Let’s face it. Growing a business is hard. Geopolitical tensions, market volatility and economic uncertainty are real challenges that executives must navigate to thrive amid the upheaval.
Your company’s future success depends on your ability to determine which strategies will sustain growth. It takes considerable effort. But we’re here to help you get there.
Before we get started, it’s important for you to have a deep understanding of your company's business direction, resources, strengths and capabilities. Complete visibility is key to making data-driven decisions. Then, you can evaluate the market and assess consumer needs to understand how those demands are being met by companies today.
Now, let’s examine how to analyse those factors to ignite your next growth opportunity.
Eight analysis types to identify market opportunities
1. Consumer segmentation and behaviour analysis
Divide or group your audience based on traits. This will help you target the right people in the most effective way.
Consumer segments can be broken down by demographic (age, gender, education, income, etc.), geographic (city, country, region) or behavioural (attitudes, lifestyles, etc.) variables.
Demographic and geographic data helps you estimate the number of potential customers. For example, a baby food brand should know the population of infants in countries where their products are sold. Or an appliance manufacturer might want to understand the number of households in a target market before expanding distribution.
You should also consider behavioural variables because these indicators help pinpoint purchase motivations associated with your product or service. Price or positioning, to name a few, can be influential factors. Lifestyles, attitudes and values often drive shopping decisions, so behavioural segmentations help you tailor your marketing efforts.
You’ll want to monitor short- and long-term consumer shifts like megatrends to understand how priorities are evolving. In recent years, high inflation drove a shift towards cautious and conscious spending. Certain consumers had to cut back on purchases but still want to treat themselves.
Major packaged food players are strengthening their presence in the premium snacks space to offer affordable indulgences in response to this behaviour. Mondelez launched Toblerone Truffles; Mars acquired Trü Frü and Hotel Chocolat; and Nestlé acquired Grupo CRM.
Organisations that use consumer segmentation to tailor their messaging, marketing and products will sell more effectively.
2. Purchase situation analysis
The buyer’s journey is anything but straightforward. A multitude of factors can impact what, when and where consumers make purchases. You have to understand your customers’ shopping patterns so you can influence their decisions. Here are some questions you’ll want to answer.
- When do people need or want your product or service?
- Where do people make their purchases?
- How do they pay?
Look at distribution channels and payment methods to start uncovering buying patterns. This will help you sell your products in the right place.
Let’s dig into the retail sector as an example. Today, most consumers expect speed and convenience, which is transforming the grocery landscape. In the last five years, the number of discounters and convenience retailers globally grew 28% and 17%, respectively. But the number of hypermarkets declined 2%.
Another channel that’s been on the rise: livestreaming e-commerce. Euromonitor expects sales to exceed $450 billion in China in 2024, reaching 14.5% of total e-commerce sales in that country. And steady growth of this channel continues in the US.
Buying patterns can tell you a lot about your customers. A clear analysis of channel shifts help you prioritise distribution.
3. Direct competitor analysis
Direct competitors offer similar products or services. For example, Coca-Cola and Pepsi, or Netflix and Hulu.
Conduct comprehensive research on where your business stands in the marketplace. You should know how key players are building a competitive edge and positioning their products or services. Then, find out how these companies size up against your business. These questions can help you get started.
- Which brands are growing and why?
- What is their unique value proposition?
- How are they marketing their offerings?
- What competitive advantage do you have over them?
Take IKEA, for example. In 2022, the company entered a new market, opening its first store in Chile. Before deciding to expand, IKEA did extensive research, most likely looking at competitors like Sodimac that already had 74 outlets in the country.
Understanding your competitors—from performance to product portfolios and new product development (NPD) to strategic direction—will help you identify growth opportunities.
4. Indirect competitor analysis
Indirect competitors target a similar audience but sell different products that satisfy the same needs. For example, Coca-Cola and Tropicana, or Netflix and Marvel Comics.
Analysing companies in tangential industries or categories can help you improve your offerings and reach new audiences.
Let’s use the travel industry to bring this to life. Airlines could look for opportunities to capture share from other modes of transport. The following questions start to uncover white space.
- How many people travel long-distance on buses and trains?
- What are the most in-demand routes?
- How much do travellers pay for their tickets?
- What is the occupancy rate of long-distance buses and trains?
- How can we persuade a current bus or train passenger to travel by plane instead?
Similarly, producers of chocolate spreads should research performance of jams, honey and peanut butter to understand their competitive positioning within the whole sweet spreads market.
Attributes of adjacent products can give you insight into market opportunities as well. In the packaged food sector, snack bars with protein have grown in popularity. Yoghurt brands—another product consumed as a snack—have also been launching high-protein varieties. You should keep up with NPD launches of your indirect competitors to inform your innovation plans.
