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Market Analysis has two distinct definitions, but as far as a business’s marketing is concerned, the relevant idea is a thorough analysis of your target market, and a plan of the steps to take for optimum sales and profitability.  The underlying purpose of market analysis is either to plan the best way to enter a new market, or, for an existing market, to increase the market share or make it more profitable. Hence market analysis is a highly relevant concept for business owners and managers.

Let us now look at the two major categories of this type of market analysis:
Market analysis for a new product line/business:
In this case, analysis of the target market involves studying the needs of your potential customers, predicting which products are likely to be successful among them, and in how much quantity you should produce the product. Logic analysis, for instance, involves studying the target customers to identify an unsatisfied need, and launching your product accordingly, to fulfill that need. Also, the incomes and lifestyles of the customers are studied, based on which you decide the price, packaging and distribution of your products, or the corresponding aspects of any services you are providing. Finally, the competition is analyzed. For this, you basically look at other firms that are catering to your target market already, and look at their market shares, their brand image, pricing strategy and other things, and this helps you generate your own ideas on how to best enter the market.
Market analysis for an existing business/product line:
Some of these techniques overlap with the market analysis for a new business or product line, but the major difference is that instead of studying targeted customers, you are interested in your existing customers. You study brand loyalty and brand perception of your product among your customers, and also predict their response to any changes you might bring in your product, packaging or pricing strategy. Also, you study the competition, and devise strategies that might give you a competitive edge, increase your profitability, sales or ROI.

Market analysis tools:
There are a myriad market analysis software tools available on the internet, some free, some not. They usually take the form of spreadsheets with several fields that input a wide range of data, and then manipulate it and present a general analysis using graphical representation, or by listing data in a specific order (such as sales by week or time of day) depending on the data that is input. Also, marketing firms usually provide market analysis services along with their other services.