Professional Documents
Culture Documents
[] For an overview of Market Analysis, refer to page 7-1 in the BizPlanBuilder Reference
Guide.
Market Definition
[] This section describes the existing and projected marketplace in which you will introduce
your company and products.
Industry Analysis
The [x] market is growing at a rapid rate. The market for these products amounted to $[x]
million in 19[xx]--representing a [x]% growth over $[x] million in 19[xx].
Referenced sources agree that the major trend is for [x]. The trend has been toward the
development of [products] and, hence, the latest development of distributed or shared
resources.
Independent market research indicates that there is currently only [x] [product] for every
[x] customers. The [market/industry], as a whole, is looking toward
[manufacturers/suppliers/retailers/experts] for use in the expansion of existing
[applications/product lines/services].
The overall [x] market for the [x] industry is projected to be $[x] million/billion by the
end of 19[xx]. The overall market potential for [product category] is estimated to be $[x]
million by 19[xx], and the [additional products] portion of this market is estimated to be $
[x] million.
The area of greatest growth in the [x] market is in the area of [x].
Market Segment
Key points in defining the market segment for [product] are [x], [x], and [x].
The stability of this market segment is [volatile, uncertain, solid, etc.], based on [x]
product category performance over the past two years.
[Segment 1]
[Segment 2]
[] List, by broad category, the types of customers you are likely to sell to. (Retailers,
Electrical Contractors, Mail-order catalogs, etc.)
The [x] segment of the market is generally based on [products] with retail prices in the
range of $[x] to $[x]. The vast majority of sales in this category will be handled by
[OEM's, Retailers, Manufacturer's Representatives]. The minority of sales will be through
direct channels.
Over the past [x] years, [similar product manufacturers or service providers] companies
have proven that meaningful features can be developed for this class of [product]: [x],
[x], and [x]. These companies have primarily focused on the use [manufacturing
technique, special materials, recipes, chemicals, machinery] to improve the quality of [x]
in a [product]. These products have been successfully distributed in many areas of the
industry. Competitive products in this market are [produced/provided] by [competitor 1],
[competitor 2], and [competitor 3].
In the next [x] to [x] years it is estimated that there will be more than [x]
[thousand/million] of [product]s distributed by [company]. The market potential for
[product] in these quantities--with a current retail price of $[x] per unit--is approximately
$[x] million. This translates to a market share of [x]% of the overall market.
[] Repeat the above information for as many market segments as are required.
Strengths
In terms of product strength, [product] has several distinct advantages over the
competition. First is its marked advancement in [x] technology.
[] In actual performance?
[] In production efficiencies?
[] In segmentation?
[] In distribution?
[] In pricing?
[] In awareness/image?
Weaknesses
There is/are [x] handicaps inherent in our product. The only notable marketplace
disadvantages are [x] and those are because [explanation].
By 19[xx] we should be able to position ourselves in order to [x] and thereby reduce this
weakness considerably.
Corporate weaknesses, at this time, consist only of [x]. However, we are taking steps to
[x] which we feel should alleviate this problem.
Opportunities
The upside potential for [x] and [our products] in [each of the currently addressed
markets] over the next two years is [x].
Based on [existing conditions], introduced in the Product Strategy section in the analysis
above, it is apparent that [justify potential with logical rationale].
Unexploited Opportunities
An altogether new application for this product would be tapping [x] markets.
[] Can the current line of products and technological capabilities be leveraged effectively?
Customer Profile
[] Use information from industry reports, census data, trade journal studies, etc.
[] Knowing exactly who you're selling to is crucial to obtaining favorable response from your
investors--they know that all the sales talent in the world is wasted unless it's directed at
the proper person.
The most typical customer for our product is someone who is in the [x] field, and who
currently uses [product] for [give/application/purpose].
It is likely that potential customers are going to be familiar with [similar products,
products that your new one will replace, your type of product] and that they will readily
accept our new [x], provided that we [approach/educate/contact].
Complementary products already in use by our customers are [other products that work
with yours] and are seen as a tremendous help in [compelling customers to acquire our
product/use our product].
It is easy to understand why the people are motivated to buy [x] because [x].
[] What motivates people to buy your product? (example; practical and emotional reason)?
[] How do these people perceive your company and products? and how will they receive
your [new] product?
Demographics
[] On a separate page, list different types of customers, title, power, viewpoint, position,
emotional and practical influences, and education.
[] Listed below is a sample template to list the demographics of your customers. You may
want to include several types of customers in your demographics to include Homemaker,
Young Married Couple, Wealthy Rural Family, Older Couple, or Elderly.
Corporate Executive
Young Professional
Age: [25-35]
Geographic: [Suburban]
Attitude: [Innovator]
Customer List
Competition
[] Discuss your key competitors with regard to product or service, price, location,
promotion, management, and financial position.
[] Look in the industrial directories at your local library. Search on-line databases that
provide competitive profiles of other companies.
[] Read industry magazines and look for advertisers.
[] If you are well-known in your industry, survey your competitor's order line anonymously
and ask how their product are better than yours.
Companies that compete in this market are [competitor 1], [competitor 2], and
[competitor 3]. All companies mentioned charge competitive prices [list examples and
range of prices].
