6 Steps to Building a Surefire Marketing Strategy

As market competition stiffens and technology shapes the future, data and insights regarding market dynamics and market conditions are an essential weapon for any company looking for dominance on the competitive playing field. With this fact in mind, however, questions arise. Where can you gather good market data? And how do you organize it in a way to generate good insights? 

If you’re not sure, you’re in the right place—we’ve got answers! 

In this post, we’ll guide you through the main steps and techniques for market analysis to make sure you’re ready to embrace vital opportunities that can bring your company to the next level and help you get an edge on the competition.

What Is Market Analysis?

Market analysis is a process of assessing and identifying various internal and external factors and conditions in a given market, or within a specific market niche. Some key insights you might gain from market analysis are: 

• The size of the market and the distribution of market share
• The major trends in the market and potential market challenges
• The market demographics and customer behavior patterns
• The most important competitors and what strategies they use
• The most important opportunities, biggest risks, and goals you might pursue 

Why Do Businesses Need to Conduct Market Analysis?

Carrying out market research enables companies to stay informed on the latest market trends, their audience’s buying patterns, the introduction of new technologies, and the shifts in competitor activity. 

To be more specific, market analysis allows businesses to uncover:

• What products and services are already popular within your target market 
• Which competitors are employing the most efficient marketing mixes to offer these products and services
• Whether there are gaps or opportunities within your niche that will allow you to fine-tune your products and services 
• What other factors outside of competition and demand can impact your business’s success or failure 

On top of these benefits, market research provides a data-driven approach to creating a high-impact and realistic plan for better business and marketing decisions in the future. 

Market Analysis Techniques for Building a Solid Marketing Strategy 

Market Analysis Step #1: Defining Business Goals

There are many ways to arrive at business goals and better understand and clarify your company’s business objectives. Since we’re talking about data-driven approaches to market analysis, we’ve picked the Critical Success Factors analysis as a “non-classical” system for better defining your business goals. 

Critical Success Factors (CSF) Framework

In a nutshell, CSF analysis is a technique businesses can use to pinpoint areas that are essential in fulfilling the business’s mission and goals. Of course, CSF will vary from business to business, but some common patterns exist.

Generally, CSF sources fall into the following categories:

• Industry CSFs are factors related to the industry in which your business operates. Things like technological advancements or cutting-edge business models are a part of this CSF realm. For instance, to create the first supersonic aircraft, aviation engineers had to rely on design engineers who developed brand-new designs for the wing. Without the presence of these engineers in the industry and their ability to think outside the box, the plane would’ve never taken off. 

• Competitive strategy and industry position CSFs depend on competitor activity and internal organizational factors, such as management structure, customer demographics, company financials, and more. Each business will define its own success factors in relation to its competition and the industry as a whole. We will cover this part in the next steps.

• Temporary CSFs are one-time factors that often come about as the result of a sudden or temporary event—a global pandemic or a new market expansion that requires companies to recruit new staff, go digital, or rethink their approach with partners. 
• Environmental CSFs relate to the external environment to which your business belongs. A quick PEST (political, economic, social, and technological) factors analysis will be enough to determine your CSFs here.

Assessing all of these factors can help your company prioritize its efforts and track and measure progress towards fulfilling your strategic goals.

Additional techniques for defining business goals:

• A Business Model Canvas can provide you with an overview of your business—from key partners to cost structure—to consolidate improvement ideas for your business model.
• The good old SMART goals framework will help you to ensure you are setting the right criteria to improve the likelihood of achieving your business goals.

Market Analysis Step #2: Assessing Market Size

Market size can mean different things in different contexts, but generally it’s the number of people or companies who can be counted as potential purchasers of a given product or service. Market size evaluation can give you an estimate on audience size, potential sales volume, and revenue streams.

There are a few measurement methods out there, but we will outline two different approaches that you can take depending on your budget, business size, and industry specifics.

Industry or Government Reports

Information, data, and measurement firms like Gartner, Nielsen, and Statista are invaluable sources of in-depth information about the market. While data from these sources often come with a cost, they also provide lots of free information that can be useful in your market research. 

On the downside, data from these firms, especially data provided at no cost, is widely accessible—often, it’s only a matter of a download. This means competitors may already be aware of the information included in these kinds of reports. 

