Business Plan Market Analysis: Information & Tips

The first step in market analysis is to identify the different target market segments for collection of data. Segmentation is partitioning customers with similar performance characteristics, traits or expectations into specific sub-groups, with the aim of directing planned efforts towards them.

Identifying Target Markets and Data Collection

The first step in market analysis is to identify the different target market segments for collection of data. Segmentation is partitioning customers with similar performance characteristics, traits or expectations into specific sub-groups, with the aim of directing planned efforts towards them. The data should relate to the customer’s need for the product.

The product should be capable of satisfying those needs, leading to the customer’s willingness to pay for them. The key is to use factual data and keep the report simple. This will enable you to prepare a workable business plan, with an impressive market analysis that would create the desired impression. This serves as an important tool to raise the required capital for your new business.

Recognizing Competition

The most important part of market analysis is competitive analysis. This includes thoroughly researched data on the competition in the market. This would indicate how your competitors’ businesses operate and help you pinpoint their weaknesses and strengths. An explanation of the strategy that you adopt, to have an edge over the existing competition based on the data collected, should be included in the market analysis report. Details of local competitive businesses, mail order competition and online competition should be included.

Then comes the legwork of visiting your competitors, gaining information about the services they offer, their customer base and their prices. You need to be thorough and spend additional time and effort on this step. Order a product just like a genuine customer, to sample the customer service and the policies governing product returns. Talk to people about the products and get their opinions. Scan business journals for relevant information.

Analysis

Once you have the data, you can proceed to the next step of analyzing the information to gain an advantage over your competitors. Filter the information on the strengths and weaknesses of your competitors and analyze where you can successfully compete and where you may fall short. Highlight the areas where you have an advantage over your competitors, turning their weaknesses into strengths for your business. Whatever advantages you reflect should be realistic and should cater to a specific customer need. Market appeal and cost effectiveness are the other areas of focus. Your analysis should complement your business strategy, indicating a strong competitive edge to firmly establish your business in the market.

A business plan market analysis is comprised of detailed information on the target segment of customers, their need of the products marketed and their response to other competing products and companies. It helps in developing appropriate business and marketing strategies and helps you to identify the path for successful sustenance and growth of the business.

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