Market data refers to all the intel available explaining the demand and supply of products and services within a business category. On the surface, this “data” includes information on the types of products and services available, how many are sold to/by the number of businesses operating in the market, and the size of the customer base. But below the surface, there is so much more data available – and so much opportunity.
The number and variety of factors involved in market data analysis is just the start of understading what it is. The process can be complex and without the right tools, it can be impossible to do correctly
Market Data Challenges
For instance, market data analysts have to come up with satisfactory explanations as to the current state of the market i.e. the “why” behind the “what.” They also have to predict future behavior of the market i.e. what is expected to happen given the current conditions , as well as likely future scenarios. Beyond that, analysis has to provide the way forward for the business i.e. what is to be done by the business in all its aspects to make the best use of the current circumstances and ensure the business’ survival.
Market data analysis is often riddled with challenges. For starters, the typical fragmentation of business procedures within the organization and market – the siloes that are created – can lead to inefficiencies and operational constraints. Poor organizational structures make it difficult to look at the business holistically instead requiring a point-by-point approach that is not only time-consuming but can also make it more difficult to interpret data.
Secondly, the dynamics in product and service production and consumption means that the quality of information is always evolving. What was true yesterday may not always be true today or mean as much tomorrow. This challenge is compounded by the need to perform analysis within that fragmented business environment.
Thirdly, inadequate specialized support for data analysts strains the team’s resources inevitably leading to suboptimal performance. Market data analysis requires much more than brain power. It demands tools that can pull all the necessary information from various sources and present it in a format that is most easily consumable by human analysts. It also requires having in place systems that support the process taking into account the multivariate nature of the data, the diversity in specialists within the team, and the structure of the organization.
Creating a Central Hub for Market Data
Despite the many pitfalls, with the right partner, analyzing market data to discover how it influences your brand can be an incredibly simple process. A good partner will help you set up a centralized support system that captures a variety of consumer and market data sources and creates a uniform view of the process by the team. It should offer a single source of truth, upon which it base all decisions:
This system helps you define the rules and criteria for the collection, storage, and use of market data across the organization. It ensures that the insights derived are readily available and usable by the various departments and individuals wherever they are relevant. This is more effective compared to where insights are locked up with a few staffers and handed out piecemeal to other departments. It improves the use of resources, boosts productivity, and inspires creativity and innovation.
Let’s explore three specific use cases for market data – product innovation; tech scouting; and identifying merger and acquisition opportunities.
Product innovation is the development and delivery of new, redesigned, or improved offerings into the market. Therefore, the essence of product innovation is the search for better solutions than already exist – whether that is achieved through completely new or significantly improved products and services.
Product innovation can be good for business in many ways.
- First, it can give a business a competing edge. Unique and better performing products set a business apart among the competition allowing it to acquire a bigger market share and lead the charge for higher industry standards.
- Second, it can help improve customer retention. Customers are always searching for better ways of doing things and businesses that keep them happy through constant product innovation get to keep them from moving over to the other options.
- Third, product innovation attracts top talent to the organization. One of the main motivations for high-performing employees is an environment that encourages creativity and innovation.
- Fourth, each of the preceding benefits of product innovation gives the business a boost for even more innovation and ultimately, growth and expansion in the market.
However, product innovation can be difficult to achieve. The process is fraught with risks for the business.
First of all, it is costly, often taking away much time that could be spent on proven solutions and requiring much initial capital. Many times, it is a gamble that may or may not pay off. The crash-and-burn stories are enough to make many organizations think twice before tinkering with new kinds of solutions. And that is even before the commodity hits the market. There is another sort of risk associated with approaching customers with a solution that they either have not tried before or one that they have to compare with other options on the market. Listening to online conversation ahead of innovation is essential, particularly as there’s a lot to consider:
Despite these risks, product innovation is usually the difference between businesses that survive and those that fail. Sometimes the existing solution just doesn’t cut it anymore and the only way forward is to innovate. Proper use of market data can help make the process more successful and remove the uncertainties associated with venturing into product innovation. Market data reveals the evolution of customer problems as well as ways in which existing solutions fall short. It reveals what is working, reveals lucrative product gaps.
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Technology scouting is about identifying emerging technologies and channeling technology related information into an organization. It combines market research, professional expertise, and proven processes to improve decision-making and stimulate innovation within the organization.
Technology scouting is the initial step towards a long-term process of matching universally available technologies with the internal strategic requirements of a business.
Through technology scouting, the business can quickly identify key areas of growth. Technology scouting reveals central themes around emerging technologies and trends which point to the direction of the industry as a whole.
It also helps detect gaps in the market that need to be filled with new innovations. Further, it improves the accuracy of profiling the target audience ensuring less risk in investments around product innovation. These factors allow the leadership to make sound decisions regarding the strategic direction of the organization.
The challenge with technology scouting is the fast rate of advancement in the sector. Due to the rising demand for new technologies across various industries, other businesses are always working on something. This means that new and improved technologies are popping up everywhere and it is difficult to keep track of all of them.
The fact is some of the new advances have the potential to make important changes in the market while others are either not as important or dead on arrival. But to know which is which, the forward-looking organization has to keep eyes on all. This is why it can be difficult to monitor the whole market. The risk of missing out on revolutionary developments is faced by all even the more established ones.
Market data reveals crucial information about the state of technology within the industry. Many established organizations undertake the process to answer questions regarding the volatility of the market, the changing customer expectations, and the might of the competition. This is how they manage to stay ahead of evolving customer needs, emerging threats from existing and new businesses, and uncover opportunities both in market demand and potential partnerships. Tracking patent data offers a huge assist here, as we can see from the Art Production patents pictured below. The clusters reveal top patent categories, and each can be explored for specific intel around who obtained the patent, when, where and lots more:
Mergers & Acquisitions
The mergers and acquisitions market encompasses all strategic alliances between organizations that seek to improve their chances of survival. As globalization continues to take shape and the markets become more crowded with competition, many businesses are leveraging M&As to grow their market share and create more value for their stakeholders.
Every M&A is based on the prospect of better performance in the unified whole compared to the individual organizations. And businesses pursue mergers and acquisitions to improve the economies of scale and scope.
One advantage is that the resulting business improves the individual company’s productivity and bargaining power in the market. Another is the synergy created, which can lead to higher volumes and lower costs of production than would be possible otherwise. It often happens that better methods, facilities, and tools of production are less costly to buy than to build. Businesses that have a large capacity for production but less profitability often merge with or acquire those that have better access to buyers but less production capacity.
There is much work to be done before a successful M&A can be affected – and market data is indispensable in this process. Initially, it helps the organizations understand the market landscape as well as consumer trends.
These guide the choice of potential partners and the available opportunities for the M&A. Research also reveals what the competitors are doing in their own M&A activities. This can also have a direct influence on the types of potential partners. In our company dataset, businesses track investment data that can fill out this picture, particularly when combined with patent insight mentioned above.
Understanding market data is essential to any business’ operation. Be sure to reach out for a demo today to explore market data relevant to your brand and its forward-thinking business efforts!