Market Analysis: Back To Table of Contents

Market Analysis
Back to Table of Contents

Chapter 6 Market Analysis
Market Analysis
6.1 Doing Market Research
6.2 Industry and Market Analysis
2
Market Analysis
6.1
Define areas of analysis for industry and

market research.
Discuss how to conduct effective market
research.
Section 6.1 Doing Market Research 3

Market Analysis
6.1
To ensure success, the entrepreneur needs to

understand the industry and the market.
He or she should define areas of analysis and

conduct effective industry and market research.

Market Analysis
6.1
industry industrial markets

carrying capacity market research
complexity exploratory research
market focus group
target market descriptive research
market segmentation historical research
market segments secondary data
geographics primary data
psychographics

Market Analysis
Defining Areas of Analysis
In order to satisfy current industry a collection

customers or attract new of businesses with a
common line of
ones, an entrepreneur must products or services
conduct market analysis.
The entrepreneur will want

to understand the nature of
the industry he or she is
analyzing.
Market Analysis
Defining Areas of Analysis
Thorough market analysis requires :
Identifying prospective customers and

determining their buying habits
Analyzing your industry and assessing your
chances for success within it

Market Analysis
Industry
There are four factors that are useful in

understanding the nature of an industry:
carrying capacity
uncertainty
complexity
stage of life cycle

Market Analysis
Industry
You will want to find an carrying capacity the

industry that has carrying ability of industry to
support new growth
capacity so that your new
business can expand and
prosper.

Market Analysis
Uncertainty
Uncertainty is the degree of stability or instability in

an industry.
Many high-tech ventures are in industries with

uncertain climates.

Market Analysis
Complexity
Some businesses must learn complexity the

to deal with complexity in number and diversity of
contacts with which a
many industries. business must deal.
Firms that operate in

complex industries have
more suppliers, customers,
and competitors than firms
in other industries.

Stage of Life Cycle
There are four stages to the life
cycle of an industry.
1 Birth
2 Growth
3 Maturity
4 Decline

Market Analysis
Target Market and

Customer
After first identifying your market a group of
market, you will then need people or companies
who have a demand for
to select a target market to a product or service and
be the focus of your are willing and able to
company’s efforts. buy it
target market a specific

group of customers whom
a business wishes to
reach

Market Analysis
Target Market and

Customer
Consumer market market segmentation
segmentation is based on the process of grouping
a market into smaller
geographics, demographics, subgroups defined by
psychographics, and buying specific characteristics
characteristics. market segments
subgroups of buyers with
A business can select and similar characteristics,
segmented by geographics,
serve multiple market demographics,
segments. psychographics, and
buying characteristics

Target Market and Customer
Market Segmentation
geographics
buying
demographics
characteristics
psychographics

Market Analysis
Target Market and

Customer
Information about the geographics the study
geographics of the target of the market based on
where customers live,
market can help an including region, state,
entrepreneur decide on a country, city, and/or area
geographic area to focus
marketing efforts.

Market Analysis
Target Market and

Customer
An entrepreneur can study psychographics the
psychographics to learn study of consumers
based on social and
about target customers’ psychological
feeling. characteristics, including
personality, values,
opinions, beliefs,
motivations, attitudes,
and lifestyle elements

Market Analysis
Target Market and

Customer
Businesses that cater to industrial markets
industrial markets must customers who buy goods
or services for business
consider customers’ use
individual situations.

Target Market and Customer
The target market for your product
or service should be:
1 Measurable
2 Large enough to be profitable
3 Reachable
4 Responsive

Market Analysis
Conducting Market
Research
Once you know the areas of market research the
the market you need to collection and analysis of
information aimed at
analyze, you are ready to understanding the
begin market research. behavior of consumers in
a certain market
The marketing research
process can be used to
identify potential markets,
analyze demand, and
forecast sales.
Select the Type of Market Research
There are three types of market research
exploratory research
descriptive research
historical research

Market Analysis
Select the Type of

Market Research
A good way to start exploratory research
exploratory research is to the initial collection and
analysis of information
read government or industry used when very little is
publications. known about a subject; it
forms a foundation for
later research

