How can marketers quickly understand an industry within 1 week?

Insight comes from understanding. Industry research is a compulsory course for strategists and also the breakthrough point for generating insights .

Industry research is basic skill and also basic law. If industry research is compared to a question, I will explain it using the rule of the golden circle, that is, the logic of Why (why do it), How (how to do it) and What (what to do).

What is the purpose of the first part of industry research?

1. The killer trick for writing a proposal

The solution is to solve the problem , and the problem should be found from the fundamentals of the industry. In addition to one's own talent, business sense also requires basic understanding of the industry.

If you don’t have enough understanding of the industry, the solutions you come up with will be like water without a source and a tree without roots, and you will lack the thinking dimension at the same level as your customers.

2. A stepping stone to enter Party A

Party A, in the final analysis, is the logic of business , and the essence of business is to provide value to consumers. The origin of value is the overall system of an industry.

Party A’s JD will generally state relevant experience in the XXX industry, so you can understand the importance of Party A’s understanding of the industry.

3. Investors’ Ticket

People who can see through the essence of things in half a second and people who cannot see through it in their entire life are destined to have completely different fates . This is a classic line from "The Godfather".

This sentence can be said to be a good summary of the importance of industry research to investment. Don't invest in an industry you are not familiar with, because it is precisely because of your impulsive thinking that you will become someone else's leeks.

The second part is how to do industry research?

1. Empty Cup Mentality

The empty cup is first of all an attitude. It means to study with awe and to look at things without prejudice . Rather than having preconceived ideas and being complacent.

A full cup mentality will sometimes allow your knowledge and experience to hinder your progress. Do not use your own thinking inertia to arbitrarily characterize industry research.

2. The Golden Circle Rule

The logic of the Golden Circle Rule is to first think about why you want to start , and then start to act, so that you can be targeted. Instead of just doing things blindly from the beginning, starting from the problem will help you not forget why you started.

3. Turn information into knowledge

Understand the difference between information and knowledge. Knowledge is digested and processed information . Pure information is a hodgepodge and not real knowledge.

Part Three: What does industry research specifically do?

1. Industry Analysis

1. Is the overall environment good?

(1) Political factors (P): whether national policies support it, whether there are public facilities, and whether relevant laws and regulations restrict it, such as e-cigarettes, real estate, and new energy vehicles.

(2) Economic factors (E): whether the economy is developing and whether the living standards are improving, such as luxury goods.

(3) Social factors (S): whether people’s ideas and concepts have changed, such as medical aesthetics.

(4) Technical factors (T): Whether it can support the development of the industry at the technical level, such as 5G.

2. Life cycle

The cycle that an industry is in is the lifeline of the industry. It is important to understand which stage the industry is currently in, whether it is in an upward phase or a bottleneck phase?

The market life cycle is very important for industry analysis. Different stages have different market characteristics, and different markets will form their own unique life cycle.

(1) Introduction stage: The problem of user awareness needs to be solved, and the focus is on dissemination. This is the stage of market development, with high costs and high expected returns. A certain amount of capital is required to start and maintain the business.

(2) Growth stage: The problem of rapid monetization needs to be solved to offset the market education costs incurred during the introduction stage. At this time, competitors are rushing to enter the market and need to build their own core competitiveness system.

(3) Mature stage: The company needs to solve the problem of brand power, use brand power to fight against the red ocean market, and consolidate its position in the competition for the existing market.

(4) Decline stage: It is necessary to solve the problem of second curve growth or to update products in order to extend the product life cycle or start another life cycle.

3. Profit model

The profit model is how the industry charges fees , which is the most important part of an industry. For example, the logic of Didi’s business model is to transport passengers from point A to point B.

In this process, whether you choose to travel alone, share a ride, hitchhike, express train, or luxury car is a question of user experience and price gradient.

4. Is the entry threshold high?

If the entry threshold of an industry is high, it will increase the barriers to entry into the industry.

5. Development History

Development process and changes, what kind of transformation has it experienced in the past and what changes will it face in the future.

6. Upstream and downstream supply chain

What is the supply chain structure and how are the suppliers numbered and distributed?

7. Sales channels

At the sales level, what are the specific channels for this industry to engage with consumers?

8. How many levels of categories are there?

How many subcategories can this whole be divided into, and what are the relationships between the subcategories?

9. Related industries

What industries is this industry related to, and what industries may it compete with?

2. Product Analysis

1. Essence (people, scenarios, problems, solutions)

What is the rationale for the existence of this industry? Is the rationale for existence due to solving one or more core problems ?

