Business Plan Preparation ESBM 4830 Frank Moyes Leeds School of Business University of Colorado Boulder, Colorado Market & Industry Analysis

Tonight’s Agenda Compelling Need Market & Industry Analysis Model Company Financial Comp Market Research - Joseph Yue Value Proposition – do next week Market & Industry Analysis

Compelling Need Solves a problem Unfulfilled niche Dissatisfaction with current products/services Poor quality or service Needs Physical Physiological Emotional Social Financial Intellectual Manage information: Google Physical: food, warmth, shelter, sleep, etc. Physiological: health, cleanliness, comfort, fitness, safety, etc. Emotional: euphoria, love, prestige, stress, etc Social: ethical, honesty, power, competitiveness, integrity, friendship, etc. Intellectual: achievement, better decisions, artistry, etc. Economic: revenues, productivity, cost savings, maintenance, etc. Financial: ROI, DCF, payback, burn rate, etc. Market & Industry Analysis

Market & Industry Analysis Market: “group of current and potential customers having the willingness and ability to buy product/services to satisfy a need.” Industry: “group of sellers that offer product/services that are similar and close substitutes for one another.” Market & Industry Analysis

Market & Industry Analysis Sections Market size & growth Trends Target Market Industry structure Competitive environment Competition Opportunity Market & Industry Analysis

Market Analysis (Customers) What is the size & growth potential? Historic and future Lot’s of numbers – show in tables Must indicate sources Segment your market Market & Industry Analysis

Market Segmentation Groups of customers – demographics & psychographics Products – features, benefits, prices Geography Distribution channels Sector – industrial, consumer, government Objective is to identify your entry point Market & Industry Analysis

Trends What changes are taking place – economic, socio-cultural, political/legal, global, environmental, demographic, technological Positive and negative trends Dissatisfied groups Must provide your sources Market & Industry Analysis

Target Segment What is the size & growth potential? Customer description Consumer - demographics & psychographics Business – types of organizations, buying decisions Could be both Best point of entry Customer research is key Surveys provide credibility Market & Industry Analysis

Channels of Distribution To reach the customer, must you go through another company? What is normal for you market? Distributors, wholesalers, dealer, retailer, internet, system integrator, original equipment manufacturer (OEM) Buying decisions Market & Industry Analysis

Industry Structure (Competition) Organization – how & where are products/services produced and delivered? How is the industry organized – who is the competition Describe the supply chain Must provide your sources Market & Industry Analysis

Supply Chain Distrib Suppliers Consumer Manfg Sources Retailers Goods Supply Chain A T Kearney, Integrating the Supply Chain Distrib Suppliers Consumer Manfg Sources Retailers Goods Information Funds Market & Industry Analysis

Competitive Environment What is the competitive environment? What is the basis of competition? Control over prices, costs & channels Market & Industry Analysis

Barriers to Entry Economies of scale: manufacturing, marketing, technological Customer loyalty: well established brands, long established relationships Agreements with customers, suppliers, strategic partners Control of the distribution channel Switching costs Capital requirements: high investment Market & Industry Analysis

Barriers to Entry (continued) Access to distribution channels: exclusive distribution agreements, dominant position of competitors Intellectual property: patents, trade secrets, copyrights, trademarks, know-how Government regulations: defense contracts, import restrictions Industry hostility to new entrants. Will use all means to drive out new competition: pricing, legal, spreading rumors Market & Industry Analysis

Competition Describe key competitors Direct, indirect, future Prepare a competitive matrix Market & Industry Analysis

Opportunity Last section of Market & Industry Analysis Make case that you have an attractive opportunity Draw conclusions based on your research, interviews and customer surveys Market & Industry Analysis

Opportunity (continued) Describe size and growth. What trends support the opportunity? Describe compelling need. What problem are you solving? Explain the evidence that proves there is a market Describe the target segment Describe what is unique about your product or service. What are the benefits? Describe your competitive advantage Market & Industry Analysis

Model Company Identify & analyze a company that represents just what you would like to do Does not have to be in the exact same market Market & Industry Analysis

Financial Comp’s Identify a company that has financial characteristics that are similar to your venture % Gross Margins % Operating Expenses Working Capital (Accounts Receivable, Inventory & Accounts Payable Capital Expenditures Market & Industry Analysis

Next Week Competitive Advantage In the Fire: opportunity/need No value proposition Hand-in Interview list Opportunity/Need – 2 paragraphs Market & Industry Analysis

Opportunity/Need Market is large enough for you to enter, growing & has positive trends Solves a problem Unfulfilled niche Dissatisfaction with current products/services Poor quality or service Needs Physical Physiological Emotional Social Financial Intellectual Manage information: Google Physical: food, warmth, shelter, sleep, etc. Physiological: health, cleanliness, comfort, fitness, safety, etc. Emotional: euphoria, love, prestige, stress, etc Social: ethical, honesty, power, competitiveness, integrity, friendship, etc. Intellectual: achievement, better decisions, artistry, etc. Economic: revenues, productivity, cost savings, maintenance, etc. Financial: ROI, DCF, payback, burn rate, etc. Market & Industry Analysis