Is your target company future-proof? Market due diligence (also commonly referred to as commercial due diligence) is an essential step for investors and stakeholders to understand market trends, potential market opportunities, the competition, and how the target company can take advantage of those opportunities.
Given ongoing market disruption and continually changing market trends, commercial due diligence is more important than ever to ensure a company’s sustainability and future success, and, ultimately, to make an informed investment decision.
In this blog, we’ll look at the 3 main components of market due diligence, and provide a list of data sources to conduct a thorough assessment.
3 Components of Market Due Diligence
1. Market Analysis
The market analysis provides an overview of the market size, market share and market trends of the target company’s industry. It also gives insight into customer segments and buyer behaviour, as well as pricing models used by competitors.
In this phase, it is important to understand the market dynamics, market growth opportunities and market risks.
Market analysis data sources:
- Financial reports: for information on market growth and market size
- News reports and press releases: for market trends, market disruptions and market opportunities
- Industry publications: for market intelligence on market share and customer segments
- Surveys & interviews: for consumer intelligence
- Online reviews and social media comments: increasingly used in place of or as a precursor to primary research methods (e.g. surveys, interviews, focus groups, etc.)
- Company websites: for market pricing, market positioning, market share claims and market trends
2. Competitive Benchmarking
This phase involves an analysis of the market players in relation to each other and the target company. Here, SWOT analysis techniques can be used to compare your target company with its competitors, analyse their strengths and weaknesses, as well as identify market entry barriers and market saturation points.
Competitive benchmarking data sources:
- Online reviews and social media comments: for product intelligence, brand health, market trends, market reputation and market share
- Mystery shopping: to understand competitor pricing models, market positioning and market segments served
- Surveys and focus groups: to gain a deeper understanding of market opportunities and market trends
- Company websites: for competitor market positioning claims and market share
- Industry publications & press releases: for market intelligence on market share and market trends
3. Internal Analysis
This phase involves an in-depth analysis of the target company’s market strategy, market positioning, market performance and market share. It is important to understand how well the company has been executing its market strategy and whether it needs to be adjusted or updated in response to changing market dynamics.
Internal analysis data sources:
- Company financial reports: for market performance, market share and market growth
- Strategic plans & market positioning statements: to assess feasibility and market alignment
- Organisational structure: to understand market strategy execution and market alignment
- Customer reviews & social media comments: for product intelligence and to understand customer loyalty, market reputation and market share
- Employee data: Including employee reviews, key talent and employee churn rate
- Sales & market data: to understand market performance, market share and market growth
By going through these 3 steps of market due diligence, investors and stakeholders will gain a better understanding of the market dynamics and market trends, as well as any potential risks or opportunities associated with the target company. This information is invaluable for making an informed decision about whether or not to invest in the target company.
The market due diligence process is involved and can be intimidating, so make the most of data analytics tools to help you streamline the process.
Market Due Diligence by Symanto
Symanto offers a suite of services and tools to help you quickly and accurately process big data sources such as online reviews and social media data. You can also use Symanto to process other unstructured text data sources such as qualitative surveys and interview responses.
This data is the most time-consuming and complex to process and analyse, but as you can see from the lists above, it plays a critical role in the market due diligence process.
With Symanto you can:
- Compare consumer reviews and mentions online for competitor benchmarking.
- Find out which features and topics customers in the market care about most.
- Identify market trends.
- Get a measure of customer loyalty, Net Promoter Score and market share.
- Gain insights from employee reviews.
- Reveal key customer psychographic traits.
- And more.