TECHNOPRENEURSHIP
MARKET IDENTIFICATION AND
ANALYSIS
101
At the end of this report, the learner
OBJECTIVE
should be able to:
1. Identify the classes of competitors.
2. Classify the product differentiation and
positioning.
3. Define market structures, its characteristics
and types.
4. Define Market Segmentation & Size.
5. Explain the beachhead market and
creating your market
S
The process of selecting the groups of customers to focus on
in a firm’s marketing mix.
It involves finding out why customers would buy from you,
dividing the market into segments according to
demographics and other characteristics, and then finding
the most profitable segments to include in your target
market.
It affords a more effective marketing mix that maximizes
your reach and profits.
The Marketing Mix 5 P’s is a significant tool to help you
select and create the right marketing strategies for your
business. It forces you to think about which areas of your
business you can change or improve on, to help you meet
the needs of your target market, add value and differentiate
your product or service from your competitors. The 5
areas you need to make decisions about are: PRODUCT,
PRICE, PROMOTION, PLACE and PEOPLE.
1. PRODUCT/SERVICE
The product or service element refers to what you are offering as a
whole to your customers. Product decisions include functionality,
branding, packaging, service, quality, appearance and warranty
terms.
2. PRICE
The price element refers to the way you set prices for your products
or services. It should include all the parts that make up your overall
cost, including the advertised price, any discounts, sales, credit terms
or other payment arrangements.
3. PROMOTION
Promotion refers to all the activities and methods you use to
promote your products/services to your target market. It includes
sales, public relations, direct marketing, advertising, sponsorship
and social media.
4. PLACE
The place element refers to how you get your product or service to
your customers at the right time, at the right place, and in the right
quantity. It includes distribution channels location, logistics, service
levels and market coverage.
5. PEOPLE
The people element refers to your customers, yourself and your staff.
You need to consider both your staff and customers if you’re thinking
of growing your business. It includes understanding what your
customers’ needs and wants are, setting targets and measuring your
customer service levels so that you attract and keep loyal customers.
1. More effective marketing mix.
2. Helps you choose the right marketing channels.
3. Uses limited time, money, and resources more efficiently
4. Maximizes sales and profits.
1. Assess product or service characteristics
2. Identify why customers would buy from you.
3. Identify the most relevant dimensions of segmentation.
4. Segment the market according to specific criteria.
5. Choose the most profitable segments to include in the target
market.
1. Nike Target Market
Nike sells apparel, equipment, shoes, and accessories to athletes and people
who play sports. Their products are good quality and last for a long time, driving
the price range up enough so that only people with disposable income can
afford to purchase their products.
They specifically target young aspiring athletes and runners, two groups of
people who rely on motivation to continue pushing themselves beyond their
normal limitations.
2. Netflix Target Market
A lesson to be learned from Netflix has less to do with its actual target market,
which is constantly evolving, and more to do with their approach to reaching
their target market.
They continuously conduct research on their audience and meticulously provide
them with what they want. From mail-in DVD rentals to a behemoth online
streaming service, Netflix has notoriously leaned into its audience and pivoted
when needed. And in doing so, they let word-of-mouth marketing fuel their
sales.
A large part of market research and an important
component of business plan.
A quantitative and qualitative assessment of a market. It
looks into the size of the market both in volume and in
value, the various customer segments and buying patterns,
the competition, and the economic environment in terms of
barriers to entry and regulation.
Forms the basis of the development of a marketing strategy
and concrete marketing measures
1.With market analysis, you can back up your business idea with
figures, data, and facts, and therefore provide a convincing business
plan.
2.You can recognize market potential at an early stage and
avoid making the wrong decisions.
3. You can identify any existing knowledge gaps and fill them in
on time.
4.A market analysis shows you which competing products are
already on the market.
5.With a market analysis, you can identify the market entry barrier
and estimate the market attractiveness.
