Time For Completion: Approximately 20-30 hours
A Market Analysis
is conducted to define and determine the attractiveness of a given market, and to understand its evolving opportunities and threats as they relate to the strength and weaknesses of a particular business.
The focus of this section should be on your target market or the people you intend to sell your products/services to. This can include individual customers, know as business to customer (B2C), or other businesses, known as business to business (B2B). So, in a way, the Market Analysis is the ground work for your company’s plan of attack.
What’s in it?
A market analysis summarizes the size and potential of your target market, current market trends, and gives demographic information about your target market.
The demographic information you want to collect about your target market will vary depending on if your company is B2B or B2C. B2Bs should focus on a target region, customers industry and size of companies, while B2Cs should focus on their customers location, personal demographics (age, gender, educational background) as well as psychographic characteristics that define why they are interested in your product.
This section should include a table that lists all of the potential market segments that you will target along with all of the information you collected in your research.
After you have studied your potential customers you should look into past and future trends of the market, keeping in mind factors like price sensitivity, demand for variety, level of emphasis on service and support your target market desires, and any regional trends that affect only the members of your target market in that specific area.
Why its Important
Understanding who will buy your product is an important foundational step. By understanding who your customers are and what motivates them to buy, you will be able to create an informed, effective marketing strategy.
Most of this information will have to be found internally by your firm by doing research of your past customers. If you are a new firm who doesn’t have any history yet, try finding the answers to these questions by contacting a firm that is similar to yours, or a trade association related to your industry.
The next post will describe how to create an Industry Analysis. Remember, you can take a look at one of our sample business plans at any time.