Market Analysis
Select the Type of

Market Research
Another way to gather focus group a group of
information is to form a people whose opinions
are studied to determine
focus group. the opinions that can be
expected from a larger
population

Market Analysis
Select the Type of

Market Research
Descriptive research can descriptive research
be gathered through the collection of
information to determine
questionnaires, interviews, the status of something,
or observation. such as in developing a
customer profile

Market Analysis
Select the Type of

Market Research
You can use historical historical research
research to forecast your the study of the past to
explain present
business’s future potential. circumstances and
predict future trends

Start the Research Process
The Five Steps of an Effective Research Plan
5 Analyze the data
4 Organize the data
3 Collect primary data
2 Obtain secondary resources
1 Identify your information needs

Market Analysis
Start the Research

Process
Research secondary data secondary data
before researching primary information that has
already been collected by
sources because it is easily someone else
obtained and inexpensive.

Market Analysis
Start the Research

Process
The most common methods primary data information
of gathering primary data that is collected for the
first time, is current, and
about customers are: relates directly to the
collector’s study
observation
interviews
surveys

Market Analysis
6.1
1. Define areas of analysis for industry and

market research.
Areas of analysis for industry research include carrying

capacity, uncertainty, complexity, and stage of life cycle.
Areas of analysis for market research include identifying
the target market through market segmentation and
conducting target marketing.

Market Analysis
6.1
2. Discuss how to conduct effective market

research.
First, identify the focus of the research. Next, select the

type of market research—exploratory, descriptive, or
historical. Finally, start the research process by identifying
your information needs, obtaining secondary resources,
collecting primary data, organizing the data, and analyzing
the data.

Market Analysis
6.2
Explain how to research an industry

Describe a customer profile and customer
needs analysis.
Section 6.2 Industry and Market Analysis 31

Market Analysis
6.2
Studying a company’s industry and market helps

an entrepreneur create a product or service that
people want.
It also helps the entrepreneur develop a customer

profile, estimate demand, and increase his or her
chances for success.

Market Analysis
6.2
barriers to entry niche

economies of scale market positioning
brand loyalty competitive advantage
mass marketing customer profile
market share customer needs analysis

Researching the Industry
Look at trends and patterns of change.
Understand industry forces that affect your business.
Study industry demographics.
Analyze the competition.

Industry Forces That Affect Your Business
barriers to entry
threats from substitute products
sources of supply
buyers’ ability to bargain
technology

Market Analysis
Industry Forces That

Affect Your Business
In established businesses, barriers to entry
the dominant businesses conditions or
circumstances that
have advantages that are make it difficult or costly
barriers to entry to for outside firms to enter
smaller, new ventures. a market to compete
with established firm or
firms

Market Analysis

Established businesses economies of scale
have achieved economies situations where the cost
of producing one unit of a
of scale in production, good or service decreases
marketing, and distribution. as the volume of
production increases; the
decrease of production
costs relative to the price
of goods and services

Market Analysis

Customers with brand brand loyalty the
loyalty do not easily switch tendency to buy a
particular brand of a
to a new company that product
enters the industry.

Market Analysis
Issues in Entrepreneurship
In the past, businesses mass marketing the

used mass marketing to attempt to reach all
customers with a single
sell products with universal marketing plan
appeal and few features to
differentiate them from
competitors’ products.

Market Analysis
The Competition
Usually, competing market share a

products are already portion of the total sales
established in the market. generated by all
competing companies
in a given market
To succeed, you must be
able to capture market
share by differentiating
your business.

Market Analysis
The Competition
Many entrepreneurial niche a small,

companies succeed by specialized segment of the
market based on customer
studying the competition to needs discovered in
define a niche in the market research
market.

Market Analysis
The Competition
An entrepreneur who wishes market positioning the

to capture market share can act of identifying a specific
market niche for a product
use market positioning.

Market Analysis
The Competition
You can create a competitive advantage

competitive grid to help a feature that makes a
product more desirable
define your competitive than its competitors
advantage.

