SEM 5 - B.P- LEC.5b

6-1

Chapter Six

Market Analysis

Dr. Bruce BarringerUniversity of Central Florida

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 6-2








Introduction

Market analysis

Breaks the industry into segments and specifies a segment or target market that the firm will tackle


Market Analysis

Firm’s target market Its customers Its competitors How it will compete

in the marketplace Its potential sales

and market share


Market Analysis Helps define the nature of the business Affirms that a company has a well thought out target

market Understands its customer and can generate sales


Market Segmentation

Markets can be segmented by Geography Demographic

variables Psychographic

variables Behavioral variables Product type


Market Segmentation and Target Market Selection

Market segmentation Homogeneity of needs and

wants within the segment Heterogeneity of needs and

wants among the segments Small differences within

segments Distinct Size Profitable


Selecting a Target Market

Once a firm segments its market, it selects a segment within the market to target

Focus on a single market


Target Market Size and Trends

Estimate size of similar businesses

Examine industry trends


Buyer Behavior

Decision making

Who makes the decision to purchase?

IndividualsGroups


Involvement High involvement Medium involvement Low involvement



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Competitor Analysis

Detailed analysis of a firm’s competition

Understand positions of major competitors and the opportunities that are available to gain a competitive advantage in one or more areas


Direct, Indirect, and Future Competitors

Direct competitors Businesses that offer a product

similar to yours

Indirect competitors Businesses that offer close

substitutes to your product

Future competitors Businesses that could move into

direct or indirect competitor roles


Competitive Intelligence

The process of gathering information about your

competitors


Competitive Analysis Grid

Competitive analysis grid A tool for organizing and presenting information you collect about your competitors


Estimate of Annual Sales and Market Share

Four ways to estimate initial sales

Contact premier trade associations in your industry

Find a comparable firm Conduct Internet searches Use a multiplication method

to try to arrive at a reasonable number


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Copyright ©2009 Pearson Education, Inc. publishing as Prentice Hall