The major strengths and weaknesses of our competitors are [example: price, location,
quality].
The major competitors' most likely response to current [economic, social, culture,
demographics, geographics, political, governmental, technological, and competitive
trends] affecting our industry will be [list response of competitors].
Our products or services are positioned relative to our major competitors by [example:
price, delivery, location].
New firms entering and old firms leaving this industry affect our product (list how this
affects your product].
Key factors of [list top factors] have resulted in the present competitive position in this
industry.
Sales and profit ranking of major competitors in the industry have changed over recent
years. These rankings have changed because [list reasons for ranking change].
The nature of supplier and distributor relationship in this industry is [the supplier and
distributor effect on your product].
[Company]'s products perform in virtually all situations where [your features, benefits,
your customers are likely to be].
The ability to [what it can do] with full capability on [list of applications, machinery,
people] is unique to [Company]'s products.
The ability to [what it can do] is unique to this product, and our research indicates its
performance is superior to anything else on the market today.
In all comparisons, [Company]'s products provide more features and have superior
performance than do competitive products. In most cases, the number of differences is
substantial. A complete technical comparison is available.
[x]'s [competitive] product does not provide the same capabilities in a situation where
[describe circumstances].
This is the only way [your product] and [their product] compete.
[] Discuss results--if they advertise consistently and continuously there, then it must be
working.
[] - OR -
This market segment is not shared with any direct competitors. Competition does exist,
however, in the [industries, countries]. Competitors in this area are [x], [x], and [x].
[] To perform an in depth analysis of your major competitors, complete the chart below.
Columns have been provided to describe up to three competitors. If needed, add more
columns.
Competitive Roundup
The following chart illustrates how [Company]'s product compares to the competition in
several different key areas.
Competitive Roundup--Company
Competitive Roundup--Product
[] Are our resources being deployed against the most serious competitors?
Risk
Business Risk
[] Progress always involves risk; you can't steal second base and keep your foot on first.
-- Frederick Wilcox
Cost Structure
[Company] had planned to add equipment to further increase production capacity over a
period of time from cash flow. However, market opportunities for [Company] products
have encouraged us to accelerate our expansion plans. [Company] believes the net
proceeds from an [investment/loan] and cash flow from operations will be sufficient to
allow [Company] to meet the expected growth in demand for our products. However,
there is no minimum investment which must be raised. There can be no assurance that
sufficient capital will be raised or that future product sales will meet our growth
expectations. Should either of these fail to occur, [Company] may elect to (i) reduce the
expansion to a level consistent with our former slower growth plan, or (ii) pursue other
financing alternatives. Implementation of either of the foregoing options could delay or
diminish [Company]'s growth and adversely affect our profitability.
Competition
[Company] competes with national [product] companies, several of whom dominate the
[product] market, and are based primarily in [list states]. [Company] and [Company] have
greater sales, and financial, production, distribution, and marketing resources than
[Company]. Although we believe that in [state] most of the our market share has come
from displacement of the brands of the [x] companies, there can be no assurance that
competition in the future will not increase from the national brands or from present or
new regionally-based [product] companies, many of which, like [Company], have
recently completed or are planning significant [facility/capacity] expansions.
Furthermore, if the market for [product] continues to grow, the major national [product]
companies will likely devote greater resources to this segment.
Industry Growth
The sale and consumption of [product] has increased dramatically over the past [x] years
and [Company] and other [product makers/providers] are increasing their capacity in
order to meet this growth. There can be no assurance, however, that the growth will
continue at the present rate, or at all, and the demand for [product] may not keep up with
increases in supply, in which case [Company] may face heightened competition and be
unable to sell sufficient quantities of our product to maintain our volume and profit
margin.
Product Liability
[Company] has [x] Liability Insurance and will continue such coverage if available at a
reasonable cost. However, future increases in insurance premiums could make it
prohibitive for us to maintain adequate insurance coverage. A large damage award
against [Company], not adequately covered by insurance, would adversely affect our
financial position.
[] Other risks that may affect your business include profit margin, seasonality, volatility of
industry, substitution, limited suppliers, dependence on major customer and the
performance of your management team. To evaluate the risk factors for your business,
see Elements of Risk on the following page .
Environmental Risk
Economic
The economic risks affecting [Company] are [x]. The best strategy for [Company] is
[diversification, offering numerous products or services to multiple market segments].
Weather
The State and Local ordinances or zoning laws that may impact our product are [x].
[Company] will staying abreast of legal issues facing [industry] through [industry
publications] and [x].
Elements of Risk
[] This table shows an example of how risk may be evaluated, where it stems from, and
which areas are most dangerous. It allows you to compare your exposure, given various
assumptions. This is a suggested list of risk. Add other risk elements specific to your
product.
[] Assign degrees of risk to each area; low=1, medium=5 or high=10. Next assign a risk
percentage to each area; 0% – 100%. The total risk percentage of all areas must not
exceed 100%. Finally, multiply the element of risk factor X the weight percentage to
calculate the degree of risk. The elements of risk that receive the highest totals should
receive the most explanation in your business.
Elements Degree Weight Total
of Risk of Risk of Risk in %
Business Risk
Environmental Risk
Rationale