Market Identification and Analysis

Lecture notes in Entrepneurship Market Identification and Analysis WHAT IS MARKET? • It is defined as the sum of all the buyers and sellers in the area or region under consideration (i.e countries, cities, community) • It is the value, cost, and price of items traded as per forces of supply and demand in a market. The market may be a physical entity, or may be virtual Environmental Scanning • The monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation to avoid strategic surprise and ensure the long-term health of the firm. The External Environment Societal Environment WHAT IS MARKET ANALYSIS? Market Analysis is a tool to identify and assess the attractiveness of business opportunity. OBJECTIVES OF MARKET ANALYSIS • Determine the attractiveness of market • Find and identify new business opportunities • Targeting and dividing the market into niche • Positioning the products or brands in the mind of customers • Understand the dynamics of the market How does market analysis help? A market analysis answers these questions: • Who are they? • Where are they? • What do they need? • How do they make their buying decisions? • Where do they buy? • How do you reach them with your marketing and sales messages? Dimensions of market analysis • Market Size • Market Segment • Market Trends • Market Growth Rate • Market Profitability • Industry Cost Failure • Distribution Channel • Key Success factors MARKET SIZE • Total Annual Size • Current and future Market Size MARKET SEGMENT • Geography and location • Customer Segment MARKET TRENDS • Identify the trends in market segment within which the product fits • If the market segment is growing and is projected to continue to grow, then it is upward trend MARKET GROWTH RATE • Market condition • Sales growth of complimentary products • Product Life Cycle MARKET PROFITABILITY • Potential profit • Factors that affect the market profitability Porter’s 5 Forces Model Technology Push vs. Market Pull INDUSTRY COST STRUCTURE • Key factors for success • Formulating strategies to develop a competitive advantage Distribution Channel • Vendor to Consumer (Logistics) • A distribution channel can be direct, or may include several interconnected intermediaries Key Success Factors • Elements necessary to achieve marketing objectives • Access to essential unique resource • Ability to achieve economies of scale • Access to distribution channels • Technological progress Performing Market Analysis • Identify why a customer will buy your product • Define your target market through segmentation • Conduct Market research • Incorporate findings into strategic business decisions Identifying Market Segments and Targets Target market identification, by definition, is the method used to sort potential clients for sales and marketing campaigns, advertising and promotions using income, demographic, and lifestyle characteristics of a market and census information. Steps in identifying target markets • Defining sources where products and/or services are most likely needed. • Researching the volume of products and services sold and used over a broad demographic area. • Studying sources of raw materials that are required to produce products or services. • Identifying major competitors to determine the location of target markets Market Segmentation MARKET SEGMENTATION divides a market into well-defined slices. A market segment consists of a group of customers who share similar set of needs and wants. The marketer’s task is to identify the appropriate number of nature of market segment and decide which one(s) to target. Segmentation Demographic Characteristics • Age • Sex • Income • Education • Stages in life cycle • Social class • Occupation • Religion • Race Psychological Characteristics • Personality • Lifestyle Behavioral Characteristics • Knowledge of product • Attitude towards product • Use of product • Response to product Geographic Characteristics • Rural • Urban, rural, suburban • Region • Climate • City Size • Population Density