What’s a Market Assessment?

This blog post will talk about market assessments and walk you through the tools used to complete one. Keep reading to learn how these tools combine to give you the data and intel needed to make informed decisions for your business. 

All of the insights presented in this blog post are derived from sitting down with Aaron Cruikshank, whose career spans market research firms, the government, and more. Throughout his experiences, Aaron learned that there were tips and tricks being leveraged, that smaller organizations either didn’t have access to or didn’t know about. Aaron knew he could do things  differently for smaller organizations, so he designed CTRS as an alternative to the offerings of large expensive market research firms. CTRS gives business owners who lack the big capital or the resources of their larger competitors. With CTRS, business leaders gain access to qualitative research that really helps them leverage market opportunities.  

Let’s Start at The Beginning: What is Market Intelligence? ?

Market intelligence bridges the gap between business intelligence and strategy development. We’ve seen many organizations who only look at their internal data and customer data before deciding what to do next strategically. But this can be a big mistake. 

Looking at the internal information is important, of course, but if you neglect looking into what’s happening in the broader market around you, you could be missing 90% of the picture. 

In practical terms, market intelligence consists of data points, like sales data, customer data, survey responses, focus groups, and competitor research. Essentially, what you’re doing is building up a briefing on what’s happening in the wider market that’s relevant to the business you’re looking at. 

Once you’ve got all this data on the wider market, then it’s time to ask the golden question: so what?  The “so what” analysis answers the big question of what does this mean for the business? This is where the real hard work of market intelligence happens. Our analysts read the data to make an informed prediction about what’s going to happen in your market in the coming years. It makes us sort of like futurologists that apply these insights to a specific business or market. 

Market intelligence in a nutshell is all of that external data rolled together with internal data to give you a briefing that helps you make these strategic decisions. It’s used by private businesses, governments of every size, universities, and not for profits. Every organization benefits from data from the wider market .

Market Assessments: What They Are and How it Compares to Market Intelligence

A market assessment is a complete market intelligence briefing. Before we were talking about all the different data points that you need to string together to make market intelligence sing and dance, but a market assessment is some of the “so what” analysis so that you know what to do with the data from the market intelligence. 

Lots of times, we have clients that come to us asking for a market assessment to a question they have in their mind that they can’t answer. They have some of the details ironed out, but they don’t have the full picture yet. While they might have an outcome in mind, it comes down to the research of what is really going on outside their business that is key.

For instance, sometimes we have clients who want to enter a new market or they want to offer a new product. The market assessment we conduct, then becomes the core data required to make every strategic decision that will be made by the business. In this case, the market assessment for a new market, will result in supporting data of whether or not the company should pursue the move to a new market or continue to focus on where they are now. It would include information on potential markets to target and takes into account the desired future state the organization envisions. 

CTRS market assessments often include a PESTLE analysis, competitive analysis, market validation, primary research, and market sizing because people often want to know the answers to how big is this potential market and how much money could we make.

What is a PESTLE? Mortar and Pestle? Nope, We’re Talking  About Market Implications, Not the Handy Kitchen Tool That Makes Delicious Pesto!

PESTLE is actually an acronym. It stands for Political, Environmental , Social, Technological, Legal, and Economic . It’s a framework of thinking to focus your questions and your inquiries for a market assessment. Each of these  factors can impact a business and it’s important to explore them to get a full picture of what’s happening in the market. Similar to the kitchen tool, mortar and pestle, it’s like taking several ingredients and grinding them together. Here are some examples of a PESTLE. 

Political 

This would be something like there’s a regulation or change that’s coming. 

Environmental 

Environmental might be considering how we factor the impact of rising sea levels into a coastal community plan that we’re working on.

Social

Social might be something like the  movement of employees wanting to move towards working from home or hybrid working environments. That’s a big trend right now among many industries.

Technological 

Technology is always changing and there is always something new on the horizon. Think of things like artificial intelligence, machine learning, and remote access. 

Legal

Legal could be case law like precedents that have been set that say “in these types of situations this is what could happen”. For example, if there is a data leak of customer data, how big of a legal hammer could you get hit with?  

Economic 

Economic could be rising inflation and interest rates or a possible recession. This one is very timely. If you were selling financial products or let’s say you had an auctioneering site with a financing division, how would rising interest rates impact people’s willingness to use that service? 

Making sure that you know what’s coming in those key areas and also what potential things are on the horizon are critical to your success. Where are the environmental and social trends heading? What technological trends are coming in the next year that will impact us? 

By doing a PESTLE analysis, you make a valiant attempt at predicting the future so you can prepare for what may come in the future.

