Author: Alexandra Vasilkioti
Hypothesis – The key to success in a market analysis
Where to start?
Figuring out from where to start market analysis can be tricky. Initial learning of the market comes before actual analysis can start, so large part of the work happens in the exploratory market research stage.
A crucial step that is often forgotten or left until too late is hypothesis formulation. In reality, hypothesis formulation is essential for strategic market analysis and should be done as early as possible.
Start formulating your hypothesis during the exploratory stage of the research. It might feel counterintuitive to formulate ideas before you “know the market”, but it works. Think of the initial hypothesis as a map on which you work out a route.
What does it mean in practice?
Initial research is exploratory in nature, usually based on gathering general market knowledge, and reviewing existing research and statistics. Many times, companies already have extensive knowledge of the market, however, disorganised and spread among different key players. Start by discussing with management and sales teams what is already known of the market, what experiences there were so far, and which assumptions might need to be validated or disproved.
Relevant internal knowledge is gathered, country and industry information are reviewed, and an initial idea of how the market could potentially work is formulated. Now what?
Think of the market in terms of customer segments and buying patterns, the competition, and in terms of barriers to entry and regulations. Based on what you know of the market so far, how do you expect all these parts to connect and work together? The most important part of the hypothesis is how you will fit into the new market.
This foundation is your main hypothesis. The hypothesis can and usually will change during the project, but its initial version should be formulated as fast as possible.
What to do with the hypothesis?
When the initial hypothesis is ready, the next step is to figure how to check its validity. This is where the quantitative and qualitative analysis comes in. Quantitative data should be gathered, analysed and triangulated. To validate qualitative data, consider who could be the expert in each area and get their opinions. If you are looking to get an opinion of “the masses”, now is also the time to conduct and analyse surveys.
By now you should have an idea of how the value chain looks. Consider the volumes and values that you have in your value chain – do they fit your hypothesis? Did you answer the question of how to fit into the market structure? If not, adjust your hypothesis accordingly and check again. If yes, congratulations – you have a working market analysis.
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