Market analysis may take two distinct forms. In the
first, it is a method used by investors to look at the market and try to
determine whether it is going up or down, in order to make investment
decisions. In the second, it is a field used by marketers to analyze the target market of their clients and determine the best courses of action to
take to improve sales and profitability.
Market analysis as used by investors
involves looking at numerical data and attempting to discern patterns or
determine probable future movement based on that data. Investors using market
analysis will look at how prices within their specific sector are moving, how
the market as a whole is tending, and what individual events might affect the
prices of stocks and commodities they are trading in. When performing a market
analysis, an investor must also consider events such as announced mergers, profit predictions
for a coming quarter, and new technological discoveries. Some investors take a
primarily mathematical approach to market analysis, looking at reams of
historical market data and crunching every number at their disposal through
their own algorithms in an attempt to
predict the market's future path. Other investors take a more 'gut' approach to
market analysis, relying on news sources and rumors surrounding companies'
activities to sketch a rough picture of possible market tendency.
From a marketer's perspective,
marketing analysis consists of looking at every angle of a market to determine
policies that will help a company capture more of a market
share
and make the share they already control more profitable. The market analysis of
customer desire and satisfaction is a large part of marketing. Logit analysis, for example, surveys
consumers and looks at needs that have not yet been met to predict how an
untried product may perform in a fresh market. For companies innovating a new
market, this is a crucial part of market analysis, because producing too many
units of a product results in a massive loss, while producing too few results
in a loss of customer satisfaction and opens the door
to competitors.
Market analysis may also look at the share a company
owns of a particular market, with the aim of determining how to acquire a
larger share. Unlike logit analysis, this type of market analysis, known as market share analysis, is geared more towards entrenched product lines. The
goal of market share analysis is not to determine whether a customer would
purchase a product, but rather to examine customer
loyalty levels, brand perception, and the overall
competitive edge, and to come up with a strategy to draw market share away from
competitors and increase one's own share.
A number of software packages exist for many types of
market analysis, usually taking the form of spreadsheets with fields for a wide array of data which is then processed
and used to give a general analysis. Most marketing firms also include market
analysis as part of their core package, with different degrees of depth
available determining on the size and needs of the company.