Market Analysis: 4 Things Every Business Consultant Should Know

Business consulting — the business of boosting business for others — is no easy feat. You not only have to have a firm grasp on the ins and outs of commerce, various markets, and more, but you need to be adaptable, ready to change as quickly as industries change. In other words, pretty quick!

But while the businesses and markets shift and transform, there are skills and tools you use every day that should remain constant. And in that core knowledge base are a few things that should never be forgotten, such as producing an effective market analysis — consider this a primer for those thinking of learning the ropes of business consulting, and a refresher for those already in the game.

Market Analysis Is about More than Just Advice

There’s a difference between offering advice, and offering calculated, strategic guidance. Your role as a consultant isn’t to say, “Hey, maybe we should do this.” Your role is to investigate, to provide those findings which are relevant to your client’s interests, and to create an informed plan of action based on that data. What are your client’s strengths and weaknesses, and how will those affect it in a new market? Is that market growing? Is it changing unpredictably, or in a way that’s easier to forecast? What challenges might they face, and how might those challenges be overcome? Instead of overwhelming clients with data and “advice,” consider how to streamline that data, presenting only what is pertinent, and apply it strategically into concrete steps, not abstract suggestions. Keep in mind that this advice isn’t free, so be sure you have a reliable time tracker that clearly outlines your consulting process.

Market Potential ≠ Market Growth

No market stands still for long. When conducting market analysis, you’ll look at the current market size, and then consider its potential. This is especially vital when the client that you are consulting for is thinking about breaking into a market that is new for them (think about when Apple decided to jump into the cellphone game, and now imagine having a faction of their budget). You can’t just let them enter blindly — you have to determine first that it will, in fact, be a viable move. How large is the market now? How saturated is it? And how much potential is there for growth?

The issue here is that the potential for growth does not indicate how much a market will actually grow. Your growth potential is an abstract concept. If a product benefits a specific demographic, then its potential is, theoretically, everybody in that demographic. But this is a poor figure to use in an actual forecast; instead, market trends (increase or decrease in size, environmental factors, et cetera) should be used to reflect a more realistic sense of how a market may grow.

A Margin of Error Always Exists, and Should Be Clearly Defined

Any business consultant that offers a market analysis framed in terms of absolute certainty should rethink their approach, because the truth is the world is just a little too chaotic for that. And because when you present a strategy to your clientele as being 100 per cent bulletproof, if anything goes wrong you’ve just severely damaged your professional reputation. And as a consultant, that is something you can’t afford to sacrifice.

Making clients aware that a margin of error exists is good; planning and preparing for what to do in the event that things go left when you want them to go right is even better. It shows your clients that you are reliable and won’t let them down, further building trust.

Market Segmentation Matters

In the scramble to define the size and growth potential for a market, it’s easy to overlook the internal dynamics of that same market. Is everyone in your market in the same age cohort, or are they spread out? How many are men, and how many are women? Married or single? Age, gender identity, marital status, location, education level… these are just a few examples of potential ways to segment your market, and to adjust messaging accordingly. In some cases, you may segment between individuals, businesses, and other organizations. For example, people aged 18 to 45 might get their information primarily from the web, while those older might still be getting theirs from more traditional media sources. Knowing how many of each are in your market tells you where your clients should be putting their advertising dollars.

Market segmentation data can be collected by looking at the available data (there’s almost always a plethora of research to take advantage of), though you can also collect your own through surveys.