Researching the Target Customer
Create a customer profile.
Evaluate customers’ needs.
Forecast research to forecast demand.

Conduct

Market Analysis
Creating a Customer Profile
Creating a customer profile customer profile a

is the first step in targeting complete picture of
a venture’s
your marketing efforts. prospective customers,
including geographic,
demographic, and
psychographic data

Market Analysis
Evaluating Customers’
Needs
In order to provide what the customer needs
customer wants, you should analysis a study that
pinpoints the features
prepare a customer needs and benefits of goods or
analysis. services that customers
value

Market Analysis
Forecasting Demand
Several methods can be used to forecast demand:
Use historical analogy.

Interview prospective customers and
intermediaries.
Go into limited production.

Market Analysis
6.2
1. Explain how to research an industry
To research an industry, look at trends and

patterns of change, industry forces that affect
your business, industry demographics, and the
competition.

Market Analysis
6.2
2. Describe a customer profile and customer

needs analysis.
A customer profile is a complete picture of a venture’s

prospective customers. It includes geographic,
demographic, and psychographic data. A customer
needs analysis pinpoints the features and benefits of
your goods or services that customers value so you can
provide them with what they want.

Market Analysis
Domain Names
A company’s domain name is much more than the way
customers can get to its Web site.
Domain names have become a crucial component of

companies’ marketing and branding plans.

Market Analysis
Tech Terms
country code top-level domain (ccTLD)
the part of the TLD that indicates the country of the Internet address,
such as .us for United States and .fr for France
generic top-level domain (gTLD)

the part of a TLD that indicates the type of Web site on the Internet
address, such as .com for commercial, .edu for educational, .org for
organization, .gov for government, .mil for military, and .biz for business
Internet Corporation for Assigned Names and Numbers (ICANN)

a nonprofit regulatory body that oversees domain name registration

Market Analysis
Tech Terms
registrar
a company that registers and sells Web site domains
top-level domain (TLD)

the most general part of a domain name in an Internet address

End of
Market Analysis
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Market Analysis

Back to Table of Contents

6.1 Doing Market Research

6.2 Industry and Market Analysis

Define areas of analysis for industry and

Section 6.1 Doing Market Research 3

To ensure success, the entrepreneur needs to

He or she should define areas of analysis and

Section 6.1 Doing Market Research 4

industry industrial markets

Section 6.1 Doing Market Research 5

Defining Areas of Analysis

In order to satisfy current industry a collection

The entrepreneur will want

Defining Areas of Analysis

Thorough market analysis requires :

Identifying prospective customers and

Section 6.1 Doing Market Research 7

There are four factors that are useful in

Section 6.1 Doing Market Research 8

You will want to find an carrying capacity the

Section 6.1 Doing Market Research 9

Uncertainty is the degree of stability or instability in

Many high-tech ventures are in industries with

Section 6.1 Doing Market Research 10

Some businesses must learn complexity the

Firms that operate in

Section 6.1 Doing Market Research 11

Section 6.1 Doing Market Research 12

Target Market and

target market a specific

Section 6.1 Doing Market Research 13

Target Market and

Section 6.1 Doing Market Research 14

Section 6.1 Doing Market Research 15

Target Market and

Section 6.1 Doing Market Research 16

Target Market and

Section 6.1 Doing Market Research 17

Target Market and

Section 6.1 Doing Market Research 18

2 Large enough to be profitable

Section 6.1 Doing Market Research 19

Section 6.1 Doing Market Research 21

Select the Type of

Section 6.1 Doing Market Research 22

Select the Type of

Section 6.1 Doing Market Research 23

Select the Type of

Section 6.1 Doing Market Research 24

Select the Type of

Section 6.1 Doing Market Research 25

5 Analyze the data

4 Organize the data

3 Collect primary data

2 Obtain secondary resources

1 Identify your information needs

Section 6.1 Doing Market Research 26

Start the Research

Section 6.1 Doing Market Research 27

Start the Research

Section 6.1 Doing Market Research 28