How to develop a crystal ball for your marketplace?
Jacob Powell
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If you don’t have a clear understanding of the market, you will continue to lose opportunities and spend capital irresponsibly.
In the following article, we are going to teach you how to understand your market and how you can build your own crystal ball, and do this in a systematic way.
What is a Market Snapshot?
Basically, it’s for you to get a solid pulse on the overall market your business operates in. The goal by the end is to create what’s called a market segmentation. Essentially a one-pager where you can literally look at the entire market based on behaviour, growth potential and areas you may want to focus on.
This block is vital for your overall vision. You may already have a vision, but a vision into the future without knowing where you are still makes you one lost pup. So let’s begin.
Steps to build your market snapsho
This is a snapshot of the overall market. If you do this right, any competitor can build a market snapshot and it should be similar to yours. It‘s the view of the market from 100,000 feet.
Step 1: What market/category does your business operate in?
First, you must articulate the category your business operates in. The category is the place where most of your competitors are.
Don’t segment too far. Your customers don’t think this way. We need to think this way in order to make strategic decisions in the future.
| Insert Category |
Step 2: How many people are in the category?
Actual figuring out your market potential is key here. You need to know where you are and how much potential there is.
Tools to use
- City economic forums
- Demographics
- Business repositories
- Townfolio
- Stats Canada
| Market |
| Size of Market |
Step 3: What is the value of the overall category?
How many dollars pass through this market annually, monthly, or weekly. You don’t need to have exact specifics, but a good general understanding is key.
You can use tools like:
- Stats canada
- Provincial demographics
- Small business reports
| Category |
| Size of Market |
| Market Value |
Step 3: Determine their value drivers.
Determine why people buy the products and services in this category through trial and error. Write down as many reasons as you can think of. This is the psychographics. Now go and test these value drivers. Ask current customers which value driver they feel stronger about. Testing is key here as you don’t want to make any assumptions.
Also, getting a large sample size will be key. Really it’s just to get an understanding of why people shop for your product/service.
Be sure to think of other drivers that perhaps your competitors fulfil. These will be important for future strategic decisions.
| Category | |
| Size of Market | |
| Market Value | |
| Value Drivers | |
| Value Driver #1 | |
| Value Driver #2 | |
| Value Driver #3 | |
| Value Driver #4 |
Step 4: Determine your market segments through trial and error.
There might be a few segments that shop for your products/services. You might have a segment that values a certain driver more. If you can distinguish between a group of people who prioritize a certain driver over another, you have a segment.
To get segments, you will need to conduct some trial and error. You might be able to find case studies online, but asking your customers for some feedback is always helpful. A great question to ask is “Mr Customer, out of these reasons for shopping me, which one speaks to you the best?”
Asking a number of customers this question will begin putting customers into groups or segments. You can then identify potential patterns among these customers.
| Category | |||
| Size of Market | |||
| Market Value | |||
| Segment 1 | Segment 2 | Segment 3 | |
| Value Drivers | |||
| Value Driver #1 | |||
| Value Driver #2 | |||
| Value Driver #3 | |||
| Value Driver #4 |
Step 5: Define the needs for each segment using a continuum.
Insert your value drivers on the left side of the page vertically, from top to bottom. Insert your segments on the right side of the page horizontally, going from left to right.
Review the value drivers and the segments. Based on your trial and error, insert if the value driver is high under that segment, medium or low.
| Category | |||
| Size of Market | |||
| Market Value | |||
| Segment 1 | Segment 2 | Segment 3 | |
| Value Drivers | |||
| Value Driver #1 | High | Medium | High |
| Value Driver #2 | Medium | High | Low |
| Value Driver #3 | Medium | Medium | High |
| Value Driver #4 | Medium | Low | Low |
Step 6: Insert market data (If you can, optional)
Insert 2 important data points if you can
- Insert what each segment is worth annually. How much money do they exhaust in your market?
- Insert your current market share of that worth.