The four core elements of a product are people, scenarios, problems, and solutions . That is, what kind of people, in what scenarios, encounter what problems, and need what solutions.

2. Function

The function here is RTB, which means what is the reason for choosing you? Reasons are divided into rational interests and emotional interests.

Rational interests refer to the rational motivations of the audience in advertising appeals, which are expressed through truthful and objective statements of the functional benefits of the product. Such as the strong suction power of Robam range hood.

Emotional interest refers to incorporating certain emotional factors into advertising, which can resonate with consumers by giving products vitality and humanized characteristics, thereby influencing their decisions. Such as Apple's dedication to its products.

3. Product demand

Is the product in urgent need? What’s the experience like? What’s the consumption frequency? Is there a possibility of it being replaced in the future?

4. Product Technology

What is the core technology of this industry? This directly determines the threshold for entering this industry.

5. Product form

Is the product physical or virtual?

6. Substitutes/complements

In addition to the products directly in this industry, are there alternatives that meet the same needs of consumers, thus forming a certain competitive relationship? At the same time, are there complementary products that can jointly meet consumer needs?

From the price perspective, if the price of one commodity rises, the price of another commodity also rises, which indicates that they are complementary commodities; if the price of one commodity rises while the price of another commodity falls, it indicates that they are substitute commodities.

3. Population Analysis

1. Subject attributes

toB or toC, that is, whether the product is sold to businesses or consumers.

2. Crowd portrait

Age, gender, city, occupation, income level, life stage.

3. Purchase motivation

Everyone has their own motivations for buying products, and these motivations can be divided into the rational product level and the emotional level.

4. Catalytic behavior

This group of people is exposed to different media at different times, places and whether online or offline.

5. Purchase channels

Through what channel do you purchase and what is the purchase link?

6. Stock and incremental

The incremental growth is a race to grab land, and the existing stock is a battle among many players.

For example, in the early days of smartphones, everyone had the opportunity to have a phone infiltrated. When almost everyone had a smartphone, it became a game of changing phones.

For example, Taobao/Tmall is currently in a relatively stock market of traffic and has encountered a certain ceiling. Therefore, on the one hand, it is improving stickiness and harvesting within the site, and on the other hand, it is more concerned about diverting traffic outside the site.

4. Market Analysis

1. Market size

The market size reflects whether consumer demand is big enough, that is, whether the cake is big enough and whether one should enter the market. The industry scale = sales volume * unit price * number of repeat purchases.

Both entrepreneurs and investors are very concerned about the issue of market size, which directly determines how much revenue a company can earn and how many companies it can accommodate.

2. Market growth rate

How has the growth been in recent years? Is it in compound growth or declining? Has the ceiling been reached?

The size of the market growth rate reflects the height of the ceiling. Different industry spaces are not only related to the height of the entire industry, but also to the height of the company, and also determine the height of your life.

So whether it is investment or work, we must choose industries with high ceilings. Different industry spaces determine the height that the company can reach in the future and also determine the height of your life.

3. Price range

Different price segments also determine the competitive status of an industry.

4. Profit Margin

Whether the profit margin of this industry can cover the cost, the general logic is small profits but quick turnover, or large profits but few sales, or even large profits but quick turnover.

5. Competitive players

The purpose of analyzing competing players is to understand the competitive landscape of the industry and how the market pie is divided, that is, to see the degree of concentration of the industry.

The competitive status of the industry can be divided into four main categories:

(1) The Matthew effect of a single dominant player , such as Didi in travel and Tencent in social networking; (2) A duopoly or a multi-oligopoly approaching a balanced competition , such as short videos from Douyin and Kuaishou; and e-commerce from Taobao/Tencent, JD.com, and Pinduoduo; (3) A hundred schools of thought contend, each leading the way , such as education and training, where New Oriental accounts for less than 2%. Due to the particularity of the education industry, there is no diminishing marginal benefit, and it is impossible to achieve a winner-takes-all situation; (4) Are there other industries that affect competition? The competitors of short videos are not only short videos themselves, but also various apps that compete with them for user time.

Summarize

The essence of industry analysis is to find where the profit is . This profit is not a unilateral factor, but a cross-analysis of a series of scale, growth, and profit margins .

The most fundamental purpose of industry research is to discover opportunities, respond to challenges, find the core problems to be solved, adopt strategies based on one's own situation, and solve user pain points.

This shows that it takes years of research to study an industry, and a week is only enough to get a superficial understanding, but this superficial understanding is the entry ticket that marketers must first obtain.

Author: Zang Feng

Source: Strategist Zang Feng (ID: clrdzwxy)