How to Write a Market Analysis in a Business Plan

Launching your business without thorough market analysis is like going grocery shopping without a list. You’ll buy a lot, spend more, and still forget the most important thing—your customer, the demand, your competitors, and more.

Without knowing your customers or demand, you will end up helping LITERALLY no one. (Except your competitors. Ouch!)

So don’t even for a second think you can put market analysis on the sidelines. But how do you do market analysis? And how do you put it into a business plan strategically?

In this blog, these steps, you'll simplify the business plan writing process and craft a plan designed to deliver impactful results.

Let's explore.

How to conduct market analysis for a business plan?

Does market analysis sound challenging? It doesn’t have to! With the steps outlined in this section, you’ll find it easier than you imagined.

Step 1: Understand your industry

Start with the big picture. Conduct market research of your industry to find key answers to questions like:

• Is the industry growing or shrinking?
• What are the latest trends shaping it?
• Are there any regulations or barriers to entry?
• What is the market size of your industry?
• What are the future trends in the industry?

For example, if you manufacture sneakers, you want to stay updated on the latest footwear trends. Are people leaning more toward casual styles or athletic shoes? What designs and features are currently in demand?

Similarly, if you’re in the soft drink industry, it’s crucial to understand regulatory barriers, market size, and consumer preferences. What flavors resonate with different age groups and demographics, and is the market expanding?

You can use reliable sources like Statista, reports, government publications, and trade journals to conduct a thorough industry analysis. Further, you can use online content like analyzing news, blogs, and social media.

A solid understanding of your industry equips your business to answer key questions, showcases the groundwork you’ve put in, and impresses stakeholders with the depth of your research.

Step 2: Define your target market

Who are you selling to? Be specific.

Clearly defining your target audience makes finding the right approach much easier. Unlike industry size, you need to analyze and define your market size.

You need to define how many potential customers are available to use your product or services. What are their age, gender, education, income, and preferences?

By understanding your target market through proper analysis, you’ll find it simpler to design a product that meets their needs.

Instead of wasting resources marketing to everyone, you can focus on a specific, targeted audience, making your marketing strategies far more effective.

To conduct the target market analysis, consider the following steps:

Suppose you’re manufacturing a germ-killing soap, and here’s the analysis you’ve gathered from supplying your product across various industries and retail shops:

This table shows that your primary target audience is the medical and healthcare sectors, as their usage is significantly higher than other categories.

With this insight, you can refine your product further to cater specifically to the needs of healthcare and medical professionals. Additionally, you can focus your marketing efforts on this segment while also strategizing ways to boost sales in other categories.

Moreover, including your target market analysis in the business plan assures stakeholders that you’re targeting the right audience and have conducted a thorough analysis of your market.

Step 3: Analyze the competitors

Stakeholders want to understand who your competitors are, what strategies they're using, and how you plan to differentiate your business.

By providing a detailed competitor analysis, you demonstrate that you know the competitive landscape and have a solid plan for navigating it, which in turn helps:

• You learn from their successes and mistakes
• Spot opportunities for differentiation (USP)
• Keep up with market trends
• Refine your pricing strategy
• Strengthen your marketing and messaging

To make a competitor analysis, conduct a SWOT analysis of the top competitors in your industry. By doing so, you gain valuable insights into your competitors' strengths, weaknesses, opportunities, and threats.

Here's an example to help you with deeper insights:

Step 4: Evaluate market demand

Evaluation of market demand is about answering the following question in your business plan:

• Will your target market accept your offerings?
• Which pricing model will encourage a greater willingness to pay?
• How will you reach your target market and convince them to choose your product?

Conducting this analysis is crucial because it helps reduce potential risks and increases the chances of business success.

Additionally, evaluating market demand will directly impact your production process. It gives you insight into how much demand to expect, reduces waste, and optimizes efficiency.

Let’s understand the evaluation of market demand with a skincare product example:

Market evaluation also includes the review of the marketing strategy to reach your customers. You need to address the following questions:

• What channels will you use to connect with your customers?
• Which social media platforms are best suited for your audience?
• Will you incorporate paid advertising into your strategy?

By addressing these questions, you’ll develop a clear and effective marketing strategy that ensures your efforts are targeted and impactful. It’ll further ensure:

• You reach your correct target audience
• Get maximum ROI
• Target only potential customers
• Drive a well-thought-out plan to promote your offerings

Such market evaluation assures stakeholders that you’ve conducted a thorough market analysis of demand and developed a clear roadmap to reach your target audience effectively.

This demonstrates your commitment to driving business success, instills confidence in stakeholders, and encourages them to invest with trust.

Step 5: Identify trends and opportunity

Any successful business today thrives by staying aligned with current trends.

