You’ve been tasked with developing strategies to expand your business. That means you need to analyse the right data that points you towards profitable opportunities based on your objectives.
A strategic market assessment helps you prioritise investment decisions and execute effective growth strategies. But where should you start? Here are three key areas of research to review for a market analysis.
1. Macroeconomics
Certain countries might appear attractive on the surface with high economic growth, stable labour markets or strong capital investments. But risks could be lurking beneath those positive indicators that need to be considered.
Top macroeconomic indicators
- Real GDP growth
- Inflation and consumer prices
- Interest rates
- Employment rates
- Exchange rates
These metrics are crucial for understanding economic conditions. For a deeper dive, incorporate business and consumer confidence, net capital stock or foreign trade, among other data.
You can also use our macro model to undertake a risk scenario analysis. Scenario forecasts capture a range of potential events (with assigned probabilities) that could impact baseline projections for GDP growth, unemployment rates, inflation and interest rates.
What will the economy look like if there is a major commodity price shock? Or if a global financial crisis hits? Scenario analysis helps you anticipate and plan for such shifts.
2. Category growth
Category sales growth is an indicator of market attractiveness and should be a primary input for your assessment. Look at both compound and absolute growth metrics to understand historical and future trajectories.
Compound annual growth vs absolute growth
Compound annual growth rates (CAGR) give you a quick view of average performance for a product or service category over time. This measure helps balance annual anomalies and provides an indication of consistent, longer-term market evolution.
Absolute (total) value or volume growth can convey the size of the opportunity, especially when comparing mature markets with rapidly rising, smaller economies. A quick tip: know the baseline sales figure of the category in review. Strong year-on-year growth from a small base might not represent sustainable or true market potential.
Let’s look at the coffee market to illustrate this data.
Ground coffee category analysis
South Africa was the third fastest-growing market for ground coffee volume sales at retail from 2018 to 2023—recording a 7.5% CAGR over that period. Growth came from a relatively small base of 7,609 tonnes in 2018 to reach 10,905 in 2023.
That makes total sales expansion 3,296 tonnes where South Africa ranks 23 of 99 researched countries by absolute growth. The top market by absolute growth over that five-year period—Brazil—increased more than 50,000 tonnes in comparison. But our forecast model for the hot drinks industry shows 75,228 tonnes of unmet potential for the South African ground coffee market.
Complementary category performance
You should also analyse the performance of complementary categories that share demand drivers or similar lifecycles to your offer. Keeping with the coffee example, you could look at specialist coffee shops, energy drinks and coffee machines, among other related categories.
This insight gives you a sense of potential demand, especially for emerging or less-developed markets.
3. Landscape analysis
Now, you need to consider the broader landscape—competitors, consumers and channels.
Competitors
Examining the competitive landscape sheds light on the degree of market fragmentation or consolidation. Market shares tell you which companies or brands compete in a given category and how much of the market those players capture based on category sales.
Remember to factor in your positioning and any USPs or vulnerabilities. If you have a difficult time competing against a certain brand on price, for example, that brand’s presence in a market should carry more weight as a potential threat. Or if a local player aligns with your business objectives, you might want to explore a joint venture.
Consumers
Demographic profiles and trends are another major determinant of future demand. Look at population, household, income and expenditure data to get a sense of consumers in the countries you’re exploring.
Answers you can find from demographic data
- Is there a dominant age group or generation?
- What is the degree or speed of urbanisation?
- Is consumer expenditure on the rise?
Use your buyer personas when reviewing this data to estimate the size of your in-market customer base.
You can get even more granular with segmentations like gross income by age, consumer expenditure by income or households by tenure as well as survey data to understand consumer preferences.
Overall, this data gives you a sense of which countries are the most favourable based on your target audience.
Distribution
You won’t be able to build an effective retail strategy without insight into the distribution landscape.
Which purchase channels are dominant for your category in the countries you’re assessing? How are sales shifting across those channels?
We’ll use the hair care category to demonstrate the varying degree of channel proliferation around the world. The charts below show the top channels for hair care sales in 2023 across selected countries.
E-commerce and hypermarkets were the two leading distribution channels for this category in both the US and China last year but with varying degrees of penetration. A deeper look at sales data in China with our e-commerce dashboards would show you that social media platform Douyin was the largest online retailer for hair care as of Q1 2024.
While the top-three retail channels for hair care sales in Brazil were relatively balanced, health and personal care stores dominate distribution in Germany.
From here, examine channel evolution over time to see which ones are growing or losing share. And given the importance of online shopping, category sales by e-commerce retailer can help you monitor the competitive landscape and decide which platforms or partners to sell through.
Get started
These three components of a strategic market assessment help you examine opportunities and challenges for potential business expansion.
The data and insights you need to get started are in our market research platform Passport. Tour the platform and see how Passport can uncover your next venture.
Contributing Euromonitor experts: Matthew Barry, Insight Manager – Food and Beverage; Lan Ha, Head of Practice – Economies; Bob Hoyler, Industry Manager – Retail and Digital Consumer; Jana Rude, Senior Insight Manager – Consumers.
Editor’s note: This article was originally published in August 2021 and has been updated.