The objectives of the market analysis section of a business plan are
to show to investors that:
• you know your market
• the market is large enough to build a sustainable business
In order to do that follow the plan:
1. Demographics and Segmentation
2. Target Market
3. Market Need
4. Competition
5. Barriers to Entry
6. Regulation
1. Demographics and Segmentation
The first step of the analysis consists in assessing the size of the
market. When assessing the size of the market, your approach will
depend on the type of business you are selling to investors.
2. Target Market
Once you have estimated the market size you need to explain to your
reader which segment/s of the market you view as your target
market. The target market is the type of customers you target within
the market. For example, if you are selling jewelry you can either be
a generalist or decide to focus on the high end or the lower end of
the market. This section is relevant when your market has clear
segments with different drivers of demand. In my example of jewels,
value for money would be one of the drivers of the lower end market
whereas exclusivity and prestige would drive the high end.
3. Market Need
Now it is time to focus on the more qualitative side of the market
analysis by looking at what drives the demand (divers of demand
factors impact each consumer's decision to buy something). This
section is very important as it is where you show your potential
investor that you have an intimate knowledge of your market. You
know why they buy. Here you need to get into the details of the
drivers of demand for your product or services.
THE 5 DRIVERS OF DEMAND
1. PRICE of the good or service- the law of demand states that when prices
rise, the quantity of demand falls.
2. INCOME OF BUYERS - when income rises, so will the quantity demanded.
3. PRICES OF RELATED GOODS OR SERVICES—either complementary
and purchased along with a particular item, or substitutes bought
instead of a
product
4. TASTES or preferences of consumers - when the public’s desires,
emotions, or preferences change in favor of a product, so does the quantity
demanded.
5. CONSUMER EXPECTATIONS about whether prices for the product will rise
or
4. Competition
The aim of this section is to give a fair view of who you are
competing against. You need to explain your competitors' positioning
and describe their strengths and weaknesses. You should write this
part in parallel with the Competitive Edge part of the Strategy
section.
The idea here is to analyse your competitor's angle to the market in
order to find a weakness that your company will be able to use in its
own market positioning.
Above is an example of a furniture shop in France. As you can
see from the table all the actors on the market are currently
focused on the low medium range of the market leaving the
space free for a high end focused new player
5. Barriers to Entry
It protects your business from new competition.
Here are a few examples of barriers to entry:
1. Investment
2. Technology
3. Brand
4. Regulation
5. Access to resources
6. Access to distribution channels
7. Location
6. Regulation
Regulation refers to licenses and concessions in particular or
requirements by the authority to start a business, which is usually
one of the barriers to entry. Explain the main regulations applicable
to your business and which steps you are going to take to remain
compliant.
1. Primary Research - experts from a target market are
interviewed in order to collect new data.
2. Secondary Research - uses existing data records from previous
surveys.
In Market Identification and Analysis we have to consider 5
categories:
1. Classes of Competitors
2. Product Differentiation, Positioning
3. Market Structure
4. Market Segmentation & Size
5. Beachhead Market and Creating your market
A competitor is a person, business, team, or organization that
competes against you or your company. If somebody is trying to beat
you in a race, that person is your competitor.
In business, we call a close a competitor a rival. In other words, rivals
are the same size and make similar products.
If two companies are leaders in their field, we refer to them as arch
rivals.
Largest firms that are arch rivals
There are 5 types of competitors:
1. Direct competitors - a firm that sells the same and services as you in
the same markets.
2. Potential competitors - a direct, indirect or replacement competitor
that currently has no distribution in our markets.
3. Indirect competitors - a firm that sells different of products and services
but are in the same industry and same markets.
4. Future competitors - a firm that has business capabilities that would
allow them to quickly take market share if they entered your markets.
5. Replacement competitors - a firm that sells products and services that
are in
different industry that could be used as a substitute for your products.
POSITIONING
-a strategic process that marketers use to determine the place or
niche an offering should occupy in a given market, relative to other
customer alternatives.
-marketing moves to figure out ways to situate the product
favorably in potential consumers' minds in relation to its
competitors. The marketing and promotional plan manipulates
symbols, such as in displays and packaging, and communicates
tailored messages targeted to people most likely to value what
is being marketed.