Take Apple Inc. as an example—as technology advances, they continuously integrate the latest innovations into their products, ensuring their business remains successful and ahead of the curve.

Similarly, if you identify relevant trends and incorporate them into your business, trends will keep your business updated, and your chances of business success will significantly increase.

But how do you identify the latest trends and opportunities?

• Keep yourself updated with industry news through blogs, reports, newsletters, and articles.
• Make a detailed market analysis of your competitor. Keep an eye on what they’re doing and craft a strategy for how you can stand out.
• Use social media platforms like X and LinkedIn to keep your business updated and stay connected with what your target audience is discussing.
• Participate in webinars, specific market expos, and conferences to learn about innovations, tools, and market shifts from experts.
• Do market research through surveys, polls, or feedback from your current customers to identify emerging trends.
• Analyze data from analytics tools to track consumer behavior on your website, social media, or sales platforms. It’ll help you identify emerging opportunities.

Following these methods you can spot the latest trends in your market sector and implement them swiftly, giving you a strong competitive advantage.

Importantly, being aware of trends and proactively implementing them demonstrates your foresight. Additionally, having clear strategies in your plan will undoubtedly impress stakeholders.

This will give them confidence in your ability to adapt and stay ahead of the competition. It shows that you're proactive, informed, and prepared to make decisions that drive business growth.

Step 6: Draw a conclusion

After all the hard work of gathering data, analyzing competitors, and identifying trends, it's time to connect the dots. In conclusion, you can show how everything you've learned directly supports your business idea and strategy.

This step ensures that all the data collected supports the viability of your business idea and provides a clear path for your future strategies.

Further, it shows stakeholders that you've thoroughly analyzed the market, competitors, and trends and that you're not just relying on assumptions. It’ll also ensure them that your business strategy is based on facts, not self-thoughts.

Here's what you can include in your conclusion:

• Connect the trends you've identified to how your business will leverage them.
• If your market research shows a growing market, explain how your business will position itself to benefit from this growth.
• Summarize how your business differentiates itself from competitors through pricing, innovation, customer service, or other factors.
• Acknowledge potential risks or challenges identified in the market analysis and explain how you plan to address them.
• Provide a roadmap for the next steps. Outline the actions you'll take to implement your findings.
• Reinforce how your market analysis supports the viability of your business model.

That's it. The steps to conduct market analysis end here. Now, let's learn a few tips for writing market analysis in the business plan.

Tips to write a market analysis

Writing a market analysis doesn't have to be a dull or overly technical process. Instead of just dumping data, think of it as telling the story of your market. It’ll keep your audience connected and engaged with your purpose.

Here are a few tips that you should follow:

1) Start with a story

Think of your market as a dynamic ecosystem where businesses interact, grow, and evolve. Start by setting the scene. Paint a picture of the current market landscape: Is it booming or declining? What forces are shaping it?

Are there new challenges or exciting opportunities emerging? Starting with a story draws in your reader and creates a context for the following numbers and strategies.

2) Focus on why, not just what

Rather than simply stating the market size, target customer, market saturation, projected growth, statistics, or growth rate, dig deeper into why they matter.

Ask yourself, why is the market growing? What are the driving forces? Why is your business positioned to take advantage of these shifts? Providing this layer of insight will make your analysis more engaging and actionable.

3) Turn data into insights

Don't just present raw numbers—interpret them. If you mention a 5% market growth, explain what that means for your business. Is this growth predictable? Does it indicate a trend toward a specific product or service? Showing how the data applies to your strategy gives your readers a clearer understanding of your direction.

4) Make it future-focused

While it's important to understand the current market, don't forget to look ahead. What are the trends on the horizon? What's changing? An excellent market analysis doesn't just describe where things stand but where they're going. Provide a glimpse into the future and how your business plans to adapt.

5) Be transparent

Stakeholders want to see that you've done your homework and understand the market challenges and the opportunities. Hence, Don't shy away from discussing threats, weaknesses, or risks. Acknowledging these openly shows that you have a balanced, realistic view of the market.

Conclusion

Clearly, market analysis in a business plan isn’t just about numbers, it's about identifying customers' desires, analyzing competitors, and implementing trends to make your business idea a reality.

In this blog, we covered the definition of market analysis, the steps to conduct it, and valuable tips for writing an effective market analysis section in your business plan. Following the steps in this blog will simplify your research and help you craft a stronger business plan for success.

However, market analysis involves extensive research, investigation, and exploration, which can benefit from expert guidance. Hiring a business plan consultant can be a wise choice to ensure a thorough market analysis.

These professionals assist with practical market analysis and provide valuable guidance throughout the entire business plan process that helps you make your business plan stand out.

Book a free 30-minute consultation call today and get expert advice.