A lot of time, money, and preparation is involved in starting a new business or opening a new location. Before getting too in the weeds, one of your first steps should be conducting a market analysis.
A market analysis helps organizations understand their target demographic, consumer profiles, buying habits, and much more. It yields valuable data if you are flying blind about a current or planned expansion market.
In this blog post, our market research company discusses the importance of collecting in-depth demographic information for new business ventures.
Plus we share an example market analysis report so you can see first-hand what type of information is included.
What is a market analysis?
A market analysis is a type of market research that produces demographic, behavioral, consumer expenditure, and index scores on specific geographies (i.e., ZIP Code, county, DMA, state, etc.).
Other terms to describe this form of market research include industry analysis, demographic analysis, and landscape analysis.
Market analysis reports are used by all types of organizations to gain a better understanding of the profile of consumers in their current or planned expansion markets.
It essentially answers whether a market is attractive or not for a concept. It reviews both current and forward-looking data (5-year projections).
💡 The Key Takeaway: When developing a new concept, it is necessary to understand your target market. Therefore, many professionals choose to conduct a market opportunity analysis to collect demographic and behavioral information of the community.
What can a demographic analysis be used for?
Are you looking to develop a new business location, or expand into a new market? A landscape analysis is used to help these ventures understand potential success and barriers. It is why they are often a component of feasibility studies.
The data in the report will help you understand how many similar establishments are located in your geography. It will also give you traffic counts.
Use the demographic data to understand the market potential and your target buyer and answer key questions such as, which populations are growing or shrinking through 2025?
Understand shifts in consumers in your market
Trying to understand how specific demographics or age groups are shifting in your market over the next 5 years? A market analysis will showcase this vital information for you.
Perhaps you are looking to build a senior living complex and you would to know the project population growth of those 55+, 65+, and/or 75+.
All of the data you need is included in the report.
Or maybe you want to build a parking garage in your market.
To determine the potential success it would be important to see daytime employment populations in your region, vehicle ownership, establishments that would require parking, and other metrics.
Understand the make-up and demographics of your consumers
Looking to launch a new product or service targeted to children under the age of 18?
The market analysis provides a wealth of information on households with children, projected population growth, and other household information including incomes to help you understand price sensitivity.
Market analysis reports are chock-full of demographic information on gender, age, income, education, marital status, children in the household, home value, and much more.
It truly sheds full light on who resides in your target market area whether it be a ZIP Code, DMA, our collection of counties.
Segment your consumers into profiles and behavioral traits
Beyond the demographics, a market analysis provides information on behaviors and profiles of consumers in a market.
This starts with behaviors related to items like dining out, entertainment habits, internet, TV and radio usage, etc.
On top of the index scores for these behaviors, a demographic analysis provides a full breakdown of personas/segmentation of consumers in geography.
Using Mosaic clusters, this type of market research provides the buyer with a breakdown of the top consumer personas in the geography.
You may learn 25% of the households are Singles & Starters.
These are young singles starting out or starting families who are into the city lifestyle.
They are digitally savvy, foodies, engage via radio, politically disengaged, single adults, use rental housing.
It also provides marketing channel preferences and information on technology adoption.
You may learn 34% of households are Autumn Years.
These are established and mature couples living gratified lifestyles in older homes.
They are into a rural living, community, saving money, members of AARP, financially secure, and enjoy the outdoors.
Identify basic demographic needs
One of the most basic requests for market analysis is to simply obtain a breakdown of demographics and populations for a geography.
The data is the vital piece where the buyer can take the current populations and five-year estimates to build into their own reports, documents, or grant applications.
If this is the reason you need a market size analysis, it serves this basic purpose and more.
💡 The Key Takeaway: A market analysis can be used for a plethora of new business objectives. It is the greatest resource in understanding today's consumers as well as predictions for how their preferences are likely to change in the future.
What questions can a market analysis report answer?
Among all of the market analysis projects completed over the years at Drive Research, here are some of the most common questions which result in an order.
- What is the current population in my market (ZIP Code, DMA, county, Census tract, etc.?)
- How is the population expected to shift in my market over the next 5 years?
- What is the age breakdown of residents in my geography, how will it change over time?
- What is the mean/median household income of residents in my market, are they affluent or poor?
- What are consumers spending their money on in my market?
- How many business establishments are there in my market so I can understand my competition?
- How can I best market to consumers in my geography? What are their profiles/personas?
- Does the market data support a decision to launch a new business concept?
Several pieces of the report can be spotlighted to feature potential success or barriers (and how you plan to overcome them).
💡 The Key Takeaway: An in-depth market opportunity analysis provides several levels of data on these topics to help you arrive at conclusions and share this information with a development company, financer, or investor.