If you can’t quite find that data, don’t worry. Look at it strategically. Next step.
| Category | |||
| Size of Market | |||
| Market Value | |||
| Segment 1 | Segment 2 | Segment 3 | |
| Segment Value | $10,000,000 | $50,000,000 | $25,000,000 |
| Market Share | 10% | 5% | 2% |
| Value Drivers | |||
| Value Driver #1 | High | Medium | High |
| Value Driver #2 | Medium | High | Low |
| Value Driver #3 | Medium | Medium | High |
| Value Driver #4 | Medium | Low | Low |
Step 7: Review segment attractiveness
Now evaluate these segments based upon 2 things
- Potential for growth or annual value
- Strategic alignment – does your firm have the ability to outcompete any other firm for this value driver with this market segment?
In a new row on the bottom insert your high, medium, and low identifiers.
| Category | |||
| Size of Market | |||
| Market Value | |||
| Segment 1 | Segment 2 | Segment 3 | |
| Segment Value | $10,000,000 | $50,000,000 | $25,000,000 |
| Market Share | 10% | 5% | 2% |
| Value Drivers | |||
| Value Driver #1 | High | Medium | High |
| Value Driver #2 | Medium | High | Low |
| Value Driver #3 | Medium | Medium | High |
| Value Driver #4 | Medium | Low | Low |
| Segment attractiveness | Low | High | Medium |
Step 8: Identify key competitors
Write out your key competitors and how they fulfil the value driver. High being, extremely well, medium being about average, and low being they don’t.
| Category | ||||||
| Size of Market | ||||||
| Market Value | ||||||
| Segment 1 | Segment 2 | Segment 3 | Competitor 1 | Competitor 2 | Competitor 3 | |
| Segment Value | $10,000,000 | $50,000,000 | $25,000,000 | |||
| Market Share | 10% | 5% | 2% | |||
| Value Drivers | ||||||
| Value Driver #1 | High | Medium | High | High | Medium | Low |
| Value Driver #2 | Medium | High | Low | Low | High | High |
| Value Driver #3 | Medium | Medium | High | Medium | Low | Medium |
| Value Driver #4 | Medium | Low | Low | Low | Medium | High |
| Segment Attractiveness | Low | High | Medium |
Step 9: Who do you serve best?
Determine which segment your company provides the most value compared to any competitor. Not necessarily the segment you will use, but having a good understanding of this will help to know your strengths and your competitor’s weaknesses.
This may also tell you you don’t have a segment. Your competition might be blowing you out of the water. This is again, great information, to then determine which attribute you want to improve and provide superior value to.
| Category | ||||||
| Size of Market | ||||||
| Market Value | ||||||
| Segment 1 | Segment 2 | Segment 3 | Competitor 1 | Competitor 2 | Competitor 3 | |
| Segment Value | $10,000,000 | $50,000,000 | $25,000,000 | |||
| Market Share | 10% | 5% | 2% | |||
| Value Drivers | ||||||
| Value Driver #1 | High | Medium | High | High | Medium | Low |
| Value Driver #2 | Medium | High | Low | Low | High | High |
| Value Driver #3 | Medium | Medium | High | Medium | Low | Medium |
| Value Driver #4 | Medium | Low | Low | Low | Medium | High |
| Segment Attractiveness | Low | High | Medium | |||
| Capability | Best | Medium | Worst |
Step 10: Select your strategically optimal segment
You don’t need to select the segment in which you are far better at. Perhaps you want to garner additional market share among a certain segment according to the driver you believe can improve and or optimize.
The next piece is to define the profile of this segment.
| Category | ||||||
| Size of Market | ||||||
| Market Value | ||||||
| Segment 1 | Segment 2 | Segment 3 | Competitor 1 | Competitor 2 | Competitor 3 | |
| Segment Value | $10,000,000 | $50,000,000 | $25,000,000 | |||
| Market Share | 10% | 5% | 2% | |||
| Value Drivers | ||||||
| Value Driver #1 | High | Medium | High | High | Medium | Low |
| Value Driver #2 | Medium | High | Low | Low | High | High |
| Value Driver #3 | Medium | Medium | High | Medium | Low | Medium |
| Value Driver #4 | Medium | Low | Low | Low | Medium | High |
| Segment Attractiveness | Low | High | Medium | |||
| Capability | High | Medium | Low | |||
| Strategically Optimal | Medium | High | Low |
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