In strategy, a market evaluation is a systematic appraisal of an industry’s current and future condition. This term may also refer to the process by which a company estimates its competitors’ strategies and responds with appropriate initiatives to satisfy their customers.
The market evaluation can be either internal or external to the company, but it usually includes both types of information gathering. In an internal market evaluation, a company’s employees and/or its customers gather information from various sources. In an external market evaluation, analysts, competitors, suppliers and other parties gather information from various sources.
In analysing a company’s market evaluation a company assesses its strengths and weaknesses in order to establish a strategy that maximises the ability of the company to compete in the market. Analysts can also draw conclusions about future trends or identify potential opportunities for new products or services. Therefore forming a new product or service might be called developing new market opportunities.
Analysing industry trends can be useful to allow companies which adopt fresh ideas to gain extra revenue from the innovations they bring to the industry. This can be called a new product or service generation strategy.
The purpose of a market evaluation is to use the information gathered to make a business decision, typically a corporate decision about which product, service or process to release for the company. This may include not only what will be developed but also what functionalities will be developed. The choice may depend on existing competitors and other market data as well as on customers’ needs.
In many industries where customers have limited experience with the technology being offered, market evaluation has been used as a tool to develop effective marketing strategies that tap into customer uncertainty and inexperience in order to create value for the customers through low cost products featuring unprecedented capabilities.
For example, market evaluation in the car industry has become very important for car manufacturers. The automotive industry uses market evaluations to develop new technologies and products, integrate them into the vehicle’s final design, evaluate the effect on production costs, and find ways of introducing new production methods. Increasingly linked to marketing strategies of automobile manufactures are competitor analyses looking at alternative markets for their products; the development of component suppliers that can produce competitively priced components; how new technology can be applied to existing products; and business practices of trading companies like parts suppliers that then use information gathered in strategic decisions.
Market evaluation is an integral part of strategy and provides valuable information for decision-makers in the company. It may help support the design and execution of a strategic plan, such as a business plan, by providing information about how to compete in an industry.
Market Evaluation and Market Intelligence
Market evaluation is one of the most important components of market intelligence. Market intelligence provides the data and knowledge that managers need to understand their environment, identify opportunity, and develop a plan to take advantage of it. It helps identify relationships between components of a business that can be leveraged to create competitive advantages.
Market Evaluation and Marketing & Business Strategies
Market evaluation is critical for the creation of a company’s marketing strategy. The marketing strategy determines which products and offerings companies will introduce into the marketplace, how they will be priced, and how they will be promoted. Market intelligence helps identify customer needs or concerns that can be addressed through new products or services, helps determine how competitors will respond to these offerings, and assesses opportunities for growth in new markets (“new markets”) or expansion into existing markets (“new product”).
Business strategies are not static. Companies are constantly changing, looking to stay ahead of the competition in order not to lose market share. Market evaluations are used in strategic planning, portfolio management, product development, and business planning.
Market evaluation is used in strategy formulation when a company decides what products or services it will offer in the marketplace, the mix of products offered, their prices, how they will be promoted in order to attract customers. It is also used in evaluating competitor’s offerings that might impact on its operations. It is also an important component in understanding trends affecting the company’s business strategy and for developing marketing plans to increase share of wallet.
By conducting market evaluations companies can stay abreast of changes in an industry, environmental concerns, long term technological advances, and government legislation that may affect the company’s operations. It is important for managers to ask “what if” questions about possible future scenarios. Market evaluations help managers to question their assumptions by providing them with the data they need to make informed decisions.
What do financial professionals consider when evaluating the market?
Finance professionals consider many factors when carrying out a market evaluation which may include including current interest rates, supply and demand, inflation, GDP growth/decline, unemployment rates and other economic indicators. Financial professionals are interested in company news as well as overall investment climate. They are best at knowing the mood of the market based on what’s happening right now. This is why they’re called financial professionals after all! When seeking an investment professional’s advice, you’ll want to know what they look at to make their decisions. If you understand their approach, it will be easier for you to make a decision that is best for you.
