Wednesday, November 12, 2003

Marketing 101 - Market Analysis

One of my jobs as a Marketing Director is Market Analysis, which consists of collecting and analyzing data - or more accurately, having a cube dweller actually collect the data and have it magically appear for analysis. A big portion of this job consists of sitting in front of the computer and visiting web sites, so it is a perfect way to hide the fact I am really blogging (clever, huh?).

Market analysis consists of collecting data from everything from the external economy to my customers' market segments. The post I did here is a perfect example. Another good analysis is a Porter Model (named after Harvard Professor Michael Porter) to understand the "five forces" impacting your market. Note that a "sixth force" - government regulation - should be considered for most industries, and should be a part of normal market intelligence.

Based on market data, Porter analysis and other tools, you can present a forecast for your company, its market share, competitive structure of the market, etc.

So you present your analysis, forecasting all sorts of good things to come to your company. Worried you're wrong? Well, don't be. Here are the key points to keep in mind for Market Analysis:

1. An organization values analysis over data collecting - in other words, if the company believes you are a good analyst, even if you're not, you're golden. Data collectors are interchangeable cogs. So move out of data collecting into analysis as soon as possible. How do you become a "great analyst"? That brings up the next point.

2. Analyses can be faked, but data cannot - You can fit data to any sort of analysis (economy is up means revenue will be rosy next year; economy is down is proof things will improve and bring rosy numbers next year). So your analysis can be anything. What should it be? That's the next point.

3. No one complains about a rosy forecast, but they do complain about bad ones - I once brought a forecast to a CEO that showed high competition, falling prices and probable consolidation in the market. The CEO said it was wrong and told me to do it again. I brought a rosy forecast showing that we would lead the market. CEO was happy, and I was deemed a good analyst. So NEVER worry that you're wrong. Why? That brings up the last point.

4. People double-check data, but they don't back-check analyses - The data has to be right, but if you forecast a rosy picture, two years later no one remembers or cares - they are worried about the forecast two years from now. Another case in point - the analysis I mentioned above where the CEO told me to redo it - three years later everything I originally forecast was correct - but it doesn't matter since that company I worked for is no longer around and that CEO is doing something else. The incorrect rosy picture is what kept me "in" with the CEO; the correct market forecast showing consolidation benefited no one, including me (there was no way to invest or buy/short stock based on my analysis).

So, the bottom line: if you analyze a rosy forecast, show it. If you forecast a horrible forecast, redo it to make it look positive. You will be judged a superior analyst and move up in the corporate world.

More sections to come tomorrow.

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