What should go into a market context analysis?
A market context analysis should cover the size of your market (the “size of the prize”), the industry and macro trends shaping it (a PESTLE analysis is the usual tool), and a genuine read on your customers and competitors. You can’t write a useful strategy without understanding the world your business operates in, and that world is always changing.
What is the “size of the prize”, and why does it matter?
The “size of the prize” is simply how big the market you’re operating in actually is, and it’s the first thing to establish because it reframes everything. We worked with a large architectural firm that felt substantial, but a quick look at the market data showed they held only about half a per cent of it, so the upside was enormous. A company we worked with in Africa was the opposite: they already had 25% of a four-to-five-billion-dollar market, so even 3% more was a huge number in absolute terms. Knowing your share tells you whether the game is about grabbing more of a big market or defending a dominant position, and it shapes the strategy you write. The same applies when you’re eyeing an adjacent market: understand the size of the prize before you step across.
What is the PESTLE model?
PESTLE is a widely used framework for analysing the macro trends around your business, standing for Political, Economic, Socio-cultural, Technological, Legal and Environmental. Political covers where state and federal governments are focused. Economic includes unemployment, inflation, wage increases, GDP growth and energy or house prices. Socio-cultural captures shifts like the post-COVID move to working from home. Technological is the pressing one, with AI everywhere, so ask whether it’s an advantage for you or something your whole category will adopt. Legal covers new legislation that can add complexity or cost, and Environmental covers things like Australia’s mandatory carbon reporting. These trends matter because they change your demand: after COVID, Australia took in roughly a million migrants in two years, about 4% of the population (Overseas Migration, Australian Bureau of Statistics, 2024-25), so the question is whether your business grew with that 4%. Work through each letter and you’ll catch the tailwinds and headwinds you’d otherwise miss.
Why look at your company’s DNA?
Understanding your company’s DNA means digging into the real reason the business was started and why it has succeeded, not the tidy timeline most companies put on their website (“founded in 1973 by two brothers, merged in 2001”). That rational history has no depth. What matters is the story underneath. We worked with a 17-year-old company and asked the founder to go back to day one and explain why he set it up, and he told an emotional, revealing story. His first-ever employee, who’d joined four weeks in, said she’d never known it, and that it made her want to work there even more. The DNA exercise reveals the underlying values within an organisation: sometimes it reveals a company was entrepreneurial at heart but has lost that edge over time, which is something you can deliberately bring back. Your DNA shapes what you’re genuinely good at, so it belongs in the market context.
How much do you need to know about your customers?
The honest answer is that it depends, and you can have both too much and too little. The critical thing is to understand your customers’ needs, and specifically whether those needs have changed and where they’re heading over the next three years. Will your customers still want the same things from you, or will you need to offer something different? BlackBerry is the cautionary tale: every senior executive once carried one, then Apple offered a simpler, better way to do similar things, and BlackBerry didn’t move with the shift. By the time they built something comparable, it was too late. Customer needs can change slowly or quickly, so the job is to stay abreast of what your customers are thinking now and what they’ll want next, not just what they wanted in the past.
How 24HRBP approaches this
In a 24 Hour Business Plan session we work through the market context first, because it focuses everything that follows. Getting clear on your market size, the macro trends and your real customer needs is what makes the rest of the strategy sharp rather than generic.
Watch the full episode on The 24HR Business Plan Podcast: Episode 2 - Understanding Market Context in Business Planning