What geographies can be selected to run the analysis?
The choice of geography boils down to your target market or what geography you plan to attract 80% or more of your customers from.
The selection can be as broad or as granular as needed.
The level of cuts can be as specific as a Census tract (usually a few neighborhood blocks if it is a city), or as broad as a state or collection of states.
Additionally, separate reports can be created for each geography. For example, if you want to compare County A to B, but also run a third report that combines County A and B together.
Here are the types of geographies available:
- Census block groups or tracks
- Congressional districts
- Metro and Micro CBSAs
- ZIP Codes
- Mile radius around an address
- Drive time around an address
💡 The Key Takeaway: A market analysis report allows for full flexibility in terms of the choice of geography. For some clients, multiple geographies are selected (it does not have to be limited to one).
What data is included in the demographic analysis report?
The industry analysis is not short on data.
Here are the categorical breakdowns of what is included in a full report provided by a market research firm:
- Map overview of the market selection
- Executive summary snapshot of demographics (with narrative)
- Traffic count list
- Total population by gender
- Population by age
- Household income
- Seasonal populations by quarter
- Household size
- Housing units
- Housing value
- Monthly rent
- Geographic mobility
- Year structure built
- Family status
- Educational attainment
- Marital status
- Language spoken at home
- Vehicles available
- TV and radio usage summary
- Mosaic household cluster summary index (personas)
- Business establishments by industry
- Consumer expenditures/index
- Automotive and transportation
- Cleaning products
- Convenience stores
- Financial services
- Food and beverages
- Household furnishings
- Household operations
- Health and beauty
- Lawn and garden
- Shelter and utilities
💡 The Key Takeaway: The demographic information available in a market analysis is abundant. It touches on everything from demographics to homes, vehicles, segments/clusters, business establishments, employment, consumer expenditures, etc.
How recent is the demographic data?
The market analysis report uses census data from 2010 to calculate estimates for 2020 and 2025 projections in your geography.
The 2020 Census data collected by the U.S. government has yet to be tabulated completely but should be ready in the next year or two providing an even more accurate baseline (rather than estimating 2020 numbers from the 2010 Census).
💡 The Key Takeaway: Data from the 2020 Census functions as a guide for researchers in their day-to-day work. Learn more in our blog post, What Impact Does Census Data Have on Market Research?
A real-world example of using market analysis data
A digital marketing agency reached out to our market analysis company on behalf of a credit union client.
The goal for the credit union was to grow market share within the counties it currently has a branch, but also look at adjacent counties that have a similar demographic to determine the best market for an additional branch to support its growth strategy.
The digital marketing agency requested a total of 13 reports which includes 12 separate county reports and 1 report inclusive of all 12 counties.
They were able to review the current Census data and 5-year projections to understand the ins and outs of the residents (demographics, behaviors, marketing opportunities, profiles, etc.) as well as how each county population was expected to change over the next 5 years.
The digital marketing agency, in collaboration with the credit union, leveraged the market data to make a case to the board for what county should be the location for the branch expansion.
💡 The Key Takeaway: A credit union partnered with Drive Research to conduct a custom demographic analysis. They were able to effectively recommend what market they should build their new branch. The new location was based on population growth, match of current member demographics, marketing behaviors matching the strengths of the digital agency, and much more.
What is the timeline for a market analysis report from Drive Research?
A market analysis report offers a speedy turnaround.
Once the order form is completed with a market research firm like Drive Research (identifying your geography or geographies and the format you would like the report), it is sent to our team of researchers.
Payment is set up through an invoice which allows for credit card processing before the report is delivered.
The report is turned around within 24 hours of the order and payment (sometimes much more quickly depending on the queue).
There are several formats for the market analysis report. The format options include:
Some choose PDF because of the ease of sharing and viewing on all devices. Others choose Word or Excel to cut and paste the data into other documents which makes the transfer process easier.
See for yourself! Download an example market analysis report, here.
💡 The Key Takeaway: Don't wait weeks or even months to uncover key demographic information of your target market. Partner with Drive Research and obtain a custom analysis in as little as 24-hours.
Interested in learning more about our market analysis reports or think this report can solve some of your needs?
Feel free to reach out to our team in Syracuse, NY to answer any questions you have. Our system provides access to markets (large and small) anywhere in the U.S.
- Message us on our website
- Email us at [email protected]
- Call us at 888-725-DATA
- Text us at 315-303-2040
George is the Owner & President of Drive Research. He has consulted for hundreds of regional, national, and global organizations over the past 15 years. He is a CX-certified VoC professional with a focus on innovation and new product management.
Learn more about George, here.