This assignment reinforces the discussions from Session 4: Market Analysis. The image (below) shows the portion of your plan outline which you will be working on. Unless otherwise specified by your instructor, this assignment should be completed in preparation for the next sequence, Session 5: Marketing Strategy.
NOTE: If you have not already downloaded the MinimumBusinessPlan.bpdx file, please follow these instructions. You will use this file to complete assignments 2 through 7 during the course:
- Download MinimumBusinessPlan.bpdx
- Open this file in Business Plan Pro
- Use the “Save as” command to save a copy of the file as yourname_businessplan.bpdx
- Follow the instructions to complete the exercise using your business plan file
NOTE: Saving under a different file name preserves the original file, in case you decide to create a second business plan using this customized outline.
Each topic should include a paragraph describing the key points for that topic:
Market Analysis Summary: The main chapter level topic should be a summary of its sub-topics. If you finish the sub-topics first, it will be easier to create a summary paragraph of the most important points.
Ideal Target: Create a profile of one ideal target customer (or organization). Use your imagination. Describe the ideal target customer including why he or she buys, what his or her problem is, how old, economic status, family status, favorite media, where you find this person to send a message, and more. A picture is a good idea.
Market Segmentation: Most markets divide into meaningful groups. For a local restaurant, segments might include families, university students, high school students, older people. Create a table showing how the market divides into segments, as suggested by this illustration:
The Market Analysis table is a simple spreadsheet, with projected years along the top, segment names on the side, and totals along the bottom. For this assignment you are looking at larger general market segments, so make educated guesses, as long as they make sense.
There is a detailed explanation of the table and how it shows segments, including even the Compound Average Growth Rate formula in the last column, in the online version of Hurdle: The Book on Business Planning, in the section called Your Target Market Forecast.
Business Plan Pro includes a pie chart of your Market Analysis table. Here is an example:
You can probably see how this chart links directly reflects the present year market segmentation, the first annual column in your market forecast table.
Market Growth: Ideally you cite experts: a market expert, market research firm, trade association, or credible journalist. This isn’t a class in market research. For this assignment, you have only three pages total, including the table and chart, so be specific and be brief.
Market Trends: Market trends could be changes in demographics, changes in customer needs, a new sense of style or fashion, or something else. It depends on what business you are in.
- What factors seem to be changing the market, or changing the business?
- What developing trends can make a difference?
Here are a few examples:
- A building supply store might note the trend toward remodeling older homes instead of buying new homes, or a trend toward more rooms in larger houses, despite smaller families, because of home offices, dens, and exercise rooms.
- A grocery store might note a trend toward Asian foods or spicier foods, or toward fresher, healthier foods, or development of a new shopping area in a different part of town.
- A credit and investment counselor might note demographic trends, such as baby boomers aging, leading to a greater need for estate planning and retirement planning.
Look to market trends as a way to get ahead of the market, to know where it is going before it gets there.
Market Needs: For each market segment included in your strategy, explain the market needs that lead this group to buy your product or service:
- Did the need exist before the business was there?
- Are there other products or services or stores that offer different ways to satisfy this same need?
- Do you have market research related to this market need?
It is always a good idea to try to define your retail offering in terms of target market needs, so you focus not on what you have to sell, but rather on the buyer needs you satisfy. As a shoe store, for example, are you selling shoes or are you satisfying the customer needs for covered feet? Are there additional underlying needs, such as style and prestige for fashion footwear, or padding for runners, or jumping for basketball players, that relate to selling shoes? Are kids buying status with their basketball shoes?
Competition: Mention the main competitors, and the strengths and weaknesses of main competitors. You might consider:
- Their products, pricing, reputation, management, financial position, channels of distribution, brand awareness, business development, technology, or other factors that you feel are important.
- What segment of the market do they operate in? What seems to be their strategy?
- How much do they impact your products, and what threats and opportunities do they represent?