Similar to a direct competitor analysis, unit prices of indirect competitors must be reviewed. In the edible oils market, for example, strong unit price growth of sunflower oil in recent years represented an opportunity for other types of edible oils to reevaluate pricing strategies and improve profit margins.
This type of analysis helps you tap into a wider customer base and reveals your competitive advantages against indirect competitors.
5. Complementary product and service analysis
You should monitor the performance of products and services that complement your business.
That means sweet spreads and butter brands should analyse market trends in bread and savoury biscuits. Another example: tomato sauce manufacturers monitoring performance of the pasta category.
This research helps you:
- Understand how your customers use your product in conjunction with others
- Detect new needs, opportunities and threats
- Develop new offerings or redesign your products
- Sell more effectively
Let’s say a company that produces fresh ground coffee pods wants to expand retail distribution. Sales data for pod coffee machines like Nespresso and Dolce Gusto can estimate market potential and demand.
Trends in complementary sectors should be considered when making investment decisions. Use this information to guide your product innovation strategy and gain market share.
6. Diversification analysis
If your company has reached a high level of maturity in your current market, a diversification analysis will help you understand how and where to grow. But you must have the right skills, resources and business models to successfully expand into new categories.
First, analyse any sectors that could benefit from your offering. Then, quantify the growth potential and understand the competitive landscape for each. Look at market sizes, shares, growth rates, unit prices, per capita sales and brand positioning. You’ll want to answer these important questions before making investment decisions.
- Do you have the capacity and tools to diversify?
- Do you have applicable resources in other industries and could gain economies of scale?
- Will diversifying dilute your brand reputation? Should you use a new brand in this new industry?
- Do the potential financial gains outweigh the risks?
British investment firm easyGroup uses a diversification strategy for long-term business growth. easyGroup first created easyJet, a low-cost air carrier, but extended its business model across other industries like FMCG, entertainment, e-commerce and technology. And the company even created competition for easyJet with the launch of easyBus and easyCar. This gives consumers various travel options while bringing in new revenue streams.
Diversification can bring in more customers, income security and consistent demand when executed successfully because your company transforms alongside consumer needs.
7. Foreign market analysis
If your company operates in a mature or saturated market, exploring other countries could help you achieve your financial goals.
Different countries grow at different paces due to disparities in economic development and local habits. The evolution of per capita consumption for a given product in each country can serve as an indicator of product lifecycle maturity. Understanding the size of the market and competitive landscape will help you estimate business potential.
For example, private labels have a high penetration rate in developed regions like Western Europe and North America. That could be an indication of growth potential for these types of brands in emerging markets, especially considering the lower price points of such products.
Local cultures, regulations and competitors must be considered before expanding into new markets. Helpful questions to ask are:
- How does your product need to adapt to local preferences or legislation?
- Who are your main competitors in this new country?
- Are there seasons or local festivities when your products could be in higher demand?
These questions must be addressed when planning international expansion.
8. Environmental analysis
Don’t forget to analyse external factors like international relations, scientific developments, regulations and environmental shifts that could impact your business. A PEST (political, economic, social, technological) analysis is useful here as well.
You’ll also want to evaluate possible economic scenarios to plan for potential disruptions or risks. Paying attention to these elements will help you assess market attractiveness and create winning strategies.
Generative AI is a recent example and has moved up the corporate agenda as of late. According to Euromonitor’s Voice of the Industry Survey 2023, 49% of professionals expect generative AI to improve customer experiences through data analysis that will create more intelligent shopping suggestions. Companies can embrace this new technology to facilitate business growth.
Scientific developments may also bring new opportunities. The world's largest market for processed meat—the US—approved cell-cultivated chicken for human consumption alongside Singapore, which could greatly disrupt the alternatives market.
Regulatory framework changes can impact your business, too. But those that stay ahead of these reforms can turn them into effective new ways of working. For example, Latin American governments require companies to include black labels on products with high amounts of calories, sodium, sugar and saturated fats. While this might have negative implications for some food and beverage brands, players that use it as an opportunity to invest in healthier alternatives could reap the rewards.
This type of analysis should be ongoing. External factors change every day. But this research will help you stay resilient amidst volatility.
Next steps
Using a mix of these eight analyses will help your business gain a holistic view of opportunities and create long-term strategic business plans.
Once you identify an opportunity, quickly develop a value proposition, plan the commercialisation chain and estimate costs, revenues, cash flows and financing needs.
Remember: not all market opportunities identified will succeed. That’s why companies invest in different types of research before moving into a new market and making changes to a product.
Now, are you ready to spot your next market opportunity? Connect with us to get the data and insights you need to conduct these analyses for your business strategy.
Editor’s note: This article was originally published in June 2017 and has been updated.