MARKET STUDY

Industry Definition
• An industry is a group of companies that are related based on
their primary business activities.
• Individual companies are generally classified into an industry
based on their largest sources of revenue. For example, while
an automobile manufacturer might have a financing division
that contributes 10% to the firm's overall revenues, the
company would be classified in the automaker industry by
most classification systems.
Industry size
• Is necessary for budgeting and marketing, especially for
those who will seek third-party financing.
• Most venture capitalists want to know the potential size of
the market for the products or services your business is
offering determines the value of your business, and to most
venture capitalists, the larger that market, the better
Industry growth rate
• Growth industries are sectors of economies that
experience higher-than-average growth due to new
technologies or changes in societal preferences or
government regulations.
Industry outlook
• A forecast regarding the future trend of a particular
company, economic segment, commodity or stock market
exchange. Market outlooks are based upon past
performance, prevailing economic factors, consumer
demand and opinion. also called market forecast.
Demand and supply factors
& trends
Factors affecting demand
• Tastes and preferences. Consumer tastes are constantly changing,
and demand for products rises and falls as a result. Kale is an example
of changing tastes. For years, kale was used as a decoration for
commercial buffets, then its health benefits become more publicized.
As a result, demand for kale rose and prices increased.
• Income level. When consumer incomes increase, they are able to
demand and buy more normal goods, which are products whose
demand goes up as income rises. For example, suppose a car costs
$25,000 and 19 million buyers are willing to pay this price. Now,
suppose consumer incomes increased; with more money available to
spend, 21 million people can afford to pay $25,000 for the car.
• In this case, demand for cars increased with a rise in income, and the
demand curve shifted to the right.
• Prices of substitutes. An increase in the price of one product can
increase the demand for its substitute. Coca-Cola and Pepsi are
excellent examples of this effect. If Pepsi increases its price,
consumers will quickly switch to buying more Coke.
• Complements. Complementary goods are products typically bought
together, like yoga classes and mats or bread and butter. If the price
for yoga classes falls, more people will sign up, increasing the demand
for mats. A drop in the price of bread will increase the demand for
butter to put on the bread.
• Expectation of future prices. If consumers expect prices to drop in the near
future or go on sale, they will delay their purchases, shifting the demand
curve to the left. English muffins, for example, are frequently offered at buy
one, get one free. Consumers know this, so rather than pay full price for a
single package, they wait for the special offer.
• The opposite is true for anticipated price increases, shifting the demand
curve to the right in advance of price rises.
• Changes in buyer demographics. Changing demographics affect the
demand for different products. For instance, the increasing percentage of
elderly people in the population increases the demand for nursing homes,
hearing aids and in-home health care.
Factors affecting supply
• Cost of production. Changes in the costs to manufacture a product
will cause the producer to modify production volume. Suppose a car
manufacturer receives an increase in the price of steel and raises the
price of cars to cover the increase. Consumers will demand a lower
quantity of cars at the higher price, causing the manufacturer to
reduce output and shift the supply curve to the left.
• Technology. Improvement in technology that reduces the cost of
production will enable producers to lower selling prices and sell more
cars. This shifts the supply curve to the right.
• Number of suppliers. The addition of new suppliers increases the
quantities available at the same prices and shifts the supply curve to
the right.
• Government regulations. Some government regulations can increase
the cost of production. As a result, a manufacturer might reduce the
quantity supplied because the profit is reduced, shifting the curve to
the left.
What Is the Importance of Supply and Demand Analysis?
• All business managers and consumers use supply and demand
analysis to make decisions. Business owners analyze the factors that
affect supply and demand curves to determine what volume to
produce and how to price their products. Consumers make buying
decisions, either consciously or instinctively, based on their wants and
needs and perceived value received at particular price points.
• The basics laws of supply and demand form the foundation of a
competitive, capitalistic environment.
Market drivers
• Market drivers are the underlying forces that compel consumers to
purchase products and pay for services.
social

