Research Assessment #2

Date: September 10th

Subject: Market Evaluation Basics

APA Citation:

“Market Research and Competitive Analysis.” U.S. Small Business Administration, Federal

Government of the United States, 4 May 2018,

www.sba.gov/business-guide/plan-your-business/market-research-competitive-analysis.

Assessment:

On my journey through the entrepreneurial process, I have completed the first stage of

idea development and am currently on the second stage of opportunity/market analysis. Market

analysis is the process through which an entrepreneur determines whether their idea is worth

pursuing. An entrepreneur needs to invest capital, whether that be time, money or anything else,

to develop any idea, so it is important to first determine whether the idea is worth developing.

Market analysis is also necessary for creating the company strategy and operating plans, as these

rely on information about the market and competition to estimate metrics such as market share.

As I have already developed my idea, essentially skipping this step, I considered moving on to

the planning stage. However, I have realized through my research that market analysis is not just

useful for determining whether an idea is worth developing, but is a driving force behind many

of the decisions a business makes.

I have already done some preliminary market analysis, determining my customers and

competition. However, to successfully complete this stage of the entrepreneurial process, I need

to conduct more thorough research. The U.S. Small Business Administration breaks market

analysis into 2 main sections: market research and competition analysis. Market research is the
process of using information about consumer behavior and economic trends to improve a

business idea. An integral part of market research is understanding the consumer base. Relevant

demographic information includes “population data on age, wealth, family, interests” (Market

Research, 2018) of a business’ consumer base. After understanding the consumer base, a

business also needs to understand the market. Businesses need to consider if there is a demand

for their product, if they have access to a sufficiently sized market, what the income range and

employment rate of that market is, how saturated the market is, and how competitive their

pricing is (Market Research, 2018). Businesses also benefit from keeping track of small business

trends, which can make them more appealing to consumers. Market research can be done

through direct research, which means the business employees talk directly to customers, or by

using existing sources. Direct research, which can be done through surveys, focus groups, and

interviews, is time consuming and expensive, however it can give nuanced information about the

consumer base.

Competitive analysis is the process of evaluating a business’ competition to determine a

competitive advantage. It is possible that the competition might target one’s market but be in a

different industry (Market Research, 2018). Competitive analysis needs to consider the market

share and the strengths and weaknesses of the competition, one’s window of opportunity to enter

the market, how important the market is to one’s competitors, any barriers to entry, and indirect

competitors (Market Research, 2018). Understanding all of these factors increases the likelihood

that an entrepreneur will be able to develop their competitive advantage.

Conducting market analysis will not only help me later in my development of the

operating plan and company strategy, but it will also help me improve my product as I modify it
to satisfy the preferences of my consumer base. Clearly, market analysis is not just a step to

prevent the wasting of capital, but is integral to the successful operation of any business.