DIFFERENTIATION
-is the process companies use to make a product or service
stand out from its competitors in ways that provide unique value
to the customer.
-identifies a set of characteristics and benefits that make a
product different and better for a target audience.
-the goal of product differentiation is to create a competitive
advantage or to make your product superior to alternatives on the
market.
FOUR TYPES OF PRODUCT
1. Valuable but not Undifferentiated
2. Differentiated but not Valuable
3. Undifferentiated and not Valuable
4. Differentiated and Valuable
Market Structure refers to how different industries are classified and
differentiated based on their degree and nature of competition for
goods and services.
Economic market structures can be grouped into four
categories: perfect competition, monopolistic competition, oligopoly,
and monopoly.
TYPES OR CATEGORIES OF MARKET STRUCTURE
1. Perfect Competition
2. Monopolistic Competition
3. Oligopoly
4. Monopoly
MONOPOLISTIC
CHARACTERISTICS PERFECT COMPETITION MONOPOLY COMPETITION OLIGOPOLY
Many, but fewer than perfect
Number of firms in market Many One competition Few
Firm’s ability to control price None High Some Some
Subject to government
Barriers to entry None regulation Few Many
Emphasis on showing
Product Differentiation Very Little No products that compete perceived differences in Some differences
directly products
Farm products such as wheat Utilities such as gas, water, Retail specialty clothing Steel, automobiles, airlines,
Examples and corn cable television stores aircraft manufacturers
A market segment is a group of people in a homogeneous
market who share common marketable characteristics such as
interests, geography, age, demographic, or lifestyle.
Commonly used in marketing strategies, market segments help
companies optimize their product or service to suit a given
segment’s needs. Often, market segments are used to identify
a
target market.
Market Segmentation
the process of separating, identifying, and evaluating the layers of a
market to identify a target market.
seeks to identify targeted groups of consumers to tailor products and
branding in a way that is attractive to the group.
helps companies minimize risk by figuring out which products are the
most likely to earn a share of a target market and the best ways to
market and deliver those products to the market.
Three (3) Criteria to Identify Different Market Segments
1. Homogeneity – common needs within a segment
2. Distinction – being unique from other groups
3. Reaction – a similar response to the market
Market Segmentation Strategies
1. Geographic Segments – customers are targeted locally, statewide,
regionally, or nationally
2. Demographic Segments - customers are targeted by their age,
gender, race, income, and education level
3. Psychographic Segments - identification based on attitudes,
beliefs, emotions, lifestyle, and hobbies
4. Behavioral Segments - identification based on various patterns
such as purchasing occasion and loyalty status
Market Size
The "market size" is made up of the total number of potential buyers
of a product or service within a given market, and the total revenue
that these sales may generate.
Beachhead
Is derived from a military strategy that advocates that, as you are
approaching an enemy territory, you should plan and focus all your
resources on winning a small border area that become a stronghold
area from which to advance into the enemy territory.
Beachhead Market
A small market with specific characteristics that make it an ideal
target to sell a new product or service. The choice of the market
is based on the compatibility between the resources available,
the product, and the market itself.
Beachhead
Is derived from a military strategy that advocates that, as you are
approaching an enemy territory, you should plan and focus all your
resources on winning a small border area that become a stronghold
area from which to advance into the enemy territory.
Beachhead Market
A small market with specific characteristics that make it an ideal
target to sell a new product or service. The choice of the market
is based on the compatibility between the resources available,
the product, and the market itself.
Conditions that Define a Beachhead Market
1. Customers purchase similar products
2. Customers have similar sales cycles
3. Word of mouth communication between customers
Strategies for Creating New Markets
1. Sell the market concept before building a product.
2. Highlight positive social and environmental impacts.
3. Incentivize your team to think “outside-the-box” continually.
4. Work to build a compelling story around your new idea.
5. Use social media and traditional media to build demand for
change
