How to do a Market Analysis and Environmental-Trend Analysis Dr. Stan Abraham MHR 423 Spring 2010

What’s Involved in a Market Analysis  Decide on your target market  How large is it, how fast is it growing (or declining), how dispersed?  How might they buy and use the product, where might they buy it, how respond to advertising and promotion, how price-sensitive?  What are their needs (basis of your value proposition), and are these changing over time?  This is all about your market (customers) Not about marketing or how you will reach them

Target Market Can be defined…  Geographically—global, national, local, etc.  Demographically—using variables such as age, income, sex, households  Business type or size—“middle-market banks,” “businesses employing >100 people”  By need—two-income families need convenience, Internet companies need exposure, people that need low-carb diets

Collecting Data on the Target Market  Have to do a lot of research The research pays off in your getting to know your market better  For consumer markets Census data State and local government data  For business markets Research the industry segment that comprises your market  Don’t research industry data here

Behavior of the Target Market  Find out everything you can about these customers How do they buy? Where do they buy? How do they use the product? How do they respond to stimuli? How price-sensitive are they? How often do they buy? Is the user the buyer? Do they prefer substitutes?

Needs of the Target Market  What needs, desires, or wants do these customers have that your product satisfies? Are these needs changing?  What is the (customer) value proposition for your company? Why should customers buy your product and not competitors’ products?  Remember, people buy benefits, not products They buy vision, not glasses They buy heat, not firewood They buy the ability to communicate anywhere, not a cell phone

Two External Environments The Task Environment  Industry analysis  Competitors and competitive analysis  Market analysis (customers) General Environment  Demographic  Economic  Political/legal  Regulatory/legislative  Technological  Socio-cultural  Lifestyles, attitudes

Why Must We Do This?  Businesses don’t exist in a vacuum  What’s changing out there could affect you Unforeseen competition could wipe you out Unforeseen costs could cripple you So could a downturn in the economy Or a new regulation you must comply with  We need to get a sense of changes that might occur in the next five years

How Is the Analysis Done?  Through doing research The Internet Articles in the Business Press (WSJ, NYT, Economist, Fortune, Forbes, LA Times, Inc., etc.) Trade publications and people in the industry Hiring competitive-intelligence professionals (not you) Don’t forget to cite your sources, and never cut and paste—that’s plagiarism  For information you simply cannot get Make informed/educated guesses Make inferences Go to the next topic…

Suggested Five Subtopics for External-Environment Paper (individual)  Industry analysis  Competitors and competitive comparisons  (Target) Market analysis  Economic and Technological trends  All the other trends, as applicable

Got Questions?  Ask me I may not know the answer but may know where to look I have many books and resources in my office I may know other profs that could help (so might you)  Ask other profs or knowledgeable people you may know

Writing the Paper  Use an outline (keeps your research relevant)  If you have nothing to say under a particular heading, omit it  Use only those headings where you can show data or analysis that will be useful in planning for your business Don’t forget that “data” is a plural word  Remember to reserve a fair amount of time for editing, editing, and more editing

Grading  This is the only paper where each person in the group should contribute one of the needed topics (should be that person’s work, not a group effort)  Divide the topics up among you as equally as you can  Clearly state which person did which part

Questions?