The activity of gathering and examining information about particular markets is called Market Analysis. It is a thorough study and investigation of the market. It is very important for sales forecasting or sales analysis.
Six Major Dimensions or Factors are considered for Market Analysis
Market Analysis – Dimensions
1. Current Market Size
Understanding the current or actual market size is the first step of the market analysis of a product. It is defined on the basis of total sales. Various sources such as government, sales tax department, industry reports, trade association reports, etc. can be used to gather information about the market size.
2. Market Potential
Potential market size refers to the possible market size, whereas the current market size refers to the actual market size. The existence of unexploited/unexplored segments of the market is indicated by the potential market.
3. Market Growth
The current size of the market is important, but the growth of the market is also either equally or more important.\ Although the large size of a market guarantees present sales, neither market share nor sales will increase without market growth.
Hence both growth and size are important for market attractiveness.
4. Market Competition
- For the market structure of a product, the level of market competition is very crucial.
- Companies must seek to understand and assess the answers to the following questions:
- What are the competitors’ strategies, objectives, and level of application?
- Does the competition have a cost advantage or disadvantage? What is their cost structure?
- Who are the most successful and unsuccessful competitors, and why?
- What are the competitors’ strengths and weaknesses?
- Answering the above questions will give companies clarity about market competition.
5. Market Profitability
Profitability is affected by competition. The more the competition, the more difficult it is to earn a profit.
The factors that influence profitability
- The level of competition in the market.
- Cost structure or product cost.
- The product’s selling price.
6. New Trends and Developments
- New trends and developments are a crucial aspect of market analysis.
- They help understand the future direction and course of the market.
- A company’s strategy, investment in the market, and sales planning are affected by this.
- For example, the trend of smaller packs in FMCG markets increases sales by attracting more customers and inducing frequent buying.
Market Analysis Example – Global Electric Car Market
Current Market Size & Market Growth
- There was a 65% rise in EV sales from 2017 to 2018.
- But the rate of increase in units sold decreased in the year 2019 to merely 9%, which amounted to 2.3 million from 2.1 million.
- If not completely stopped, the rate of expansion has at least paused temporarily.
- Europe is the country with the maximum growth in EVs.
- The global EV market penetration rose to .3% for an overall share of 2.5% between the year 2018 and 2019, even though there was an overall dip in sales.
- The EV penetration, in addition to the growth in 2020s first quarter, was 2.8%
New Trends and Developments
Switching regional dynamics with the United States and China and losing to Europe is suggested by main EV markets.
- In 2019, 1.2 million units were sold, and EV sales in China were constant. It accounted for a 3% increase when compared to the preceding year.
- In 2019, there was a 12% drop in EV sales in the United States. A mere 320,000 units were sold.
- In the same year, 590,000 units were sold in Europe, which accounted for a 44% rise.
- All through the first quarter of 2020, these trends resumed.
- As compared to the previous quarter, sales dipped by 33% in the US and 57% in China.
- At the same time, the EV market in Europe rose to 25%
Example – Electric Car Market
- New Trends and Developments – The State of EV Charging
- 2019 witnessed around 2.1 million chargers more than in 2018, amounting to 7.3 million chargers.
- Four countries, namely Germany, the UK, France, and the Netherlands, have 76% of Europe’s total charging points.
- Fast chargers are getting more popular day by day.
- 82% of the world’s total 598,000 fast chargers were in China by 2019.
- Most of Europe’s and the United States’ publically accessible chargers installed in 2019 were slow chargers. But this is going to change soon as many ultra-fast charging projects have already been announced in Europe.
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