The Ins and Outs of Primary Research

Let’s say you were going to make sneakers – you’ve got this new model of sneakers that you want to get out there in the market. You know you need to find out consumer preferences and find out how consumers will react to your model, so you do market testing. Maybe you distribute a survey to hundreds or thousands of people with your different ideas of how it could look and then you collect the feedback from the responses. That example is basic market research and it’s done all the time. It’s important work. 

The challenge – and where primary research becomes critical- is that you can’t just do a survey format like the above example, when the market is more scattered. Imagine you’re looking at utility companies in Western Canada, and there’s only eight of them. Right away, you know that’s not going to be a statistically significant sample. In reality, the focus needs to be on getting those people on the phone and asking them the really important questions. 

In our experiences, we’ve noticed that through in-depth interviews and expert interviews, you’re having deep conversations with somebody about the reality of their business. You work through the questions of what the customer journey looks like, what gets consumers to choose one vendor over another, and how do they buy. Another important part of that discussion is finding out who consumers see as your competitors because this is something that a lot of companies skip over. It’s easy to get tunnel vision when thinking about competitors but the key to business success is understanding who your customers consider as competition. If your customer has the option to buy from them and they come to mind when making a purchase decision, then you need to classify that business as your competitor.  You might disagree with who your customers pick, but the truth is, if your customers think a company is a competitor, then they qualify as your competitor. 

Those details are the types of insights that come out of conversations we have in primary research. It’s really about that qualitative, in-depth conversations that can help give you more data points for what’s going on overall. As the expression says, you are getting the information from the horse’s mouth – straight from the source. That’s what makes primary research a powerful market intelligence tool.

Market Sizing – How it Works 

A lot of people rely on market sizing for either investment opportunities or looking for funding sources. When we conduct market sizing, we are typically looking at what we call the TAM, SAM, SOM model. Sounds like a Dr. Suess book, but it’s actually a super handy tool for market calculations! 

TAM is the Total Addressable Market. If we use tire retailers as an example, this would be the total global market for vehicle tires. Typically, it’s expressed in a dollar amount rather than a number of units. So you wouldn’t say, “this is how many tires are sold globally”, but rather, “this is how many dollars worth of tires are sold every year”. 

The next step is SAM, which is the Serviceable Addressable Market. If you’re a tire company in Western Canada and you’ve got shops that go from B.C. all the way out to Ontario, but nothing really east of Ontario, your serviceable addressable market is wherever you’ve got those shops. 

Lastly, SOM stands for the Serviceable Obtainable Market. This is the slice of pie that you can get within SAM, or what some people might call your market share slice. SOM is really the number that most people want to know. To estimate these things, we use the intel we gather and while it’s not an exact science – it’s technically a very educated guess.

When we put these numbers in front of people we always give them the spreadsheet of the math, so they have the opportunity to play with the numbers themselves. By doing this, they can go “oh that assumption there of the price for a tire is a little different.” and they can change one number in the Excel spreadsheet and all the calculations are updated automatically. The math we show is the most defensible numbers that we can come up with. By having these numbers, we can give somebody an idea of what their market share is today and what their market share could grow to be in the coming years.

Market Intelligence is Used by Big Businesses, Why Not You?  

Some people might say “well why haven’t I heard about this stuff before”? It’s not a topic that is very mainstream  and it’s a shame because market intelligence is something that’s deeply understood by the larger companies who have dedicated departments to do this work. 

But at CTRS, we are on a mission to try and democratize market intelligence. We are working hard to bring these same  techniques that the really big companies are using, down to smaller companies, not for profits, and governments. Why? Because any time you can make a better decision, it benefits everybody.

How does market intelligence impact organizations? In the case of a not for profit, you might be using the resources you have been allocated to your organization, in a more effective manner so you can help more people. If you’re a government, the work that goes into your target markets and policy research can help you make better decisions about programs that are going to benefit communities. For businesses, in particular small businesses, a market assessment can help them make better informed decisions. It’s so easy to fail in the early stages of a small business because of the lack of intel you have access to. 

The tools we use at CTRS are meant for everybody and we are actively trying to make sure that people know how to use them and have access to the tools that give the best intel. 

Get Started with CTRS 

We give business owners who lack the big capital or the resources of their larger competitors, the opportunity to leverage market intelligence to make informed decisions. With CTRS, business leaders gain access to qualitative research that really helps them leverage market opportunities.  

If you want to learn more about how these tools can help your business thrive, contact us to set up a free consultation call where we can discuss your challenges and help you work through the next steps.