1. Market Analysis Business Organization and Management Chapter 6

2. Defining Areas of Analysis Market Analysis –Identify your target market and determine customers spending habits –Analyze the industry

3. Target Market and Customer A market is a group of people or companies who have a demand for a product or service and are willing and able to buy it. Target customers are the particular groups of customers you want to buy your products/services.

4. Market Segmentation The process of grouping a market into smaller subgroups defined by specific characteristics –Geographic area –Demographics –Psychographics

5. Conducting Market Research Occurs after you identify your target market. Market research is the collection and analysis of information aimed at understanding the behavior of consumers in a certain market.

6. Conducting Market Research 1.Identify the focus of the research 2.Select the type of market research Choose a research approach Exploratory Research is used when you know very little about a subject. Focus group- a group of people whose opinions are studied to determine the opinions that can be expected from a larger population Descriptive research determines the status of something. Information is collected through questionnaires, surveys, observations Historical research studying the past. Help predict future potential.

7. Conducting Market Research 3. Start the Research Process Secondary Resources Internet US Census Bureau Chamber of Commerce Government and community organizations Primary Data –Information you obtain for the first time and use specific to your study. Observations, interviews, surveys

8. Researching the Target Customer Customer Profile is a complete picture of a venture’s prospective customers –Who are my customers? –What do they generally buy, and how do they hear about the products and services they buy? –How often do they buy? –How can my business meet their needs

9. Researching The Target Customer Forecasting demand –use historical analogy products Compact discs from cassettes and records –Interview prospective customers and intermediaries –Limited production to test the market Kiosk

10. Industry Four factors useful in understanding the nature of an industry –Carrying Capacity – ability to support growth and expansion. –Uncertainty – degree of stability or instability in an industry Fast changing = high degree of uncertainty = more risk = typically high rewards –Complexity- # and diversity of contacts with which you must deal. Suppliers, customers and competitors –Stage of Life Cycle – Birth, growth, maturity, decline

11. Researching the Industry 1.Trends and Patterns of Change Early 1950 1939 Late 1960’s 2000’s 1990’s 1980’s

12. 2. Barriers to Entry are conditions that make it difficult for a firm to enter into a market. Threats from substitute products Sources of supply –You must have access to affordable sources of inventory, raw materials, and goods. Consider where supplier is located, trade discounts and alternate sources. Economies of Scale –Wal-Mart can purchase their inventories at large discount prices. Brand Loyalty Technology

13. Researching the Industry 3. Industry Demographics –# of companies, annual revenues and average size of the companies by number of employees 4. The competition –Market share is a portion of the total sales generated by all competing companies in a given market. –Competitive advantage is a feature that makes a product more desirable than its competitors products.