PowerPoint Presentation  Section 6.2  Pages

What you’ll learn  How to research an industry  What obstacles typically block a new venture’s success  How to study a target market 6.2 Industry and Market Analysis

Why it’s important  Studying your company’s industry and market will help you create a product or service that people want.  Studying your company’s industry and market will help you understand your chances for success. 6.2 Industry and Market Analysis

Key Terms sales potential market share market share economies of scale economies of scale barriers to entry barriers to entry brand loyalty brand loyalty proprietary technology proprietary technology 6.2 Industry and Market Analysis

Key Terms (Cont.) market share niche niche customer profile customer profile customer needs analysis customer needs analysis 6.2 Industry and Market Analysis

Springboard Predict some technological, fashion, and agricultural changes that might occur during the next decade.

I. LOOKING AT THE INDUSTRY A. Evaluate prospects for success in the market. B. Evaluate the sales potential and the competition. 6.2 Industry and Market Analysis

II. TRENDS AND PATTERNS OF CHANGE To determine a business strategy, one must understand where an industry is headed and how it works. 6.2 Industry and Market Analysis

III. YOUR COMPANY AND THE INDUSTRY How much of a product a business can realistically expect to sell is called sales potential.

6.2 Industry and Market Analysis IV. THE NATURE OF YOUR PRODUCT What one sells influences how much can be sold.

6.2 Industry and Market Analysis V. INDUSTRY TRENDS Identifying trends can help a business predict its product or service’s sales potential.

6.2 Industry and Market Analysis VI. SOURCES OF SUPPLY Suppliers can affect costs, products, and sales.

6.2 Industry and Market Analysis VII. DEMOGRAPHICS Demographics can indicate if an industry is growing, shrinking, or remaining stable.

6.2 Industry and Market Analysis VIII. BARRIERS TO ENTRY A. Barriers to entry can keep new businesses from entering or succeeding in an industry.

6.2 Industry and Market Analysis B.New businesses face many obstacles. 1. Economies of Scale. Bigger businesses can churn out more products more quickly and cheaply.

6.2 Industry and Market Analysis 2. Brand Loyalty. Customers prefer to purchase products and services from companies they know.

6.2 Industry and Market Analysis 3. Access to distribution channels. 4. Proprietary Technology. A know-how that is owned and often protected by patents.

6.2 Industry and Market Analysis Math Problem Next year’s total market toy sales will be $5M. Your projected toy sales are $50,000. What will be your market share?

6.2 Industry and Market Analysis IX. THE COMPETITION A.Market share is a portion of the total sales generated by all the competing companies in a given market.

6.2 Industry and Market Analysis B.A niche is a small section of a market, usually based on specific customer needs.

6.2 Industry and Market Analysis C.Conduct a thorough analysis of the competition. 1. Identify competitors 2. Find competitors’ strength and weaknesses

6.2 Industry and Market Analysis 3. Identify competitive advantages

6.2 Industry and Market Analysis X. LOOKING AT THE TARGET CUSTOMER A.Know the customers. B.Meet the customers’ needs.

6.2 Industry and Market Analysis XI. WHAT DO WE WANT TO KNOW ABOUT THE CUSTOMER? A customer profile is a complete picture of a venture’s prospective customers.

6.2 Industry and Market Analysis A. Who are my customers? B. What do they generally buy, and how do they find out about it?

6.2 Industry and Market Analysis C. How often do they buy it? D. How can my business meet their needs?

6.2 Industry and Market Analysis XII. WHAT DO MY CUSTOMERS NEED? A customer needs analysis pinpoints which features and benefits of goods or services customers value.

6.2 Industry and Market Analysis End of Section 6.2