The market analysis of a business plan must present a broad and clear image of the industry you want to be a part of. In the marketing analysis section of the business plan you need to present the results and the conclusions of the marketing research. The more detailed aspects of the marketing research, such as the final research report, the questionnaire, graphics and in-depth analyses should be included in the Annexes section of the business plan.
The main purpose of the market research is to provide relevant information that will help you solve marketing problems that will come along the way. This is a necessary and important activity in the start-up phase: conducting detailed market analysis is the foundation of any successful business because the data you gather will be a determinant aspect in the decision making process.
Normally, the Market analysis section of the business plan should be included after the Products and services section. Be sure to check out a more detailed structure of the business plan before you start writing it.
Also, much of the information that will be included in the market analysis will be derived directly from the SWOT analysis that was performed early on in the business planning process.
What elements should the market analysis include?
Industry description – make sure to offer a detailed description of the industry you plan on being a part of: size, growth rates, general trends and any other characteristics you find relevant (for example: the life cycle stage of the product/service; growth forecasts, etc.) Afterwards, schematically present the types of consumers (companies, public administrations, individuals).
Information about the target market. Set your target market so that you can supply your customers as best as possible given the resources you hold. Offer information about your target customers: A lot of companies get it wrong in this stage because they try to extend way too much, thus losing their focus. Once you’ve determined the target group, ensure you have as much information as possible about it. In the plan the following information should be included:
- The main characteristics. What are the specific needs of potential buyers? How much of their needs are covered? What are the socio-demographic characteristics of the target group? Is there seasonality to your sales? What are the decision making factors that influence the purchasing of products? Where is the target group located and how can you access it?
- The size of the target market. In this section you must offer data regarding the number of potential clients, their number of purchases, the buying frequency, and the growth potential of this market.
- The information sources you used. Present the main data sources that helped you during the information gathering process. Also, show the data sources you will use to obtain information about the target market. You could combine online information with data obtained from offline sources such as press, reports of some associations pertaining to the field, etc.
- The market share you could obtain. What is the market share and the number of clients you believe you will be able to win over? Present your arguments having solid data to back it up.
- The price strategy and the gross margins. Determine the price structure, the estimated gross margins, the payment terms and the discount policy you intent to use.
- Media channels. Present the media channels you plan on using to communicate with your target market. These may be as follows: publications, the Internet, radio stations, television or any other channel that is compatible with your business profile and your consumers.
Competition analysis. By conducting this analysis you are able to identify your main direct and indirect competitors. Ensure you are able to identify your competitors for each of your products or services you sell.
Elements that must be included in the competition analysis are:
- Their market share;
- Their strengths and weaknesses;
- The communication strategies you use;
- The obstacles preventing you from tapping into the market that ultimately damage your company. These can refer to high start-up costs, lack of qualified personnel, the need for licenses and patents, etc;
Other restrictions: Here you must include any regulations or specific requirements that have a direct impact on your business and for which you need to find solutions. It is important to specify the duration until you are able to obtain all approvals and all the costs this activity involves.