Social
Drivers Root Cause Example
Population While also Zipcar took off in urban San Francisco, where owning a car is
Density listed in impractical. Zipcar’s scattered storage lots give customers quick
Economic access to wheels, often walking distance.
Drivers,
denser
population
enables
sharing to
happen with
less friction.
Mindset of Greening, Many of the startups we interviewed explained that this is about
Sustainabili Cleaning, and re-use or preservation of resources, rather than buying new
ty Sustainability products.
have been
hot topics for
years. This
bolsters the
need for
economic
conservation
and long term
thinking.
Lifestyle In Shareable For resource-strapped students, Chegg enables students to trade
Trend Magazine’s textbooks, rather than buy at high margin bookstores. Social
among book, Share networking is part of their inherent behavior.
Youth or Die, Neal
Gorenflo
writes that
this sharing
mindset is
common
among
college
students who
have limited
resources.
Altruistic In some A recent UCLA poll found that over 75 percent of incoming
Mindset cases, gifting freshman believe it is “essential or very important” to help others
or paying it in difficulty, the highest figure in 36 years.
forward are
common in
this
movement. S
ee list of
gifting
startups.
Independe We heard Similarly, TaskRabbit advertises that their rabbits are: “College
nt Lifestyle from Molly students, recent retirees, stay-at-home moms, young
Turner at professionals,” enabling those who may not seek a full-time
AirBnb that position.
many renters
of homes
found this
service
empowering.
Their own
homes were
revenue
generators
for their
independent
lifestyle.
economic
Economic Drivers Root Cause Example
Increase in World Population China and India have When I was born in the ‘70s,
population growth rates at the world population was in
17% and 30%, respectively. about 4 billion; today it’s 7.1
America is at 22%. See billion. It is estimated to be
Wikipedia. close to 9 billion by the time I
am 75 years old (data here).
Strained Resources The interviews revealed a Recycling programs are
general sentiment that natural evident everywhere, even in
resources are finite and the the sales offices and break
cost to retrieve them is far rooms there are recycled
greater than the potential plates, utensils and paper
return in revenue. Those with
less money are more inclined
trade, and to activate their
inventory for revenue by
sharing.
Economic Disparities Where there is a divide fixed For example, we saw a boost in
between haves and have-nots, Bitcoin value as Cyprus was
these sharing systems naturallyunder severe economic strain.
seek to shift resources.
Excess or Idle Inventory One of the root causes of this Rachel Botsman discusses in
movement an abundance of her iconic TED speech that the
idle resources sitting by the average usage of an electric
wayside that can be shared drill is a mere 12 minutes per
and often monetized. year.
Inaccessible Luxury Those who can’t afford Why buy a $100,000 Lincoln
something, can now rent Town Car, when you can rent
it. One successful Gen X an Uber for 30 minutes, saving
banker told me that, “Access is money and headaches?
more important than
ownership”
Influx of VC Funding Venture capitalists have Category leader, Uber, has
already put billions into this received nearly $50m of
market of fresh new funding and AirBnb has
startups. Our research shows received a whopping $120m.
that there has been over $2
billion of funding across 200
startups.
technology
Technology Drivers Root Cause Example
Social Networking These technologies provide three key AirBnb in itself is a social
Technologies features: network. They have seller
•Social profiles and reputations profiles, and renters have
tracking, their own reputation with
•Social graphics that enable people to verified IDs. The goods
connect traded are locations.
•Transfer of information, in this case,
need for resources or supply of them
Mobile Technologies Access to people or other resources Many of these startups are
requires “portability” for a majority of mobile-driven. For
these services, so mobile platforms example, Lyft has a thin
and devices for transfer of website and suggests that
information become necessary. users download mobile
apps for this transportation
site
Payment Systems In the end, this is a marketplace of TaskRabbit asks me to use
goods and services. Systems and my credit card, while other
platforms are required to broach the systems like Bittorrent are
transactions that may use traditional fueled by Bitcoins.
ecommerce or new bartering
methods
Target market
•This is the group of people or
businesses that will best benefit
from the use of the product or
services.
 Marketing and
positioning plan
Marketing Plan
• A marketing plan is a report that outlines your marketing strategy
for the coming year, quarter or month. Typically, a marketing plan
will include these elements:
• An overview of your business’s marketing and advertising goals
• A description of your business’s current marketing position
• A timeline of when tasks within your strategy will be completed
• Key performance indicators you will be tracking
• A description of your business’s target market and customer needs
• Writing a marketing plan forces you to think through the important
steps that lead to an effective marketing strategy. A plan will also help
keep you focused on your high-level goals.
Positioning
• Is a marketing concept that outlines what a business
should do to market its product or service to its
customers.
• The marketing department creates an image for the
product based on its intended audience. This is
created through the use of promotion, price, place,
and product.
Positioning
• The more intense a positioning strategy, typically the more effective
the marketing strategy is for a company.
• POSITIONING STRATEGIES:
• Positioning in Advertisements
• Positioning in Sales Location
• Positioning through Price
competition
Direct and indirect competition
• Direct – where someone has a very similar product as an alternative
to yours.
• Coke vs. Pepsi
• Indirect – is the conflict between vendors whose products or services
are not the same but that could satisfy the same consumer need.
• Fitness equipment sales compete with gym memberships and diet programs.
• key competitors are the ones who take your customers, even if those
companies do not sell the same exact product or service as you do
Market share

