In order to improve its position within the market, the manufacturer must know which factors contribute most to the promotion of goods. This is where market analysis comes to the rescue. Market conditions are not just the ratio of supply and demand, as many people think. This is a fairly complex mechanism, subject to constant vibrations that displace both old and new players. We will tell about how to carry out an analysis vital for any enterprise.
What is market analysis?
Market conditions - a situation established in the market at a certain point in time under the influence of the main economic forces: supply and demand. Depending on supply and demand, the movement of goods takes place, the market price for the products is established, producers appear or disappear, the company's capitalization rises or falls, and overall market fluctuations occur.
Market analysis is an analysis that is designed to assess the situation on the market of goods or services to establish an enterprise strategy.
Why is it needed?
Analyzing the current situation on the market, the company is able to:
- identify your position in the industry;
- identify competitors and choose a method of dealing with them;
- find out consumer preferences and satisfy the demand for a tor or service;
- simulate the prospects of the product;
- identify areas of activity and translate them into a strategic plan.
Market analysis must be performed not only when the company already has its own niche, but also when the new player only wants to get it. In this case, the analysis of the situation allows us to determine the size of the barriers to entry into the industry, the degree of market congestion, the prospects for this industry, etc.
goal
The purpose of this analysis is to establish the current behavior of supply and demand and the degree of influence of economic objects on market behavior, for making correct management decisions that contribute to making more profit at lower production costs. In all this lies the whole essence of the analysis of market conditions.
Tasks
Just like any other study, this type of analysis involves the formulation of certain tasks. In this case, the tasks are:
- Choose the most complete and latest information about competitors: identify the level of demand for a competitive product, draw parallels between the pricing of your own company and a competitor, study suppliers and their prices for raw materials, determine the threat of substitutes, etc.
- All indicators must be systematized.
- Identify all factors that have an impact on market behavior, establish their strength, relationship and direction of their action.
- Establish the degree of activity of all factors and their interaction to compile forecast production of the company.
Factors affecting market conditions
The market conditions and market analysis can be influenced by those factors that, to one degree or another, influence the change in the scale of production, pricing, issue of securities, etc.
These include:
- the degree of market balance (demand = supply, in perfect proportion);
- the degree of deviation of the main characteristics of the market;
- current, probable or deforming prospects that are forming in the market;
- movement of finished products and goods;
- probability of loss of capital under the current conditions;
- number of intra-industry competitors;
- development of an alternative commodity unit.
Research methods
To conduct a full-scale analysis of market conditions, statistics come to the rescue. Statistical methods can be divided into 6 main groups. Thus, market analysis methods include:
- Statistical observation - tracking the operation in the market in real time for data collection, the volume of which would allow for a complete analysis.
- Selection and grouping of information received.
- Descriptive analysis, which includes compiling a frequency table, calculating characteristics, or graphically presenting information.
- Reduction of the results to a single conclusion.
- Link analysis - is used to determine the degree of interconnection between the objects of statistical research (volumes of products supplied to the market and their quality).
- Prediction of market behavior. It gives an idea of how supply and demand for a particular product or for the industry as a whole will behave.
Additional methods
If the target consumer of the manufactured goods is the population, then resort to additional methods of analysis of the situation. The market situation in this case is becoming more global in nature, and additional methods are used for methods for assessing it, including:
- game theory;
- building models that can mimic the market;
- analysis of factors with indirect effects, etc.
An indicative market analysis can be done by anyone. However, to build an accurate forecast, it is necessary to attract specialists who are fluent in all market research methods.
Investments
Analysis of investment market conditions is determined by the constant variability of supply and demand. The cyclical and volatility of the investment market actualizes the constant monitoring of market conditions: the main trends and the forecast of demand for securities. Any investor should have a complete set of information about the current market situation, be able to properly adapt to the current state of affairs, give a correct forecast of market behavior in order to skillfully exist in the market economy. Without the ability to determine the degree of development and an active investment market, it is impossible to make right and competent decisions that will have clear economic feasibility. Only such knowledge lays the foundation for a successful investment strategy.
Investor shortcomings in assessing the investment situation in the market can lead to negative consequences, such as a decrease in income, loss of equity and invested capital.
The analysis of the investment market involves the use of methods such as real-time market tracking, research of the data and forecasting the supply-demand ratio.
Monitoring the market situation in real time involves monitoring changes in the system of indicators that characterize supply and demand, current prices and the degree of competitive relationships. Particular attention is paid to those areas of the market where the construction of investment activity is supposed, or where it is already actively operating. The results of the study are displayed graphically or presented in any other form that can give market agents forecast data on the behavior of the securities market.
Analysis of the current situation on the securities market involves determining the trends of its change, based on the data that were obtained as a result of a study of previous periods. The analysis of the situation, first of all, begins with the calculation of complex indicators that characterize the market behavior obtained as a result of monitoring. Then, the prerequisites for the deformation of the current market cycle are identified.
The analysis of the situation that existed at the time of the study and its subsequent forecasting serves as an important element in choosing the most important areas of the strategy in the field of investment business and forming an investment portfolio. The main goal pursued by the forecast is to determine the laws of development of factors that in the long term form the market situation. The forecast is made based on the time period, based on certain methods and calculations.
Services
Analysis of the market for services is carried out according to the same principle as in the case of the investment market. Any entrepreneur, depending on the results of the study, must make a forecast according to which he will build his pricing policy.
The forecast can be made for the long, medium - and short-term periods. Long-term forecasting is associated with the development of a strategic plan for the distribution of its services in the market, which involves global capital investment for large projects. A distinctive feature of long-term forecasting is that its development takes place for a period of three years.
A medium-term forecast is made to adjust the core business of the enterprise. A service provider company determines which services are subject to severe market fluctuations and which remain unchanged over the next two to three years.
Short-term forecasting of the market conditions for services involves the introduction of short-term financial instruments that will help the company occupy or at least not lose its niche in the coming year. Such forecasting is the most accurate, flexible, and on its basis the enterprise is able to quietly maneuver in short-term planning.
