Industry Analysis: Why we need the data

When taking the decision to operate a business, we must be armed with specific justifications why the decision was a good one to take. An analysis to provide data on the performance in an industry is a key reason why the decision to operate in a certain market is justified.

We look at corporates taking decisions to enter into certain markets, launch new products or target key customers on a periodic basis. These decisions are justified by critical analysis carried out on their industries of operation to provide data sets that allow for an inspection of the performance of these industries.

Smaller enterprises are also not left behind in the need for analysis. Though these are done on a smaller scale, they are also quite imperative for the decision to set up a business to operate within a certain industry.

What then is an analysis of the industry?

1. Defining the Industry: A definition of the industry and market segment being analyzed is carried out. This includes identifying the products or services offered, target customers, and key competitors.
2. Market size and growth rate: The size of the market and its growth rate is determined, both in terms of revenue and number of players. The market trends and any potential opportunities or challenges are identified and understood.
3. Competitor analysis: The current players in the market, their market share, strengths and weaknesses, and how they compete is analyzed. This information can help the company determine its position and identify areas of differentiation.
4. Customer analysis: The needs, behaviors, and preferences of the target customers is evaluated. This can help the company understand how to best meet the needs of the customers and what value it can offer.
5. Market segmentation: The market is divided into smaller segments based on factors such as demographic, geographic, psychographic, or behavioral characteristics. This can help the company understand which segments are most profitable and how it can best serve them.
6. SWOT analysis: A SWOT analysis is conducted to evaluate the company’s strengths, weaknesses, opportunities, and threats in the market. This can help the company understand its current position and identify areas for improvement.
7. Market trends: The latest trends in the industry are identified and their potential impact on the market is assessed. This can help the company stay ahead of the competition and make informed decisions.

To go into the detail of an industry analysis allows an entity to provide clarity into the attractiveness of a sector for its own business. It also allows this entity to gauge the performance of its business at inception allowing a realistic view of business performance if the entity is just starting out.

For entities that have been in the market for a period of time, an industry analysis is pertinent to allow them to gauge the performance of their business against other players in the market and further take decisions to scale the business.

Each analysis provides detail into the placement of different players in an industry and allows a realistic view of each player in the sector contributing to the development of a growth strategy.

For smaller enterprises seeking entry or scale, the industry analysis will allow them to tier their enterprise appropriately and investigate how to play profitably in their tier of placement against the other players within the same category.

Indeed, an industry analysis is imperative for all sizes of enterprises in a market. It provides insights that are critical for noting business performance and making the necessary shifts to accommodate entry into a market or scale of a business within the said market.

The insights generated during the analysis are critical to place an enterprise within its specific tier and take necessary steps to allow the optimal performance of this enterprise in a specific market.