Effective Methods for Market Analysis Based on the Lanchester Strategy

The Lanchester Strategy emphasizes the importance of precise market analysis to effectively execute the “weaker’s strategy” and “stronger’s strategy,” clarifying a company’s strengths and competitive advantages. This article organizes and explains specific methods for conducting market analysis from the perspective of the Lanchester Strategy.

1. STP Analysis (Segmentation, Targeting, Positioning)

STP analysis is fundamental for market analysis and is essential for the Lanchester Strategy’s emphasis on focusing on specific targets.

• Segmentation (Market Segmentation)
  Divide the market based on geographic, demographic, psychographic, and behavioral factors.
  Example: Urban vs. rural areas, age groups, preferences.

• Targeting (Selecting Targets)
  Identify specific market segments to concentrate efforts on, particularly important for resource-limited small businesses.

• Positioning
  Clarify your position in the target market, focusing on differentiation from competitors.

2. SWOT Analysis

SWOT analysis evaluates internal and external environments. In the Lanchester Strategy, it helps leverage a company’s strengths while addressing weaknesses.

• Strengths
  Identify areas where the company outperforms competitors (e.g., technical expertise, brand strength, local focus).

• Weaknesses
  Highlight areas for improvement or resource deficiencies.

• Opportunities
  Analyze growth opportunities from market trends or changes.

• Threats
  Identify risks such as competitor activity, regulatory changes, or economic downturns.

3. Competitor Analysis

Understanding the competitive landscape is critical to winning in the Lanchester Strategy. Methods include:

• Five Forces Analysis
  Analyze market competition through five key factors:

  • Industry rivalry (competition among existing competitors)
  • Threat of new entrants
  • Threat of substitutes
  • Bargaining power of suppliers
  • Bargaining power of customers

• Competitor Benchmarking
  Study competitors’ success factors and identify areas for differentiation.

• SWOT Analysis for Competitors
  Apply SWOT analysis to competitors for comparative insights.

4. PEST Analysis

PEST analysis evaluates the external environment across four dimensions: Political, Economic, Social, and Technological. This helps in adapting to external changes within the Lanchester Strategy.

• Political
  Examine regulations, tax policies, and government interventions.

• Economic
  Assess interest rates, currency trends, and economic cycles.

• Social
  Understand shifts in consumer values and lifestyles.

• Technological
  Analyze the impact of new technologies on the market.

5. Niche Market Identification

The Lanchester Strategy highlights finding underserved niches and establishing dominance. Methods include:

• Identifying Market Gaps
  Spot unmet needs or under-served customer groups.

• Customer Interviews and Surveys
  Understand unresolved challenges or demands from consumers.

• Market Trend Analysis
  Observe micro-trends and specialize accordingly.

6. Pareto Analysis (80/20 Rule)

The 80/20 Rule suggests that 80% of results come from 20% of efforts. Use this to determine focus areas.

• Customer Analysis
  Identify key customer groups driving the majority of revenue or profit.

• Product Analysis
  Focus resources on top-performing products or services.

7. Market Share Analysis

Understanding your market share helps refine strategic priorities.

• Identifying Leaders and Followers
  Study the actions of market leaders (major players) and followers (smaller companies).

• Exploring Share Reversal Opportunities
  Explore strategies for niche markets where smaller players can outperform leaders.

8. Value Chain Analysis

Break down your value creation processes to prioritize resource allocation effectively, aligning with the Lanchester Strategy’s principle of concentration.

• Primary Activities: Product development, marketing, sales, and customer service.
• Support Activities: HR management, technology development, and procurement.

9. Combining Blue Ocean Strategy

The Blue Ocean Strategy complements the Lanchester Strategy by targeting uncompetitive markets (blue oceans).

• Creating Value Curves
  Compare your product or service features against competitors to find unique advantages.

• Discovering Non-Customers
  Target potential customers who are not yet engaged in the market.

10. Leveraging Data Analytics Tools

Modern tools enable detailed market insights:

• Google Analytics: Analyze customer behavior data.
• Social Media Analysis Tools: Understand consumer reactions and trends.
• BI Tools (Business Intelligence): Visualize operational data such as sales and inventory.

Conclusion

Market analysis for the Lanchester Strategy becomes more effective when combining the following methods:

1. STP Analysis: Define target markets.
2. SWOT Analysis: Understand strengths and weaknesses.
3. Competitor Analysis: Evaluate the competitive environment.
4. PEST Analysis: Comprehend external factors.
5. Niche Market Identification: Achieve focused strategies.

By flexibly employing these methods, you can maximize resources and establish a competitive edge. Thorough market analysis and well-targeted strategies pave the way for success.