Chapter 6

Market Analysis

Section 6.2: Industry and Market Analysis

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Section 6.2
Industry and Market Analysis

The standards

• 5.C.01.03 Describe methods of market research and identifying target markets.

• 5.A.01.04 Demonstrate an understanding of the principles and concepts of a
business’s supply chain

Objectives

● Explain how to research an industry

● Describe a customer profile and customer needs analysis.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Opening Activity - Industry and
Market Analysis
Industry trends, industry demographics and your competition
have the ability to affect your business and strategies.

Group 1 and 2 - What are some industry forces that

can affect your business?
Group 3 and 4 - What are industry demographics and
how do they affect your business?
Group 5- How can your competition affect the success
of your business?

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Researching the Industry

Look at trends and patterns of change.

Understand industry forces that affect your

business.

Study industry demographics.

Analyze the competition.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 1- Look at trends and patterns of change.

● You can find an opportunity in an industry by looking

at trends and patterns of change.

● For example,

● is it becoming more difficult for new companies to

enter the industry?
● Has the rate of sales growth slowed?

● How volatile is the industry?

(volatility refers to how quickly things change in the
industry).

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 2- Industry forces that Affect your
Business

Companies that use

technology to operate
effectively and efficiently
Are more likely to remai
Massachusetts Common Core Standards Competitive.
VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Barriers to Entry
a. Barriers to Entry: Conditions or circumstances that make it
difficult or costly for outside firms to enter a market to compete with
established firm or firms

In established businesses, the dominant

businesses have advantages that are barriers to
entry to smaller, new ventures.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Barriers to Entry - Economies of Scale
b. Economies of Scale: Situations where the cost of producing
one unit of a good or service decreases as the volume of
production increases; the production costs decrease relative to the
price of goods and services

Established businesses have achieved

economies of scale in production, marketing,
and distribution.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
Massachusetts Common Core Standards
VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Barriers to Entry - Brand Loyalty
c. Brand Loyalty: The tendency to buy a particular brand of a
product

Customers with brand loyalty do not easily

switch to a new company that enters the industry.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Threats from Substitute Products

If the industry that you have selected is extremely

competitive, you will be competing with companies that
produce products and services that are similar to yours, In
addition, your business will also be competing with
companies that produce substitute products, those that
offer an alternative to customers.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Sources of Supply
You must have access to affordable source of inventory,
raw materials and goods, otherwise, you will not be able to
offer your product or service at prices that generate sales.

You should also consider where your suppliers are located

and the trade discounts they offer.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Buyers’ Ability to Bargain B2B
In industries where buyers have bargaining power, a new
business may have difficulty gaining a foothold. Large
discount buyers, such as Wal-Mart, have enormous
bargaining power . This enables them to purchase their
inventories at deep discounts. Small businesses do not
generally have that power.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Technology
Technology enables companies to improve their business processes.
Companies that use technology to operate effectively and efficiently are more
likely to remain competitive.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 3-Industry Demographics
Each industry has basic demographics. These include the number of
companies, annual revenues and average size of the companies by number
of employees. These facts reveal whether the industry is growing, shrinking or
remaining stable.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 4-The Competition

Usually, competing products are already established in the market.

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

Many entrepreneurial companies succeed by studying the competition

to define unserved niche in the market.

A niche: a small, specialized segment of the market based on

customer needs discovered in market research.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 The Competition
An entrepreneur who wishes to capture market share can
use market positioning.

Marketing positioning: The act of identifying a specific market

niche for a product.

To succeed in the face of competition, you must conduct a

thorough analysis of the competition. What is unique
about your business is defined as competitive
advantage.
Competitive advantage: A feature that makes a product more
desirable than its competitors’ product.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 The Competition
● Honda is best at developing precision engines and
power trains.
● Google is best at optimizing searches for any type of
information.
● Apple is best at creating a simple, easy to adopt
solution that is not easy to duplicate.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 The Competition
Usually, competing products are already established in the
market.
To succeed, you must be able to capture market share by
differentiating your business.
Market share: A portion of the total sales generated by all competing
companies in a given market.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
Activity - Group Work
Each group will apply the factors affecting the nature of their respective industries.
In order to penetrate and grow within a market you must know
your customer. To target your marketing efforts towards them,
create a customer profile.
Success Criteria:
● Includes detailed customer demographic information - age,
gender, income, education and location.
● Includes customer behaviours and interest
● Well supported by examples and evidence
● Time -bound
● Tool: Poster
Instructions and Guidelines
● Use professional business terminology
● Adhere to the time limit of 15 min for task
preparation and 3 min for presentation.
● Each member should take part in the task.
● Once a task is accomplished you can move to
the highlighted Success criteria in the next
quadrant
Massachusetts Common Core Standards
VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
In order to penetrate and grown within a market you must know
your customer. To target your marketing efforts towards them,
create a customer profile.
Success Criteria:
● Includes detailed customer demographic information - age,
gender, income, education and location.
● Includes customer behaviours and interest
● Time -bound
● Comprehensive explanation as to how product/service meet
their needs and the value provided to the customer.
● Tool: Video content
In order to penetrate and grown within a market you must know
your customer. To target your marketing efforts towards them,
create a customer profile.
Success Criteria:
● Includes detailed customer demographic information - age,
gender, income, education and location.
● Includes customer behaviours and interest
● Well supported by examples and evidence
● Time -bound
● Tool: Ppt presentation
Massachusetts Common Core Standards
VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Researching the Industry

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Creating a Customer Profile
Creating a customer profile is the first step in targeting
your marketing efforts, such as age, income level,
education, buying habits, places customers shop. This
customer profile helps you make decisions about your
product and service and in developing a marketing
concept.
Customer profile: A complete picture of a venture’s prospective
customers, including geographic, demographic, and psychographic
data.

In case of business customer, you will want to know the size of the business in terms the number
of employees and sales levels.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Evaluating Customers’ Needs

In order to provide what the customer wants, you should

prepare a customer needs analysis.

Customer needs analysis: A study that pinpoints the features and

benefits of goods or services that customers value.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Forecasting Demand:
How much of a product or service they will buy and how often they
buy it.
Several methods can be used to forecast demand:
● Use historical analogy: you may be able to project the demand
for your product or service based on demand for another one.
Example: blue ray discs and dvds.
● Interview prospective customers and intermediaries: no one
knows the market better than the people who work in it.
● Go into limited production to test the market: the only to test the
reaction of potential customers may be to produce a small
number of products, then you can put them in the hands of
people to test.

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.
 Reflection

Massachusetts Common Core Standards

VBC.VBUS.2.C.01.03: Identify the different types of industries and markets.
VBC.VBUS.2.C.02.02: Describe and demonstrate the decision making process.