The following video provides a mindset and process for doing a scan of your market environment

(Optional) Transcript

Here are my 10 steps for scanning the market environment. Before I take you briefly through each step. I want to highlight a few points.

[0:08] Start by observing (analyzing comes later)

The first is that the scan is primarily an observation task. Our goal is to bring back a relevant picture for the organization to use as a map, to understand the market environment we’re working in now, the current status (product market fit) of any offers and infrastructure we’ve already placed in the marketplace to serve it, and finally a first cut at unexplored market territory, either because we have not chosen to serve it yet, or because the future may be different than the past.

However, we’ll be taking two analysis steps as part of our scan too. The first is to define our market category. Where’s the boundary of the playing field? Depending on the task, we may choose to define this very broadly, say “the breakfast market” or more narrowly, say “the high protein breakfast bar market.”

The second is to make a diagnostic assessment of product market fit. As marketers, we will always be balancing effort to retain and expand current customer relationships with effort to attract new ones. This assessment of current product market fit will inform the balance of resources deployed towards each.

Because assessing our fit with our environment is part of our scanning task, we sequence observations that are at different levels, internal, micro and macro, rather than scanning each level comprehensively before moving to the next.

[1:22] Observations are different from facts, track your confidence levels

The second point is that observations are different from facts. Observations are data points use as evidence to support and reject hypotheses. The results of our scan will inform a series of hypotheses– educated guesses– about our readiness to pursue opportunities and address threats we see in the environment. We will initially be relying heavily on secondary data: observations collected by market analysts and other subject matter experts, served up to us by Google and other data aggregators. Part of our job as environment scanners for the organization is to consider the credibility of these sources when building our map.

But a second part of our job is to follow our nose, even when the evidence is limited, so that we can react more quickly than competitors to what’s happening in the market.

Our scan may include observations from peripheral observers or different markets with hypotheses that things will play out similarly in ours. So your scan will be balancing different levels of confidence of what you can infer from your observations.

You will want to have a method to record your confidence in different conclusions that you make. Beyond keeping track of the sources of your observations and inferences, I don’t have a specific process recommendation here. Do what’s worked for you in doing research in other domains.

[2:35] Resist “Paralysis by Analysis”

Finally because your scan will necessarily be a balance of more- and less- supported hypotheses about your environment, and your fit within it, you’ll likely always feel that you need to go deeper– that you’re just guessing on parts of it. I guarantee you there’s no magical report out there that will answer all of your questions. But Google sure makes it easy to keep trying to find it.

So think of peeling an onion and force yourself to take off a whole layer before going really deep in one area. For this task, a full map, even with some areas that are poorly supported is much more valuable than a deeply researched partial one. Try to avoid paralysis by analysis, losing opportunity while you improve your map. This is a balancing act I struggle with every day.

[3:20] Step 1: The Playing Field

Okay, let’s get started.

Step one: the playing field. Define the scope of the market category you’re scanning. Questions to consider include what is the boundary between the micro and macro environment of the marketplace in this analysis? Are we considering the market for breakfast bars or breakfast? What stage in the market life cycle is this market in right now?

[3:54] Steps 2-6: Existing Marketplace Interactions

Step two: in the micro environment, identify customer segments that you currently target. For each segment questions to consider include what other current needs and buying situations. How familiar are they with making buying decisions in this market category? How often do they do so? What triggers them to start a buying decision, and how does it typically progress? What habits and preferences will they bring to their buying journey?

We’ll dig more deeply into building better hypotheses about these questions in module four.

Step three: internally, identify existing offers that you’ve currently have placed in this market. What product attributes, service experiences, brand meanings and channel touchpoints, make up the customer experience. What types of functional, social and psychological or emotional quality and convenience benefits do your offers aim to offer to customers?

What’s your revenue model? What non-price customer costs or relationship expectations are part of your revenue model? We’ll dig more deeply into building better hypotheses about these questions in module five.

Step four: in the micro environment, identify solution alternatives your current customer segments consider, besides you, to solve their needs. Who are the competitive players on the field? What is the mix of incumbents, insurgents and substitutes. What is your share of market solutions served versus these competitors? To what extent do customers in your currently targeted segments stick with one alternative? Or switch between different ones. Are you seeing shifts in alternatives customers consider?

Step five: internal customer facing infrastructure. From the point of view of the customer, what key channel partners are important for delivering on your offer promises. This is perhaps the most important element of the customer facing infrastructure that we haven’t yet considered. But also important: how important are customer facing employees to delivering on your offers? What consistent brand meanings do customers find important? Are there other key partners, activities, or resources that are key ingredient brands in your offers? In other words where customers would care if you change them.

This is an area where you can easily start to stray too deeply into operational and financial domains. Keep your feet firmly planted in your customer’s shoes. What are the things they see about how you develop and deliver your products that are important to them? What would they miss if you changed it to improve feasibility and viability?

Step six: current product market fit. Having accounted for all the players in the field, we can now make a useful assessment of our relative position with them. Our product market fit. Relative to competitive alternatives, how well do your offers fit the needs and buying situations of your targeted customers/ what’s their current satisfaction with your offers? Where might you add promotional campaigns to encourage demand for well-fitting offers? Where might you change your customer experience for better fit? Where might you change your revenue model?

[7:01] Steps 7-8: Potential New Territory

Steps two to six define your existing marketplace. Steps seven and eight consider new territory to be explored.

Step seven considers unserved customer segments in the micro environment. Identify customer segments that exist in the marketplace that you’re not currently serving. What alternative offers do they currently most often select? What’s their current satisfaction with the offer?

Then, also go back and answer all other questions and steps two and six, replacing “current satisfaction” with “current or likely perception” of your current offers.

Step eight moves to the macro environment for the first time, considering future trends. What trends do you see affecting all the players in the market? How might these trends change customer needs and preferences for solutions? The fit between your offers and customer needs? Between competitors offers and customers’ needs. How might they bring new customers into this marketplace or cause customers to leave it?

[8:00] Steps 9-10: Bringing in the rest of the organization

Step nine: current macroeconomics, how do current market conditions enable or constrain the execution and profitability of your current business model. The execution profitability of competitors’ business models? How about the pursuit of new or revised offers or business models?

Step ten: The last step is to layer on organizational goals and constraints that will guide the scope and depth of analysis you’ll now do of opportunities and threats you’ve uncovered with your map.

For example, we may have uncovered a growth opportunity that goes beyond our organization’s current mission or strategic infrastructure plans. We may have cost pressures or technological readiness issues that constrain our ability to pursue trends in the marketplace. Our current marketing resources, product portfolios, channel partner relationships, and existing brand equity in the marketplace may also enable or constrain us.

Not surprisingly, this process is circular. Depending on the purpose of the scan, you may want to have a sense of nine and 10 prior to beginning. But note that a detailed analysis of these last two steps, which are on the left-hand side of the environmental model will take you deeply into assessing the feasibility and viability of your business model. Resist that urge. You can trust that there’ll be others in the organization who are starting their analysis from this perspective.

Our point in including these steps here is to recognize that in addressing desirability risk, marketing strategy will need to integrate with the overall business strategy. So we should be considering that when scanning our market, and particularly when presenting our map to the rest of the organization.

Also be conscious of how considering feasibility and viability constraints early in your scanning process may bias you away from exploring the marketplace for good investments towards future value. There’s a difference between “not yet” feasible or viable and “never” feasible or viable. There may be times when we’ll conclude from our analysis, that changes to the overall strategy are good for the organization to consider now. There’ll be other times when our strategy right now will be constrained by important strategic priorities related to feasibility and viability. Our scan can then be held in reserve for when circumstances change.