Industry Analysis You must identify:  Sales potential of your product  Your competition

What is “Sales Potential”? The projected or estimated amount of your product you can realistically expect to sell

What do you “analyze”?  Trends and patterns of change  Your company  Your industry  Your suppliers  Demographics of the industry  Barriers to entry  Your competition  Your customers (target market)

Trends and patterns of change  Ease of entering the industry  Rate of sales growth  Government regulation  Industry volatility (how quickly things change)

Your Company The nature of your product - matched to your market? - relatively “new” product? - old product with a “new” look?

Your Industry  Past and current sales levels  Demographics –Number of companies –Average size of companies –Number of employees –Annual revenues

Your Suppliers  Affordability of sources  Accessibility of sources  Location of sources  Trade discounts?  All can offer your costs, pricing and sales

Barriers to Entry  Economies of scale – As businesses grow they can produce products more cheaply and efficiently (hard to compete with)  Brand Loyalty – Customers purchasing products of a particular company  Access to distribution channels – path along which the product travels  Proprietary technology – knowledge that is owned and protected by patents (Microsoft)

Your competition  Market Share – portion of total sales generated by all competing companies  Niche – small segment of the market based on customer needs

Your Customers  Customer Profile – demographic, geographic, and psychographic (lifestyle) data of your prospective customers  Customer Needs Analysis – identifying the features and benefits of your products that your customers value

What is the Customer Profile of The Balloon Closet?

Competition Analysis  Identify your competitors –Direct (donut shop vs. donut shop) –Indirect (donut shop vs. health food store)  Strengths/weaknesses of competitors –Products, prices, quality, selection – advertising, personnel, customer service, distribution methods  Your competitive advantage (uniqueness?)