Private Equity Market Analysis: Growth Strategy for Businesses

PE Firms
Value Creation

Private equity market analysis is crucial to inform business decisions about essential activities such as marketing strategies and product development. It involves gathering and analyzing data about a specific market, including its size, potential and competition.

Before any acquisition, BluWave’s co-head of research and operations, Scott Bellinger, emphasizes the importance of this exercise.

“No matter how strong a target company’s product or service is, if the market is shrinking, then it doesn’t matter,” he says. “First and foremost you want to make sure you get the market right and make sure it’s stable and growing and you’re able to find a target within a strong product or service in a strong market.”

With that in mind, let’s take an even more detailed look at a market analysis.

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What is Market Analysis?

Market analysis is the process of gathering and analyzing data about a specific market, including its size, potential and competition. The purpose of market analysis is to help businesses make informed decisions about marketing strategies, product development, and other business activities.

READ MORE: What is Commercial Due Diligence?

Bellinger identifies the following as the key, high-level components to investigate:

  1. Target Audience: Pinpointing the particular group of consumers or companies that the product or service is meant to cater to.
  2. Market Size (Volume): Determining the overall scale of the market, which includes the number of possible consumers and the total amount of revenue produced.
  3. Market Trends (Patterns): Examining patterns and shifts in the market, such as transformations in consumer behavior, emergent technologies, and evolving regulations.
  4. Total Adjustable Market: What is the maximum amount of potential clients or customers that exist? Knowing this helps businesses define the opportunity and effort for a new or existing venture.
  5. Competitive Landscape (Assessment): Identifying and evaluating the strengths and weaknesses of rivals, such as their products, pricing tactics, marketing approaches, and customer base.
  6. Market Segregation: Segmenting the market into smaller subgroups based on variables such as age, income, location or behavior.
  7. Voice of the Customer: Grasping the requirements and desires of customers and how they may be changing with time.
  8. Entry Obstacles: Recognizing potential impediments to entry for new competitors, such as high startup costs, regulatory challenges or established brand loyalty.
  9. Distribution Strategies: Analyzing the various channels by which the product or service can be distributed to customers, such as through online sales, retail stores, or collaborations with other businesses.

Why is Market Analysis Important?

As Bellinger mentioned before, a business with a shrinking market doesn’t make for a strong acquisition opportunity.

“You could buy the best newspaper in the world, but if no one’s reading newspapers, it doesn’t matter,” he says. “The same goes for middle market companies.”

Conducting a market analysis is critical for businesses for several reasons:

  1. Spotting Opportunities: Through market analysis, businesses can identify fresh prospects for expansion, such as overlooked market segments or emerging trends that can be capitalized on.
  2. Competitive Edge: By analyzing the competition, businesses can gain a more comprehensive understanding of their strengths and weaknesses and devise tactics to differentiate themselves in the market.
  3. Formulating Marketing Tactics: Market analysis helps businesses formulate effective marketing tactics by identifying customer needs and desires, and understanding the most effective ways to reach and engage them.
  4. Risk Management: By understanding market trends and potential obstacles to entry, businesses can minimize risks and make well-informed decisions about product development and expansion.
  5. Decision Support: Market analysis provides businesses with valuable data and insights that can aid decision-making across the organization, from sales and marketing to product development and financial planning.

How to Conduct a Market Analysis

Conducting a comprehensive market analysis involves several steps:

  1. Clarify the Objective: Determine the specific objectives of the market analysis, such as discovering new market prospects or analyzing the competition.
  2. Gather Information: Collect data and information from various sources, such as customer surveys, market research reports, and competitor analysis.
  3. Evaluate Data: Evaluate the data to identify trends, patterns, and insights that can be used to make informed business decisions.
  4. Create Strategies: Utilize the insights obtained from the market analysis to devise effective marketing and business strategies that will aid the company in achieving its objectives.

READ MORE: Centralized Data Management: Business Intelligence & Analytics

Types of Market Analysis

There are several types of market analysis, each of which serves a specific purpose:

  1. Industry Analysis: Analyzes the overall industry trends, including market size, growth potential, and regulatory environment.
  2. Competitive Assessment: Evaluates the strengths and weaknesses of competitors, including their products, pricing strategies, marketing tactics, and customer base.
  3. Customer Evaluation: Analyzes the needs and preferences of customers, including demographic data, buying habits, and customer satisfaction.
  4. Market Segmentation: Divides the market into smaller sub-groups based on characteristics such as age, income, location, or behavior.
  5. Product Appraisal: Assesses the features, benefits, and pricing of the company’s products or services compared to competitors.
  6. Distribution Study: Examines the various ways in which the product or service can be distributed to customers, such as through online sales, retail stores or partnerships with other businesses.

Each type of market analysis provides a unique perspective on the market and can help businesses identify opportunities.

Tools for Market Analysis

There are several tools and resources that businesses can use to conduct a market analysis, including:

  1. Market Research Reports: These reports provide in-depth analysis of specific industries, markets, and competitors, and can be purchased from market research firms.
  2. Surveys: Surveys can be used to collect data from customers and potential customers, including information about their needs, preferences and behaviors.
  3. Focus Groups: Focus groups are small groups of people who are brought together to discuss a particular topic, such as a new product or service.
  4. Online Analytics: Online analytics tools can be used to analyze website traffic and customer behavior, providing valuable insights into customer preferences and behaviors.
  5. Social Media Monitoring: Social media monitoring tools can be used to track mentions of the company or its products on social media, providing insights into customer sentiment and feedback.

READ MORE: What is Product Positioning? Framework, Strategy for Marketing

Market analysis is a critical tool for businesses to gain insights into their target market, but they might not always have the resources or relationships to do so.

That’s why bringing in a proven third-party resource that knows your industry inside-out can accelerate the process.

The invite-only BluWave-grade network of business builders is full of service providers who can help you with this exact challenge.

When you connect with our research and operations team, they scope the finest details of your need before connecting you with two or three exact-fit solutions.

In less than 24 hours after your initial call, you can speak with resources that have been hand-chosen just for you. After selecting the best fit, we’ll be by your side from day one until the engagement for your market study is complete.


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