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

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

3. 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

4. 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

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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

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

14. 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

15. 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

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

17. 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

18. 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

19. 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

20. 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

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

22. 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