• Market share represents the percentage of an industry, or a market's

total sales, that is earned by a particular company over a specified
time period. Market share is calculated by taking the company's sales
over the period and dividing it by the total sales of the industry over
the same period. This metric is used to give a general idea of the size
of a company in relation to its market and its competitors.
• Gains or losses in market share can have significant impacts on a
company's stock performance, depending on industry conditions.
SWOT analysis
• Strengths and weaknesses are internal to your company—things that
you have some control over and can change. Examples include who is
on your team, your patents and intellectual property, and your
location.
• Opportunities and threats are external—things that are going on
outside your company, in the larger market. You can take advantage
of opportunities and protect against threats, but you can’t change
them. Examples include competitors, prices of raw materials, and
customer shopping trends.
Key barriers to entry
• Barriers to entry are the economic term describing the existence of high
start-up costs or other obstacles that prevent new competitors from easily
entering an industry or area of business. Barriers to entry benefit existing
firms because they protect their revenues and profits
• Common barriers to entry include special tax benefits to existing firms,
patents, strong brand identity or customer loyalty, and high customer
switching costs. Others include the need for new firms to obtain proper
licenses or regulatory clearance before operation.
• Barriers to entry may be natural (high startup costs to drill a new oil well),
created by governments (licensing fees or patents stand in the way), or by
other firms (monopolists can buy or compete away startups).
Risk Response strategy
• is a process of developing strategic options, and determining actions,
to enhance opportunities and reduce threats to the project’s
objectives.
• A project team member is assigned to take responsibility for each risk
response. This process ensures that each risk requiring a response has
an owner monitoring the responses, although the owner may
delegate implementation of a response to someone else.
For Threats For Opportunities

Avoid. Risk can be avoided by removing the Exploit. The aim is to ensure that the
cause of the risk or executing the project in a opportunity is realized. This strategy seeks to
different way while still aiming to achieve eliminate the uncertainty associated with a
project objectives. Not all risks can be avoided particular upside risk by making the opportunity
or eliminated, and for others, this approach definitely happen. Exploit is an aggressive
may be too expensive or time‐consuming. response strategy, best reserved for those
However, this should be the first strategy “golden opportunities” having high probability
considered. and impacts.
Transfer. Transferring risk involves finding Share. Allocate risk ownership of an
another party who is willing to take opportunity to another party who is best able
responsibility for its management, and who to maximize its probability of occurrence and
will bear the liability of the risk should it occur. increase the potential benefits if it does occur.
The aim is to ensure that the risk is owned and Transferring threats and sharing opportunities
managed by the party best able to deal with it are similar in that a third party is used. Those
effectively. Risk transfer usually involves to whom threats are transferred take on the
payment of a premium, and the liability and those to whom opportunities are
cost‐effectiveness of this must be considered allocated should be allowed to share in the
when deciding whether to adopt a transfer potential benefits.
strategy.
Mitigate. Risk mitigation reduces the Enhance. This response aims to modify the
probability and/or impact of an adverse risk “size” of the positive risk. The opportunity is
event to an acceptable threshold. Taking enhanced by increasing its probability and/or
early action to reduce the probability and/or impact, thereby maximizing benefits realized for
impact of a risk is often more effective than the project. If the probability can be increased
trying to repair the to 100 percent, this is effectively an exploit
damage after the risk has occurred. Risk response.
mitigation may require resources or time and
thus presents a tradeoff between doing nothing
versus the cost of mitigating the risk.
Acceptance. This strategy is adopted when it is not possible or practical to respond to the risk
by the other strategies, or a response is not warranted by the importance of the risk. When the
project
manager and the project team decide to accept a risk, they are agreeing to address the risk if and
when it occurs. A contingency plan, workaround plan and/or contingency reserve may be developed
for that eventuality.
STRATEGIC PARTNERSHIP
AND LINKAGES
Strategic partnership
• A strategic partnership is a mutually beneficial arrangement
between two separate companies that do not directly
compete with one another.
• Companies have long been engaging in strategic partnerships
to enhance their offers and offset costs. The general idea is
that two are better than one, and by combining resources,
partner companies add advantages for both companies
through the alliance.
For example:
• Some good examples of strategic partnership
agreements between brands that you may have heard
of include Starbucks’ in-store coffee shops at Barnes &
Nobles bookstores, HP and Disney’s ultra hi-tech
Mission: SPACE attraction, and Nokia and Microsoft’s
joint partnership agreement to build Windows
Phones.
• In an ideal partnership, you benefit not only from adding
value for your customers but lowering costs as well. That’s
why every strategic partnership is ultimately an act of
leveraging costs versus return.
• Before diving into a partnership, size up the other party and
carefully evaluate the benefits and risks of entering into the
agreement. If you can satisfy your profit goals and customer
expectations through the partnership, then it’s the right call
for your business.
linkages
• Relationships and interactions between tasks, functions,
departments, and organizations, that promote flow of information,
ideas, and integration in achievement of shared objectives.
DISTRIBUTION STRATEGY
 Distribution Strategy

