Qualitative Market analysis is a key part of any comprehensive Business plan. Market analysis shows your expertise on a specific market, as well as the possible financial attractiveness of the market.
Before we consider how to make a good Business plan, we will clarify what the Market analysis is.
Market analysis is a qualitative and quantitative appraisal of the Market. It includes the size of the Market, different Customer groups, Consumer behaviour, Competition, and also the Economic and Legal environment.
How to make the Market analysis?
Show the businesses subject that:
- You know your Market well
- The Market you want to enter is not too saturate, to be able to build a sustainable business on it
To achieve noted, you need to explore:
- Target Market
- Market size
- Market needs
- Barriers to Market entry
Target Market means the type of Consumer you are targeting on it. So, you need to determine what kind of Consumer profile you want to gain auto be loyal to your Services / Products.
How to identify the target Market?
To identify tit you need to have concise answers on two questions:
- What problem does your Product or Service solve?
You will answer this question only if you understand the issues your Product solves. Once you understand what the problem is, then it will be easier for you to make a list of Consumers who are bothered by the same problem. This is the answer to the second question, which is:
- What Consumer profile is most likely to struggle with this same problem?
Split the Consumer profile into several categories:
- Purchasing power
- Place of residence
Do this in order to define as precisely as possible the profile of the Consumer whose problem your Product / Service solves.
When estimating the size of the Market, access to it will depend on the type of Business you are offering to the interested Businesses Subject. If your Business plan is to open a private Hotel then you need to take a local approach and try to estimate the Market around your Hotel. But if you are planning to open a Hotel chain, then your Market assessment should be within the national framework.
A Business plan without Competition analysis is not valid because it gives you a complete overview of who you are competing against and what expectations the Market has. In this section, therefore, you specify your position in relation to the position of the Competition. By analysing the weaknesses and strengths of the Competition, you have the opportunity to use those weaknesses of the Competition as your own opportunity to position yourself in the Market.
This part of the Market analysis is crucial! Why? Because this is a part when you should let the investor or a Business subject know how well you know the Market. You need to convince them that you know the Market very precisely and very “intimately”. This is the part where you need to indirectly highlight your concrete advantages over the Competition. To do this, highlight some drivers that your Competition was not focused on and use this as a favourable starting position.
Barriers to Market entry
Before you decide to enter specific enviroment, pay attention to the obstacles that may prevent or obstruct you. The type of obstacles will depend on the type of your Business, your Management team, but also on many other factors from your Business environment.
Here are some examples of obstacles you may face with:
- The need for significant Investments
- Accessibility and attractiveness of the location
- Brand development (high marketing costs to achieve a certain level of Market recognition)
- Access to distribution channels
- Legal regulations
This was a short introduction on how to make the Market analysis – perhaps the most important part of a Business plan. Market analysis differs from venture to venture, and it is very complex, so approach it responsibly and leave it those who knows the business.
And don’t forget – Operando is at your service!