A market analysis essentially describes who your customers are and how your company is going to meet their needs. Some key components of a market analysis:
- Size of the market: Different than the size of your industry, the size of the market is how many potential customers you could have. You’ll want to consider everything from your total addressable market (TAM) to your share of the market (SOM).
- Demographics: These are details about the age, gender, educational level, occupation, and so on for your target market.
- Psychographics: Different than demographics, psychographics help explain your target market’s personality and lifestyle. This is where you’ll explain how your product fits into your customer’s lifestyle.
- Geographics: Where do you find your customers? Are they in a specific city or other location? Do your customers live in rural or urban areas?
- Behaviors: How do your customers shop for and buy products like yours?
- Trends: If your target market is changing their behavior, it’s important to note those trends and how that will impact your sales.
Source: Industry Research Versus Market Research from Bplans.