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

2. Tonight’s Agenda Topics Market Analysis Industry Analysis Competitive Advantage Opportunity/Need Segmentation Financial Comp’s Model Company Gene Hayworth – Leeds Librarian Hand-in Interview List 2

3. Market & Industry Analysis Next Week Topics Value Proposition Competitive Advantage Business Analysis Customer Research Model Company Read BP pp 11-13, 27 University Parent Plan – Sarah Schupp In the Fire - Opportunity/Need Write Value Proposition 3

4. Market & Industry Analysis In the Fire - Opportunity/Need Focus on what are the needs in the market What is the pain? What problem must be solved? Is there dissatisfaction - poor quality or service Need must be: Compelling Easily understood by TM 4

5. Business Plan Elements Executive Summary Company Overview Market & Industry Analysis Product/Service Description Marketing Plan Operations Plan Development Plan Management Competitive Advantage Financial Plan Funding 5 Market & Industry Analysis

6. Market & Industry Market: “group of current and potential customers having the willingness and ability to buy product/services to satisfy a need.” = Customers Industry: “group of sellers that offer product/services that are similar and close substitutes for one another.” = Competitors JW Mullins, New Business Road Test 6 Market & Industry Analysis

7. Market Analysis = Customers Market size & growth Trends Entry Point 7 Market & Industry Analysis

8. Market Size & Growth Segment your market Historic and future growth Must indicate sources Lot’s of numbers – show in tables 8 Market & Industry Analysis

9. Market Segmentation Groups of customers – (demographics & psychographics) baby boomers, grandparents Products – features, benefits, prices Benefits – enhance image, trend setter, weather protection, save money Geography – see Hecho en Casa business plan Distribution channels Sector – industrial (see MRT business plan), consumer, government 9 Market & Industry Analysis

10. 10Market & Industry Analysis

11. Trends What changes are taking place – economic, socio-cultural, political/legal, global, environmental, demographic, technological Positive and negative trends Must provide your sources 11 Market & Industry Analysis

12. Identify Potential Entry PointIdentify Potential Entry Point Describe best segment. Why? Future segments 12 Market & Industry Analysis

13. Industry Analysis = Competition Industry Structure Competitive Environment Competitors 13 Market & Industry Analysis

14. Sources Suppliers Manfg Distrib Retailers Consumer Goods Information Funds A T Kearney, Integrating the Supply Chain Industry Structure Supply Chain 14 Market & Industry Analysis

15. Competitive Environment How do companies compete – quality, price, new products, customer service Degree of rivalry Response to new entries 15 Market & Industry Analysis

16. Barriers to Entry? Economies of scale: manufacturing, marketing, technological Customer loyalty: well established brands, long established relationships Agreements with customers, suppliers, strategic partners Switching costs Capital requirements: high investment 16 Market & Industry Analysis

17. 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 17 Market & Industry Analysis

18. Control Setting prices – bargaining strength of customers Lowering costs – technology, process design, resources, bargaining strength of competitors Channels of distribution – access, creating new channel 18 Market & Industry Analysis

19. Competition Describe key competitors Direct, indirect, future Prepare a competitive matrix Product/Services Marketing Management Financial Image – website, brochures, literature, advertisements Inertia 19 Market & Industry Analysis

20. Market Market size & growth Trends Entry Point Industry Industry Structure Competitive Environment Competition Opportunity 20 Market & Industry Analysis

21. Opportunity Last section Make case attractive opportunity - validate Draw conclusions based on your research, interviews and customer surveys 21 Market & Industry Analysis

22. Financial COMP’s Company in your marketplace. NAIC code Publicly traded Industry ratios – see Selected Resources Guide Library Key financial measures to compare when developing strategy and projections Reality test 22 Market & Industry Analysis

23. Financial COMP’s 23Market & Industry Analysis

24. Needs Market & Industry Analysis24 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.