Also, the reports created by these firms require a lot of effort and time to create, which causes a delay in the period between data collection and insight generation and access for the general public. Markets move fast, so by the time you get access to a given report, the market may have already shifted in a different direction. Because of this, pairing reports with real-time data is often best. 

Semrush .Trends 

Semrush’s affordable competitive intelligence solution can provide great real-time data for any market, including insights into market size and market dynamics. The latter is important because, as mentioned, industry reports are often released with a time lag, and timing is essential for spotting industry fluctuations and the arrival of game-changing companies.

The Market Explorer tool can help the customer estimate the overall market size for a particular niche based on online traffic trends and organic keyword data. You can begin by entering competitors into the tool, or you can select an entire industry, which is especially useful for assessing the market broadly. 

Let’s take a look at the Beauty & Cosmetics industry in the U.S. to explore the data on market size and think about how it might be useful. 

In the Market Summary section at the top of the Overview report, we find a variety of data points to help us better understand our market. The Market Competition section to the left reveals how the market share is distributed among various market players. 

The Beauty & Cosmetics market has low consolidation, meaning many small players own a small portion of the market share. This typically means it will be easier for new players to enter the market. We can also see the top three players and their market share, but we’ll explore this metric below in the section on analyzing competitors. 

The Market Size graph reveals the Total Addressable Market (TAM) and Serviceable Available Market (SAM). These metrics reflect the amount of demand within the Beauty & Cosmetics market. 

• The Total Addressable Market (TAM) represents the total demand of all potential customers, including those who aren’t ready, willing, or able to purchase a product. 
• The Serviceable Available Market (SAM) is your target audience. This is the amount of demand from customers you could actually reach if you owned all of the market. 

It’s important to remember that the numbers here aren’t the number of customers. Makeup and cosmetics run out, so this market’s customers may buy products over and over again. This means one customer can generate multiple units of demand. 

For the Beauty & Cosmetics market, the TAM is 2.1B and the SAM is 1.1B. With a large TAM, and a SAM that’s only half the size, the market looks healthy and still has room to grow. Also, taking a peek at the market traffic metric above the Market Size graph, it looks like it grew by 8% across the previous month, which is another good sign. 

Market Analysis Step #3: Identifying Market Trends and Growth Rate

You can’t stop once you identify the market size, as this metric is never constant. Market growth and market trends are essential factors to regularly revisit so you can take timely action and fine-tune your business and marketing strategies accordingly.

What Are Market Growth Trends?

Market growth refers to an increase in market size or overall sales within a given niche over a certain period of time. 

To estimate market growth, you can look at indicators such as the year-on-year (YoY) industry trend, shifts in the number of customers, and the number of complete purchases per client (internal or industry report data only).

Let’s look at an example from the Apparel & Fashion industry using Market Explorer. Here’s the Market Summary for May 2022: 

Now, compare it to the Market Summary from May 2021: 

In May 2022, the industry had a Total Addressable Market of 4.5B. But if we look at historical data, we can see in May of 2021 the Total addressable market was 2.3B. As shown, the market nearly doubled in a year’s time! 

You need to consider market growth trends throughout the market analysis process to get an understanding of how fast the market is growing, what its growth potential is, and whether it is generally on the rise or in decline. 

Now, we’d like to introduce a widely employed technique that can help you assemble all the data to gather actionable insights for your business: The BCG Matrix. 

Boston Consulting Group Matrix and the Market Explorer Tool

Developed back in 1968, the BCG matrix is a framework that helps large corporations manage their portfolio and prioritize budgets and operations across multiple business units based on market growth and market share numbers. 

However, the BCG matrix can be employed by any business, large or small, as its logic can be applied to prioritizing customer segments, products, services, marketing channels, markets (GEO), and brands.

Let’s return to the Semrush Market Explorer tool to gather all the necessary market data to build up a BCG matrix. For this example, let’s say Elon Musk wants to see if he should prioritize Tesla over SpaceX, SolarCity, or OpenAI. 

Side note: Of course, with companies like Tesla who are publicly listed on stock markets, we can rely on their annual reports to do the measurements. As for companies like OpenAI, we can only rely on external tools that gather various market data to spot and interpret some trends. In Market Explorer’s case, traffic growth numbers can potentially indicate a rising interest in the product or ​

1. Collect market growth and market share data

Initially, you’ll need to collect data on your market share and the growth rate of your products, business units, customer segments, and any other important factors. With the help of Market Explorer, we can see that among Musk’s businesses, Tesla has the highest traffic share of all of the businesses examined, though growth has been slow. 

