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A company's approach to market analysis is likely to influence and even establish the path for sales, marketing, and production efforts at the business. To conduct a market analysis, a business can measure certain quantitative factors, including sales deriving from a specific customer segment, and other factors such as client response to price increases to establish a plan for improving operating results. In some cases, a business may need to introduce support from a software solution or an industry consultant to establish the very criteria that lead to an effective market analysis.
Market segmentation represents a technique that can be used to conduct a market analysis. This approach is an attempt to generate the most profitability out of a select group of consumers. It involves a series of activities, such as identifying a target audience, or a particular demographic for a product or set of items, marketing the products in the most efficient way possible, and remaining competitive on price and service throughout the process. The analysis aspect of this process is in collecting and using information surrounding the audience that is most suitable for a given product based on age, income, location, income and other factors, and directing resources towards reaching these target individuals.
Software tools are available in the marketing industry that support a user's attempt to conduct a market analysis. These programs apply certain calculations to quantify the value that customer groups bring to a firm. Based on the results, users might be able to direct resources and marketing efforts towards the most appropriate groups. It might also lead a firm to derive ways to better serve client segments that are lagging in terms of the percentage of revenues produced. Software solutions might use a database to collect certain pieces of data and then deliver a set of results from which users can conduct a market analysis.
In order to remain competitive in the marketplace, businesses must establish an appropriate pricing model for individual products. By assessing demand for a given product or service, a business may be able to conduct a market analysis that leads to the best approach to pricing. Software products or third-party consultants can help with this process, as well. It may involve establishing sales and revenue growth predictions in conjunction with evaluating historical data on customer retention to assess a pricing model that is both fair and likely to lead to the greatest profits for a business.
@saraq90 - My husband did a very small market analysis for if his product was priced right because it was a high return item as it was a niche product and the only one of its kind.
What he did was come up with the price that went with his projections that would create a profitable year and then targeted various buyers (dealer suppliers, dealers, individuals, and small companies).
He waited till he was at a trade show and then people who engaged him he would look for their reaction when he told them the price and based on their reaction he asked questions to find what was behind their reaction.
Obviously if enough people were okay with
the price he felt confident to price it there. But the most important key is just what you said - do not price it too low, because even if you talk to just a few people then they may remember that price when you sell it for higher.
I am trying to conduct a small market analysis of a product I plan on testing in the market, and I want to do just as the article described. I know how people feel about the product, but now I need to see how people feel about the price.
Can anybody give specifics on how they attempted this, since you can't really survey too many people discussing your prices as they can get an idea of how low you could price it?