1. Mississippi State University “The people’s university” -- Dr. Mark Keenum MGT 3323 Entrepreneurship Daniel T. Holt Assistant Professor of Management

2. Administrative Issues First screen assignments—DUE Today, 13 Feb (electronic version due NLT than 9 a.m. tomorrow morning) Grades will be posted NLT than Monday, 20 Feb Industry, Competitor, & Target Market Analysis—Due 5 Mar Get started early (represents 20% of your grade & 20 – 25 pages are expected) Discussion for today

3. Planning Process

4. Considering the opportunity generally

5. Business Opportunity Insight Existing ProductsNew Products Existing MarketsMost simple ideas. Face stiff competition because existing firms Practical New MarketsPracticalMay be the most difficult as they are expensive and may require considerable capital with R&D.

6. Feasibility Analysis A more stringent test designed to take the best ideas that emerge from the First Screen and more fully assess the feasibility Includes… First phase (due 5 Mar) Analysis of the Industry Analysis of competitors & how you’re different Analysis of the target market (requires first hand data from customers—we’ll talk about this next Monday) Second phase Financial feasibility Final phase Revisions & improvements to first two phases And… Suppliers Distribution channels Location analysis Technology and service analysis

7. Requires…. Primary data Analysis of original research data that you collect (for instance, buying preferences of your target market—you must do this as part of your assignment) Secondary data Analysis of data that are publicly available (for instances, analysis of industry study data, Census Bureau data, company reports These are found through several sources (we’ll discuss several today)

8. Industries Industries represent… A group of firms producing a similar product or service Industries vary by… Size Growth-rate structure Financial characteristics Attractiveness Industry analysis shows… The market need There is a substantial market size There are industry trends to support the company’s strategy

9. Industry & Market Niches Industry—group of firms producing a similar product or service Large and growing industries (would like few competitors, less than 5) Structurally attractive Start-ups can enter the industry and compete Target segment—portion of the industry that the firm goes after or tries to appeal to Importance of product to its customers Should be large enough for the new business but small enough to avoid attracting larger competitors Favorable environmental and business trends

10. Industry Participants Describe segmentation Product The computer industry might be segmented by PC, laptop, server equipment, or software Customer The computer industry might also be segmented by customers such as business, individual, government, or schools Financially Some firms (as we have discussed compete on price) positioning themselves for a target group financially (i.e., higher price ranges) As you decide a focus, it might be good to overlap these two to clearly identify your focus. Nature of the participants in an industry Size of the industry Growth potential Profitability (bizstats.com) Key issues Key trends & long term prospects for new products & services

11. Determining Industries http://www.naics.com/search.htm http://www.naics.com/search.htm Your demands… A definition of the industry (see p. 103-104) Industry characteristics Explain how the industry is segmented and where your business fits into that segmentation Explain the portion or specific market within your broader industry that you plan to target Industry size Normally displayed in dollars over 3 to 5 years Industry growth rate Displayed as a percentage over 3 to 5 years Consider looking at the local market it possible See the Census Industry sales projections Report the next year to 3 years Consult trade associations

12. ‘…it’s a tough call in many instances’ as many firms might be classed in a number of categories. Identifying industries Identifying trends How has the market changed over the last five years? What is the projected growth in the market? What factors will affect growth …several reports are available through Mintel. Industry trends What are the general economic factors? What are the changing regulatory conditions? What are the changing consumer needs “Understanding an industry is solving a puzzle…” Interpreting the data to assess the opportunity ‘Each fact and figure should help you and investors understand the viability of the opportunity.’

13. Lets watch a pitch…. http://www.msnbc.msn.com/id/14855230/ http://www.msnbc.msn.com/id/14855230/ What industry?

14. Online Retail Industry

15. Industry Issues Industry size Normally displayed in dollars over 3 to 5 years Industry growth rate Displayed as a percentage over 3 to 5 years Consider looking at the local market it possible See the Census Industry sales projections Report the next year to 3 years Consult trade associations

16. Industry Issues Industry size US online retail sector had total revenue of $134.9 billion in 2009 The electronics segment was the sector's most lucrative in 2009, with total revenue of $32 billion, equivalent to 23.7% of the sector's overall value Industry growth rate Represented a compound annual growth rate (CAGR) of 11.5% for the period spanning 2005-2009 Industry sales projections Performance of the market is forecast to decelerate, with an anticipated CAGR of 10.5% for the five year period 2009-2014, which

17. Industry Size $ Billion€ BillionPercent Growth 200587.462.9 2006107.077.022.4% 2007126.791.118.4% 2008132.395.14.4% 2009134.997.02.0% Average Growth 11.5% SourceSource: Datamonitor (note from last week (see slides; access through Business Source Complete; Search for this included “Industry profile” AND “United States” AND Datamonitor AND retail)

18. Consider the following… Develop business to retrofit cars to be environmentally friendly.

19. Consider the Car Industry…

20. Financial Benchmarks Identify key financial benchmarks and ratios, interpreting the meaning of those ratios (consult the sources from the library & online sources) Bizstats example

21. Competition

22. Consider the Value Proposition Product Performance, quality, features, brand, selection, search, easy to use, safe Price Fair, visible, consistent, reasonable Access Convenient, location, nearby, at-hand, easy to find, in a reasonable time period Service Ordering, delivery, return, check-out Experience Emotional, respect, ambiance, fun, intimacy, relationships, community

23. What would the primary and secondary value be of ?

25. 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

26. Future Competitors…

27. Competitive Advantages Firms X, Y, and Z are in this market space We are able to enter because … We can protect ourselves from imitation by … What do customers currently do without us? Consider How do you compare to rivals? How can you compete in the space? Are rivals focused on your space?

28. Your demands…. An identification of direct and indirect competitors (see p. 134-137) A description of where these competitors are located and how accessible they are to customers A description of the products and services competitors offer (varieties, inventories) Competitors’ prices and costs The types of customers competitors attract Competitors’ strengths and weaknesses Competitors marketing and distribution systems Barriers created by the competitors A description of the methods for generating revenue in the industry Your venture’s values and benefits directly compared to your competitors against meaningful criteria that you define A competitive analysis grid (p. 138)

29. Resources Consult the following to share avoid mistakes http://www.gaebler.com Company information Hoovers on-line Http://www.hoovers.com/ Professional Associations http://idii.com/resource/associations.htm http://www.weddles.com/associations/index.cfm Business patterns http://www.census.gov/econ/cdp/index.html

30. Resources Community specifics can be identified through US Census Bureau http://www.factfinder.census.gov/home/saff/main.html?_lang=en City-Data http://www.city-data.com/ Income data for communities Quickfacts through US Census Bureau http://quickfacts.census.gov/qfd/index.html Social trends Mintel (must create a profile using Mississippi State Information; accessed through the library) http://academic.mintel.com.proxy.library.msstate.edu/sinatra/oxygen_academic/whatshot /

31. Resources Company information Hoovers on-line Http://www.hoovers.com/ Professional Associations http://idii.com/resource/associations.htm http://www.weddles.com/associations/index.cfm

32. Questions, Comments, or Criticisms?