Open AI, on the other hand, has seen strong growth this past year. And when we compare Open AI to other companies in the artificial intelligence space, we see that their growth has moved steadily upward, while the market has remained relatively stable. 

Running Tesla, SolarCity, Starlink, and and SpaceX through the tool to get a similar analysis, we discovered that:

• Within the electric vehicle market, Tesla’s traffic increased by 20% YoY, while it takes the top spot with regard to traffic share worldwide. 
• SolarCity (now a part of Tesla—Solar Panels) has seen a double decline in traffic rate, yet it still has a large market share, being the second most visited solar panel site.
• Starlink exists within a fractured market, and though it stands in the third spot in terms of market share, it only holds 6% of the total market. Its growth across the last year has been small. 
• SpaceX is in a similar position in terms of the fractured market, but it holds a relatively large market share, and the company’s growth has exceeded that of the market in 2022. 

2. Apply the data to the BCG matrix and prioritize your business and marketing efforts accordingly

The BCG matrix’s horizontal line represents the market share, and its vertical line stands for the growth rate. What we should do now is place each of our research items within the designated box, reflecting how they rank in terms of market share and growth.

BCG’s definition for the terms within the matrix are:

• Pets—items with both a low growth rate and low market share
• Question marks—items with a small market share but with high growth rates
• Stars—items with high market share and a fast rate of growth
• Cash cows—items with high market shares, but lower growth expectations

It won’t always be immediately obvious which box the items you’re considering should fall. Yet, when you look at each of them in relation to the other, you can see that Tesla is Musk’s Cash cow, SpaceX is a Star, OpenAI falls under the Question mark, and SolarCity can be considered a Pet.

Additional Techniques for Spotting Market Trends and Growth Rate:

• McKinsey’s Three Horizons of Growth model helps companies manage their current performance while keeping an eye open for innovation and growth opportunities.
• Airtable’s Growth Experiments template offers a structure for running growth experiments that can potentially scale your business.

Market Analysis Step #4: Getting an In-depth Look at Competitors

To get an edge over your competitors, you need to have an understanding of your competitive landscape to find the best strategy to position your brand in the market. 

Porter’s Five Forces analysis offers a strong foundation for analyzing not only competitors, but also factors that affect competition—from new entrants to existing rivals to additional products and services you might not have considered. 

Porter’s Five Forces Analysis

Porter’s five forces analysis allows you to evaluate opportunity and risk based on five essential industry factors:

• The intensity of the competitive landscape
• Level of supplier power
• Buyer’s entry and exit costs
• The threat of substitute products
• Access to the market for new entrants

The Intensity of the Competitive Landscape

The first thing to look into is how intense the competition is within your niche. The key insights you should gather at this stage are:

• The competition level within the marketplace
• Key competitors
• A clear understanding of your competitive strategy

To explore the competitor aspect of the market analysis, we’ll take a data-driven approach, and use both Market Explorer and Traffic Analytics to view the competitive landscape in the food delivery space. Using Doordash as our focus, let’s look at their top 5 competitors. 

The Market Summary in Market Explorer’s Overview report shows the market is moderately consolidated, meaning a small number of players own a majority of the market. These larger players—like Doordash, which owns 42% of the market—can be difficult to compete with. 

Clicking the ‘view details’ button brings you to the Domains vs. Market Dynamics graph, found further down in the Overview report. 

Here, we see Doordash and their top 5 competitors. Notice that the closest competitor is Domino’s. Despite their proximity to Doordash, however, Domino’s market share is close to half of what Doordash owns. In the third spot, Ubereats owns only a third the market share of Doordash. 

Let’s dig a little deeper into these two competitors using Traffic Analytics. Here we’ll consider the Traffic Journey report. With all of the reports in Traffic Analytics we can learn a great deal about our competitors strategies, strengths, and weaknesses. We will just offer one example here. 

Let’s start with the Traffic Journey report, which lets us see where competitor traffic comes from and how they shape up against one another. 

Looking at the Traffic Sources graph, we see that Doordash is the clear winner when it comes to direct traffic, with Domino’s next in line. Looking at Referral traffic, however, Uber Eats comes out on top with 700k more visits to the site in August 2022 than Doordash.

