GSM Lecture 5

Management > Global Strategic Management > Conditions > Macro/microenvironment > Porter's 5 Forces > 5 Forces explained > 5 Forces continued > Market analysis

Market analysis

For an effective corporate strategy, a good understanding of the market is necessary, most importantly the customers and their needs.

It is difficult to evaluate a market before it exists, but it is essential that the firm finds out as much as possible about its potential customers in order for the product or service to be tailored to their present and changing future needs.

Market segmental analysis enables a firm to group customers according to shared characteristics, such as sex, age, occupation, socio-economic status, race or lifestyle. From this a firm can work out how to market to their chosen target market.

Customer motivations. It is then necessary for a firm to discover what would motivate their target consumers to buy their products. Factors include sensitivity to price and quality, and the extent of brand loyalty. The main tool used to reveal customer motivations is market research, usually in the form of interviews and focus groups.

Unmet market need, according to Aaker (1992), can be defined as "a customer need that is not now being met by the existing product offerings". It is crucial for a firm to identify particular unmet needs as this will facilitate effective product development. the primary tool for this is market research in the form of interviews and focus groups.