Market Analysis

CHAPTER 6

BBUSS 2403 • BUSINESS PLANNING

3-1

6-2

Introduction Market analysis

Breaks the industry into segments and specifies a segment or target market that the firm will tackle

6-3

Market Analysis

• Firm’s target market

• Its customers• Its competitors• How it will

compete in the marketplace

• Its potential sales and market share

6-4

Market Analysis• Helps define the nature of the business• Affirms that a company has a well thought out

target market• Understands its customer and can generate

sales

6-5

Market SegmentationMarkets can be

segmented by– Geography– Demographic

variables– Psychographic

variables– Behavioral

variables– Product type

6-6

Market Segmentation and Target Market Selection

Market segmentation– Homogeneity of needs

and wants within the segment

– Heterogeneity of needs and wants among the segments

– Small differences within segments

– Distinct– Size– Profitable

6-7

Selecting a Target Market

Once a firm segments its market, it selects a segment within the market to target

Focus on a single market

6-8

Target Market Size and Trends

• Estimate size of similar businesses

• Examine industry trends

6-9

Buyer Behavior

• Decision making

– Who makes the decision to purchase?

•Individuals•Groups

6-10

Involvement– High involvement– Medium involvement– Low involvement

6-11

Competitor Analysis

• Detailed analysis of a firm’s competition

• Understand positions of major competitors and the opportunities that are available to gain a competitive advantage in one or more areas

6-12

Direct, Indirect, and Future Competitors

• Direct competitors– Businesses that offer a

product similar to yours

• Indirect competitors– Businesses that offer close

substitutes to your product

• Future competitors– Businesses that could move

into direct or indirect competitor roles

6-13

Competitive IntelligenceThe process of gathering

information about your competitors

6-14

Competitive Analysis Grid

Competitive analysis grid A tool for organizing and presenting information you collect about your competitors

6-15

Estimate of Annual Sales and Market Share

• Four ways to estimate initial sales

– Contact premier trade associations in your industry

– Find a comparable firm – Conduct Internet searches– Use a multiplication

method to try to arrive at a reasonable number