Doing some free website reviews on a webmaster forum this morning, I came across the classic case of time and money spent with no market analysis. The site owner has a pretty good looking site, has a product competitively priced, and a small budget for marketing. The problem? It’s not making sales as expected, and he is having a hard time getting visitors. If he had only done a little market analysis work first.

A Market Analysis is Essential

Starting a website without a market analysis is like buying a lottery ticket, and that ticket cost the price of developing your site. Have any of you gotten rich by buying lottery tickets? The odds are kind of against you here.

In the case of the site owner I reviewed this morning, the problems and work that he did, clearly spelled out to me that there was no market  analysis though he did to a great deal of other research. He’s finding it hard to get traffic, it has an extremely competitive keyword topic, and his marketing budget will not even remotely come close to making a sale. His product is just $6.99, and if he is lucky enough to get targeted visitors at 10 cents a click he will need to convert more than 1:100 to make any money at all. An analysis would have also revealed that his competitors offer many additional free services that his site is not. A final note here, his competitors advertise on television.

If there had been a market analysis a few things may have changed the site owners perspective on the whole idea. He may have realized that this may be a waste of time, or this may take a long time to market for free. He may have also realized that his prices could actually be be a bit higher, and still be competitive. Whatever the condition, even a extremely basic market analysis will reveal a lot.

A Basic Market Analysis for a Website

So before you go crazy building your website make sure to do (at least) a basic market analysis. Here is a list of items to help you make your evaluation.

A Basic Website Market Analysis Checklist

• Identify your product or service
• Identify your prospects
• Identify the leading competitors
• Estimate leading competitors value – How much money do you think they make?
• Check market saturation – Are their 5,000 others selling this as well?
• Determine best method to advertise, identify leaders methods
• Keyword analysis
• Estimate costs for advertising or time if using free methods
• Determine competitive price
• Find complaints about your competitors – This is helpful to avoid pitfalls, and ways to compete against the current industry leaders.
• Do a reality check evaluation – Are you building a search engine to compete with Google?
• Spend more than one hour doing this evaluation

The last item I mention on this list is to spend more than one hour doing it. I’m not actually kidding here. One of the biggest mistakes you could ever make is to start a website without doing a market analysis. One or two hours of work could save you countless hours, and money chasing hopeless dreams.

If you do a market analysis you will get something a little more than a stiff look at reality. If the signs still point to achievable goals, and your site is still a go, then think of how much of advantage you already have to those that have not taken the time to do an analysis. Just taking a wild guess here, I suspect that less than 10% of all websites ever built had a market analysis done prior to starting. A market analysis, if done right, can almost point the way to success. Already have a site with customers? Then add to that list, survey your customers. Customers offer all sorts of insight.

It’s fun to get jazzed about a new site, but it is also a real drag if that site has still not gone anywhere a year later.

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