Chapter 4 – Chapter 4 – Analyzing Analyzing Markets & Markets &

CompetitionCompetition

ObjectivesObjectives• Understand market segmentation• Understand sales forecasting• What is a good location?• Evaluate the competition

Debbi FieldsDebbi Fields

• Strengths?

Debbi FieldsDebbi Fields

• Strengths?– Discovered early the “value of work and

satisfactions of doing a good job”– Confidence– Comfortable in the public eye (retrieved

balls for Oakland A’s)– Learned customer service (A’s giving

autographs)

Debbi FieldsDebbi Fields• Weaknesses starting out?

Debbi FieldsDebbi Fields• Weaknesses starting out?

– No college education– Very young when she started– Not taken seriously

Debbi FieldsDebbi Fields• Results?

– Business expanded rapidly– Husband quit corporate job to help– Business expanded too rapidly– Debbi switched from day to day details

to plotting the big picture

What is the market for an What is the market for an enterprise?enterprise?

• The groups of people, businesses, or organizations seeking the types of products or services you sell, and willing and able to pay your price

Consumer & Business UsersConsumer & Business Users• Consumers – people who buy

products and services for personal or family use

• Business users – people who buy products and services for their company or institutions

Market SegmentsMarket Segments• Groups of people with similar needs

and characteristics

Target MarketTarget Market• The particular group to whom you

wish to sell your products or services

Sales ForecastsSales Forecasts• What is a sales forecast?• Why would a small business do a

sales forecast?• How is a sales forecast prepared?

How is a sales forecast How is a sales forecast prepared?prepared?

1. Estimate market potential for all similar businesses in your area– Sources?

• Chamber of Commerce• Trade association• Banker• Accountant• Suppliers• Similar entrepreneurs from other areas (not

competitors)

How is a sales forecast How is a sales forecast prepared?prepared?

2. Find out how many competitors you have.

3. Estimate your share of the total market.– Will you get an equal share with all

other local competitors?

Location, location, locationLocation, location, location1. Choose a city

• Near where you want to live• Services (fire, police)• Public transportation• Public utilities• Quality of schools (affects workforce

potential)

Location, location, locationLocation, location, location1. Choose a city

• Sufficient population• Competition• Level of employment• Legal considerations

• Tax advantages• Zoning restrictions• Unusually high taxes

Location, location, locationLocation, location, location2. Choose an area within the community

• Near public transportation?• High traffic area?

3. Choose a specific location• Adequate parking• Well-maintained building & area• Enough traffic flow?• Restrictions on the property?• Cost?

CompetitionCompetition• Look at other small businesses, mail

order, large businesses, Internet, etc.• What is the right number of

businesses per resident for different types of businesses? (see p. 94)

CompetitionCompetition• Strengths & Weaknesses of

competitors:– Collect information– Plan your strengths