: Assessing the strengths and weaknesses of competitors is crucial for businesses to determine how they can differentiate themselves in the market. This information can also help businesses identify potential threats and opportunities within the competitive landscape.
4. Customer segmentation: Identifying and understanding the different segments within a target market can help businesses tailor their marketing and product strategies to meet the unique needs of each segment. This information can also help businesses identify new market opportunities.
5. Regulatory environment: Understanding the regulatory environment within a market is crucial for businesses to determine any legal barriers to entry or compliance requirements.

What Is a Custom Market Assessment?

The baseline of any market assessment is market size and growth data.

In the absence of standard industry reports that contain reliable industry-level sales and growth data, you can start by collecting internal data (in the case of existing products) as well as any other available quantitative data on the market and competitors, including revenue projections from third-party sources.

A custom market assessment can include both interviews with industry experts (to gather first-hand insights) and well-targeted surveys to validate those insights. Surveys can also produce valuable insight into categories such as market size, market shares, and growth drivers.

Qualitative insights gathered through expert interviews or focus groups can also help uncover customer needs, values, desires, and motivations, which in turn can help reveal indications of market growth potential and product requirements.

As such, a custom market assessment can give your business an edge over the competition, as it can help you discover new market prospects and provide a basis for your strategic decision making about pricing, distribution channels, and marketing tactics.

Steps for Conducting a Successful Market Assessment

To conduct a successful market assessment, follow these tips:

• Define the target market: Clearly defining the target market is crucial to ensure you’re gathering only relevant data. This includes identifying the geographic location, industry sector, and unmet needs of the target audience.
• Gather primary and secondary data: A comprehensive market assessment should include both primary and secondary data. Primary data is information collected directly from the target audience. Secondary data is information gathered from existing sources, such as industry reports and government statistics.
• Use a variety of research methods: Implementing an array of research methods, such as surveys, focus groups, and industry expert interviews, can help you gather a wide range of information and perspectives.
• Consider external factors: External factors, such as economic conditions and cultural trends, can have a significant impact on market demand.
• Continuously update the assessment: Markets are constantly evolving, so you should regularly update your market assessments to ensure you’re staying current with changes in the market.

Applying Market Expertise to a Custom Market Assessment

Expertise is essential for successful outcomes. As indicated, many markets require extremely niche insight and multiple perspectives. Without these, the best tools and strategies will not be effective in producing useful insights. In the worst case, they can generate dangerous or misleading insights.

A market assessment, especially a custom one, should include perspectives of industry experts (including executives both past and present) as well as a market’s customers, ex-customers, and competitors’ customers to ensure relevant, actionable insights are generated.

Finding suitable industry experts and customers isn’t easy. You need to carefully screen and vet these people so you can trust that the insight they provide accurately reflects the marketplace. If you don’t put sufficient focus on vetting and screening, you may gather insights that are not representative or even misleading, potentially leading to poor — and expensive — decisions.

Market Assessment: Conclusion

Market assessments provide valuable insights into the target market, competition, and industry trends, allowing businesses to make informed decisions and create effective strategies. They are crucial for businesses looking to enter a new market or develop a new product or service.

Especially in niche markets, it can be very hard to find reliable or even any market data. In these instances, it’s necessary to conduct or commission a custom market assessment as a baseline for informed decision making.

A custom market assessment can give your business a competitive edge and position it for success in your market.

About Peter Eckart

Peter Eckart is a former university-professor-turned-McKinsey-consultant-turned-senior-executive-turned-independent-consultant. Before starting his work as a freelance consultant and advisor, Peter was Director, Business Intelligence at the New York-based unicorn startup Zocdoc Inc. Before joining McKinsey & Co., Peter was an assistant professor in space engineering at the Technical University of Munich, one of Germany’s top three universities.

GLG’s B2B market research team partners with seasoned experts like Peter Eckart to provide end-to-end execution of market assessments in a variety of industry verticals, uncovering the insights our clients need to make intelligent, informed decisions.