• is a strategy or a plan to make a product or a service available to the

target customers through its supply chain.
• Distribution Strategy is precisely the strategy deployed by a company to
make sure the product/service can reach the maximum potential
customers at minimal or optimal distribution costs.
• A good distribution strategy can maximize your revenue and profits but
a bad and unplanned distribution strategy can lead not only to losses
but also helping the competitors get the advantage through the
opportunity in the market which you created.
3 MAJOR DISTRIBUTION STRATEGY
• Intensive - A marketing strategy under which a company sells through as many
outlets as possible, so that the consumers encounter the product virtually
everywhere they go: supermarkets, drug stores, gas stations, and the like. (e.g.
Soft drinks)
• Selective - is a type of distribution strategy that lies and operates between
intensive and exclusive distribution. Selective Distribution involves using more
than one, but lesser than all the intermediaries and distributors who carry the
company's products on a basis of a company specific set of rules.
• Exclusive - Distribution is exclusive when only certain retailers are given the
option of carrying a product in its store. Exclusive distribution is an agreement
between a supplier and a retailer granting the retailer exclusive rights within a
specific geographical area to carry the supplier's product
PRICING STRATEGY
1. Price Maximization
• A price maximization strategy aims to make pricing decisions
that generate the greatest revenue for the company. Calculating
the fixed and variable costs a business will incur, and then
figuring out how to minimize these costs, aids in arriving at a
profit-maximizing output. According to Madhavan Ramanujam,
pricing expert and author of Monetizing Innovation,
maximization is one of the best strategies for startups who are
looking to prioritize revenue growth.
2. Market Penetration
• Pricing for market penetration is a method used to attract a high
volume of buyers by marketing products or services at a lower
price than competitors. While this strategy can be extremely
useful in increasing market share, it is worth keeping in mind
that many new businesses who elect this strategy experience
an initial income drop that can be difficult to come back from.
The idea is that once a business successfully penetrates the
market, they will be able to grow and expand their brand to
attain higher profitability to make up for this early setback.
3. Price Skimming
• This strategy tends to work best during the introductory phase
of products and services. It involves introducing a product to the
market at a premium price, then methodically lowering the price
over time to attract a larger customer base. This method allows
a company to generate considerable profits in the introductory
phase of a product, and works best for products that can be
marketed to consumers willing to pay top price for the latest and
greatest. Apple executes the price skimming strategy every
year, pricing each new iPhone steeply during the introductory
phase, then lowering that price as time goes by.
4. Economy Pricing
• Economy pricing markets toward price-conscious
buyers. This strategy intends to minimize business
costs for the sake of selling products and services at a
price lower than the market average. While this
approach is effective in some cases, it can be risky for
smaller businesses, as their profitability relies almost
entirely on volume of sales and thus can jeopardize
profitability.
5. Psychological Pricing
• Have you ever wondered why items are often priced at $9.99
instead of the near equivalent of $10? Well, the answer is
psychological. As humans, we tend to yield to emotion rather
than logic. This is why utilizing “9”s in your pricing creates the
illusion of a less expensive product without significantly
affecting profitability. Another way to capitalize on this facet of
human behavior is by offering something “free” with your
product, an example being when a beauty product company
offers a complimentary travel-size version of a product for
customers who choose their brand over a less expensive
competitor.
Which Pricing Strategy Is Right For Your
Business?
• Determining which of these pricing strategies will help
you reach your pricing objectives requires serious
consideration. A crucial aspect to examine is aligning
price with value. You can't sell a valuable product for a
ridiculously low price and expect to make a profit.
Similarly, no one will buy an overpriced product that
they feel is not worth their money. Figuring out how
valuable your product is in the eyes of consumers helps
you find the “sweet spot” between price and value in
order to optimize success.
MARKETING BUDGET
Marketing Budget
• Is an estimate of projected costs to market your products or services.
• The costs in a marketing budget will be allocated according to the
campaign and the media to be utilized. Some prior research will be
necessary for the cost estimates to be as realistic as possible.
• Marketing budgets ensure that your marketing plan or campaign is
realistically costed.
Market Environment
• Industry (define & describe : size, growth rate, and outlook)
• Demand and supply factors and trends
• Market drivers (social, economic, technology)
• Target market (define and describe; how end users and customers
benefit)
• Marketing and positioning plan
• Competition (direct & indirect competition, and key competitors; give
market share; SWOT Analysis; key barriers to entry; Response
Strategy)
Sales Strategies
• Strategic partnership and linkages
• Distribution strategy
• Pricing strategy
• Marketing budget (ideally 3 years)