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 Segmentation Markets 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 Intelligence The 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