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What is a Business Market Study?

Carrieanne Larmore
Carrieanne Larmore

A business market study discusses current and projected market conditions, availability of supplies, and market demand for the business’s products and services. If the business market study reveals that the overall market conditions are healthy; that the business will have access to what it needs; and that there is adequate demand, then the business can confidently start its new endeavor. Failure to conduct a business market study can result in the business risking its investment in an unfavorable market.

Current and projected market conditions are generally the first part of a business market study. This information may not be publicly available for all industries, so hiring a marketing firm to complete this part may be required. While businesses can do their own market analysis and projections, it can be time consuming and costly if this is not its specialty. Current market conditions include if the market is growing, leveling or declining; if there are new technologies that can replace the market or industry; the competitive landscape; and the size of the market in comparison to consumer demand. Future market conditions include a long-term outlook of the market of up to 15 years, but focusing on the next five years produces results that are more accurate.

A business market study analyzes information to determine demand for a business's products and services.
A business market study analyzes information to determine demand for a business's products and services.

Availability of supplies is a part of the business market study, as the business needs to verify that it will be able to sustain itself and have access to what it needs at a reasonable price in order to be profitable. This section focuses on whether the business can secure raw materials, if options are available for renting or leasing machinery, and financing terms and conditions for purchasing or leasing equipment. It is also important for business market studies to include details about the distance of suppliers and costs of shipping, as these costs can significantly affect the business’s profitability.

Market research involves a study of the business environment in which a business operates.
Market research involves a study of the business environment in which a business operates.

Market demand for the business’s products or services is a key section in the business market study since this research determines the likelihood of those in its target market making a purchase. This part of the business market study also includes detailed information such as what influences customers in this market to make a purchase, alternative products available to customers, standard market payment terms, expected warranties and level of price elasticity. The business must understand exactly how the market works, what the competition is doing to entice customers, and if there is an opening for a new business to enter the market.

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    • A business market study analyzes information to determine demand for a business's products and services.
      By: Halfpoint
      A business market study analyzes information to determine demand for a business's products and services.
    • Market research involves a study of the business environment in which a business operates.
      By: Kirill Kedrinski
      Market research involves a study of the business environment in which a business operates.
    • Shipping costs can affect profitability.
      By: Kurhan
      Shipping costs can affect profitability.