In this regard, it appears Uber Eats has a stronger referral strategy than the other two companies, which may be of interest if we’re looking to examine competitor strengths. But we can go one step further. 

Using the Traffic Journey Details graph, we can uncover what sites send traffic to our chosen websites. This data can help us better understand Uber Eats’ strategy. 

Here’s a selection of websites from the report. We can view some of the sources sending traffic to Ubereats.com as well as to other sites and we might look more closely at businesses like the LA Times or Starbucks to better understand their relationship with Uber Eats. 

This is just one example of the type of data we might want to dig up when using the Porter’s Five Forces Model. Between Market Explorer and Traffic Analytics, Semrush can help you dig up a ton of competitive intelligence that will be useful when looking at competitors.

Level of Supplier Power

Online or offline, businesses are heavily reliant on other businesses in their operations. This factor of Porter’s Five Forces examines the power a supplier might hold over your business.

Your procurement, security, and other departments will have information about the following factors you should consider when it comes to assessing the threat of over dependence on suppliers:

• The number of suppliers within the market (from your anti-DDoS software to steel mills)
• The range of existing suppliers—the more backup suppliers you manage to secure, the more bargaining power your business will have
• The costs of switching to other suppliers—from rewiring all the hardware to establishing new supply chains, you should consider all the factors and expenditures

Buyer’s Entry and Exit Costs

Your customers can also have some bargaining power over your business. While this may seem like a customer-centric factor, you should be looking at your competitive landscape once again to determine the costs of the buyer’s entry and exit. 

The overall audience size, the number of competitors, their pricing, and quality factors will matter when you are shaping or reshaping your business and marketing strategies.

This post will help you find the right tactics that enable you to:

• Analyze your competitors’ overall online performance
• Get a glimpse at their online advertising strategies
• Pinpoint your rivals’ SEO, content and PR strategies
• Reveal their activity across social media channels

The Threat of Substitute Products

On top of keeping an eye on competitors and their marketing strategies, it’s crucial to remain aware of products or services your rivals offer that may be substitutes to your products or services. An indirect competitor might be impacting your profitability as your customers are switching to a different product or service. 

Normally, a substitute product constitutes a threat if:

• It comes at a lower price but with a similar function or quality
• It offers a similar price but is of higher quality or more functionality 

With this portion of the Porter’s Five Forces Model, Semrush can again provide a ton of useful information. Let’s look at the Audience Insights and Top Pages reports. 

Beginning with Audience Insights, we can use the Audience Overlap widget to see how audiences overlap among players. This can be useful for seeing how your audience engages with competitors, and may substitute with their products. It can also help you identify opportunities to move in on your competitors’ audiences. 

Sticking with food delivery, we can see that Domino’s and Doordash have the largest overlap. 13.7M customers visited both sites in the month of August. For those customers, either company could be a substitute when it comes to food delivery. 

When looking at Uber Eats represented by the orange circle, they also have a large overlap with Doordash, though a much smaller overlap with Domino’s. This could represent an opportunity. If they were able to offer a service that Domino’s offers but Doordash doesn’t, they might be able to seize some of Domino’s audience with a replacement service. 

The Top Pages report can also provide useful information about competitor products and promos. The report offers a variety of filters to gather the most relevant information. Here, we set the tool to show new pages on the Domino’s site, and pages with the word “coupon” in the URL. 

You can also filter by traffic type, which can help you identify top promos. Click on the “Paid” tab to the right of the report results to bring the pages with the highest paid traffic to the top. 

Exploring competitor offerings through the use of various tools across the .Trends solution can provide you with the data you need to complete the substitute products analysis for your Porter’s Five Forces Model. 

Access to the Market for New Entrants

This factor considers how easy or difficult it is to enter the market for up and coming brands. While you may be all set with your market analysis, this factor requires ongoing market monitoring.

Again, the Market Consolidation measure in the Market Overview provided by Market Explorer can help you understand the lay of the land. Markets where a small number of larger players own the majority of the market share will be more difficult to enter. 

Get familiar with the consolidation level within your market and keep an eye on shifts in market share among the most important players. As markets evolve, you may be able to develop an entrance strategy that will help you break through at the right opportunity. Try this article and checklist to get ready. 

Additional Technique for Analyzing the Competitive Landscape:

• Competitive Perceptual Mapping can help you to assess how customers perceive a certain product or service and evaluate the strengths/weaknesses of comparing brands within a given niche.

