The Benefits of Market Analysis

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The market analysis aims at studying the dynamics and attractiveness of a given market within an identified industry. It primarily takes two separate forms. In the first form, investors use market analysis to oversee and analyze its growth curve to come up with investment decisions. In the second form, market analysis is a field of study employed by marketers to examine the market in the target. Regional and urban economics is the field of studying real estate market analysis at regional and urban setup levels. This study aims at examining the various factors economic factors that contribute to the growth and fall of cities (Casselman 1).


Comparative advantage

The increasing growth in population and economy generally comes because of the comparative advantage that one locale has over the other. Several factors lead to this comparative advantage. These factors include educational facilities, transportation facilities, natural environment, climatic factors, and the labor force quality and quality (Casselman 1).

Transportation facilities

Transportation facility is one of the most vital factors that contribute to a comparative advantage in the community. For example, New York is a state that developed within ports emerged the dominant ports on the seaboard. This was because it enjoyed the initial advantages of the Erie Canal during 1825, which enhanced accessibility to the western community.

Educational facilities

The quality of facilities used in the educational sector is vital with the current economy, which has turned out to be service-oriented and technological. This helps in enhancing the labor force’s quality in education and providing better forums for technological development.

Created environment

This environment includes factors such as public services, levels of tax, cultural activities, educational facilities, transportation, and utilities. Based on the measure of such factors, a community may earn a comparative disadvantage or advantage. For instance, an industrial park may give rise to increased industrial employment in a region.

Natural resources

Availability of a wide range of natural resources in a region is a vital factor considered in the cities location. A city with natural resources must give birth to other advantages as a trade and industry center.

Climatic factors

A favorable climate is also an important factor in the development of regions and cities especially for those regions that depend on tourism as the major economic income. A favorable climate enhances the comparative advantage to these cities such as California and Florida that draws a huge number of tourists.


This is an intangible factor but is so critical to the growth of the community. It is one of the most vital factors in quality development and regional growth.

Labor force

The quantity or quality of the labor force greatly affects the comparative advantage of a particular region. A skilled labor force involves expertise skills and experience in their area of deployment (Casselman 1).

The concept of the economic base

Specialization is a key factor in the development of cities or regions. No economy can be self-reliant but must purchase some necessary supplies outside its boundaries of operation to pay for its imports. According to local economies analysis, employment falls into two major classifications namely:

  • Export activities (basic activities): This category produces products for consumption or sale outside the border of the region. It includes activities undertaken by manufacturing companies, mining, wholesale trade, and agriculture (Casselman 2).
  • Population-serving activities (non-basic activities): This category produces products for consumption or sale within the surrounding community. It includes those activities undertaken by the public utilities; finance, construction companies, government, and retail trade (Casselman 2).

Employment opportunities for the population-serving industries within a given region increase with the expansion of export activities within that region.

People’s location

The development of cities relies on areas that offer industries a comparative advantage. The exploitation of these advantages enhances the development of the economic base. The population density tends to be high in regions that offer economic opportunities where people can get a comparative advantage. Therefore, the housing demand within a particular locality has a close relationship with the employment demand (Casselman1).

Local real estate analysis

To analyze real estate, the expertise must acquire an understanding of the existing industrial changes within the community and the factors that lure new people or cause people to migrate. Local real estate analysis takes two forms (Casselman 4).

Short-run demand analysis Short-run demand changes in most cases affects existing properties sales, lease rates, commodity prices, and vacancy rates. Analysts need to consider factors such as current real estate supply improvements, industrial structure, past changes in the local economy, and future economic trends (Casselman 1).

Long-term demand analysis

This involves analyzing factors such as long-run economy prospects, regional trends that affect employment, and the upcoming firms in the region. Investors in real estate need to analyze carefully the assumptions lying behind employment projections and population (Casselman 3).

Urban growth patterns models

There are varieties of ways in which a city may grow. The first method is vertical growth where new taller structures replace smaller ones. The second method is by employing air rights to put up new structures within the existing ones by filling the vacant spaces between the structures.

Concentric circle growth

This model takes the bid-rent theory, which states that tenants who are in a position to pay high rents reside closer to the city center. It involves many concentric zones radiating outwards from the city center.

Axial growth

This model came into the market in the 1930s, taking a star-shaped city. It grows from stretching outwards the city along transportation routes. Lands along cities served by complete transportation facilities enjoy a comparative advantage over those in the rural setup.

Sector growth

This takes a wedge-shaped sector extending from the city center. It has five major divisions in form of the sector including the central business district, industry, and warehouse, low-value residences, medium-value residences, and high-value residences (Casselman 11).

Multiple- nuclei growth

This model emphasizes that several activities take place in clusters. It also argues that in major cities, there exists more than a single center of the business district. It maintains that the clusters developed due to the following factors:

  1. Some dissimilar activities tend to be detrimental to one another
  2. Similar activities draw proximity to each other
  3. Some activities tend to take lower-priced less desirable sites
  4. Some activities need specialized facilities


Market analysis helps in evaluating the market clients and ascertains the most viable courses of action necessary to enhance profitability and sales. Investors generally analyze numerical data, existing market patterns, and probable future patterns of specific data in carrying out market analysis. They carefully analyze the price movement within a specific sector, events that may affect their commodities, and the entire market trend. They may also investigate events like emerging technological discoveries, announced mergers, and profit predictions (Casselman 2).

Work cited

Casselman, Ben. “Consumers’ Fears Hobble Economy”. Wall street Journal, NY: Jones Reprints, 2011.

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