Market Analysis Step #5: Identifying the Right Demographic

Defining the right customer has to start with such basics as geographic, demographic, psychographic and other characteristics. Essentially, all of the factors involved in creating your buyer personas. 

Once you have buyer personas defined, you can start segmenting your target audience based on similar needs or demand features to provide tailored and more targeted customer experiences.

Buyer Persona Definition

Buyer persona research is a thorough process that helps you understand who your target customers are and how to reach them. Essentially, your buyer personas are fictional characters with the following features: 

This comprehensive post will walk you through the entire buyer persona creation process, uncover where you can gather your data from, and provide a template that you can use to fill in all the details.

Hooley’s Segment Attractiveness and Resource Strength Framework 

Now, once you’ve identified all imaginable buyer personas, it’s time to break down your customers into separate segments to tailor more relevant messaging, solve different problems, and offer different product features.

You can divide your customers however you’d like, but here are the key customer segmentation criteria widely used across various companies:

• Geographic: country/region, urban/rural
• Demographic: age, religion, gender, socio-economic status, education, and family size
• Psychographic: lifestyle, interests, hobbies, opinions, influencers
• Behavioral: buyer journey stage, brand loyalty traits, price sensitivity, purchasing style, usage rate
• Media: social media, Television, newspapers, or search engine preferences
• Benefit: customer service, quality, and other specific expectations 

Using Hooley’s Segment Attractiveness and Resource Strength framework, you can assess the appeal of each market segment before setting your priorities to address budget, employee resources, product, or other limiting factors.

Create a matrix similar to the BCG framework used earlier—with market segment appeal reflected in the vertical line, and the horizontal line reflecting your resource capabilities.

All that’s left for you to determine is which customer segments fit within any of the boxes of your matrix.

Market Explorer and Traffic Analytics offers demographic information that can help you better understand any market’s audience characteristics. For example, here’s a look at the Demographics report in Market Explorer. 

With this report, we can learn a lot about our audience in terms of age, gender, media preferences, and interests. All of these factors can influence the way we reach, communicate with, and meet our target audiences desires and needs. 

Market Analysis Step #6: Accounting for Internal and External Factors

The steps you previously took to carry out a market analysis should have uncovered a wide range of insights you need to consider before finalizing your business, sales, and marketing plans and strategies. 

The very last step is to gather your findings and organize them to assess how you can:

• Capitalize on your advantages
• Eliminate your weaknesses
• Seize market opportunities
• Minimize the impact of any threats

One of the best ways to get there is by conducting a SWOT analysis.

SWOT Analysis

SWOT analysis is probably the most popular strategic analysis framework, and for good reason. It’s a simple and powerful way to consider your business’s strengths and weaknesses, while also staying alert to opportunities and threats.

The upside of SWOT analysis is that it gives you an overview of both internal and external factors that can affect your business and marketing models. 

To complete a SWOT analysis, you simply make four quadrants and label them Strengths, Weaknesses, Opportunities, and Threats. 

• Within the Strengths, list business characteristics that give you a competitive advantage.
• Under Weaknesses, outline features that put you in a weaker position compared to your competitors.
• Fill the Opportunities box with data-driven insights that your business can embrace to increase sales, boost profitability, and expand market share.
• Add Threats, including both internal and external elements that can potentially negatively affect your business—from the arrival of industry game-changers to changing Government regulations.

While SWOT analysis is fairly straightforward, tools like Miro allow you to create a comprehensive illustration of your insights that you can share with the entire staff and edit with the key stakeholders.

Additional Technique for Assessing Risks and Opportunities:

• Scenario planning can help you to build different plausible options of what can go wrong or right for your business as well as identify triggers that can point towards which scenario is more likely to come up.

Final Words

Gaining sufficient market understanding is a prerequisite for business growth and success. Without deep insight into market characteristics and nuances, your business ideas and expectations will have little value. 

Your business and marketing plan should be based on market research, otherwise, you might end up like the Detroit Three automakers, who failed to account for scenarios other than low fuel prices and traditional customer preferences. With exploding fuel prices and a shift in customer demand towards smaller vehicles, the Detroit Three’s market failure paved the way towards the fall of the Motor City. And, according to Forbes, it’s all because they didn’t run through all the scenarios you see while carrying out market research.

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