Seminar 3 Flashcards
Industry vs. Market (Market)
Market
Market is about the buyers and sellers and their interactions in a specific context.
Market - an area where buyers and sellers meet and trade with one another either directly or through middlemen to determine the price of the particular product, by demand (consumers of the commodity) and supply forces (producers of a commodity). There are various forms of the market that vary in their nature, structure, size, etc.
Market - the groups of individuals or organizations that make up the pool of actual and potential customers for their goods and services. These groups fall into one or more of the following categories: geographic, demographic or socioeconomic, psychographic, behavioral or sectoral.
Markets – are used by firms to define their customers;
A single product might have dozens of target markets;
Market - the geographical scope of the term may refer to the local situation in some part of the rural economy, or it can refer to the country as a whole, the region, or the international economy.
‘World market’ - refers to the process of price formation at an international level.
Industry vs. Market (Market) Pt.2
Market analysis - investigates 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.
Market analysis can help you identify how to better position your business to be competitive and serve your customers + reduce risk, identify emerging trends, and help project revenue.
Market analysis - focuses on the specific environment that your business will directly compete in + gives a greater understanding of the audience and competition => will help you build a more targeted marketing strategy.
Market analysis is a thorough assessment of a market within a specific industry.
Market analysis - a key part of any business plan.
Market Analysis
Market analysis should answer the following questions:
Who are my potential customers?
What are my customers’ buying habits?
How large is my target market?
How much are customers willing to pay for my product?
Who are my main competitors?
What are my competitors’ strengths and weaknesses?
Industry vs. Market (Industry)
An industry is about the companies and their products or services
Industry - a combination of companies that produce the same/similar product (e.g.: movie industry, music industry, fruit industry, etc.).
Industry grouping is based on the primary product that a company makes or sells (the largest sources of revenue).
Companies within a similar industry will often perform similarly due to macroeconomic conditions helping or hurting all companies the same across the industry.
Industry analysis - a marketing process that provides statistics about the market potential of your business products and services. This section of your business plan needs to have specific information about the current state of the industry, and its target markets.
Industry analysis - helps businesses to identify both the opportunities and threats coming their way and gives them a strong idea of the present and future scenario of the industry.
The key to surviving in the ever-changing business environment is to understand the differences between yourself and your competitors in the industry and use it to your full advantage.
Consider the questions when thinking about the present industry:
How many of the firms in the industry are profitable? Compile a list of companies in the selected industry category => get the latest financial statements of the companies you’ve selected.
What are the key factors for success in your industry? Examples: marketing, pricing, bidding, cost control, customer service and product quality.
Are there any barriers for a new business to enter the industry (depends on the industry + general ease of doing business)?
What is the impact of government as a regulator, customer, legislator, etc. on the industry?
Is the business seasonal? What are the high and low seasons? Why are certain months better than others?
Consider the questions when thinking about the future of this industry:
Is the industry growing or declining? Why?
Where will it be in five years?
How will technology changes affect the business?
How dependent is your industry on another industry? Example: the transportation industry depends on the manufacturing industry, and the restaurant industry depends on the tourism industry.
Market vs. Industry Comparing
Meaning:
Market: Market refers to a mechanism that helps buyers and sellers in entering into transactions relating to exchange of goods and services.
Industry: An industry is a collection of companies that offer similar or substitute products to the customers and compete with one another.
Goods and Services:
Market: Variety of goods and services are offered.
Industry: Only one type of goods and services are offered.
Concerned with:
Market: Consumers
Industry: Producers
Competition:
Market: Exist between various sellers and buyers
Industry: Exist between the firms operating in the industry
What is target market?
Target Market - is a group of customers within a business’s serviceable available market at which a business aims its marketing efforts and resources.
A target market - consists of consumers who exhibit similar characteristics and are considered most likely to buy a business’s market offerings.
What is target market? Pt.2
By knowing what your product/service has to offer and what will make customers buy, you can begin to identify common characteristics of your potential market.
Identifying the target market is important in the development and implementation of a successful marketing plan for any new product.
The target market also can inform a product’s specifications, packaging, and distribution.
Attention: Part of the success of selling a good or service is knowing to whom it will appeal and who will ultimately buy it. Your user base can grow over time through additional marketing, advertising, and word of mouth.
What are the 4 types of market segmentation?
Geographic - Zip code/Postal Code
Demographic - Age, Gender, Income
Psychographic - Values, Goals, Needs
Behavioral - Purchasing habits, brand interactions
What are competitors?
Direct Competition - Organizations offering the same product or service to the same customer base.
Example Nike versus Adidas.
Indirect competition -Organizations that produce similar products and fulfill similar needs.
Example McDonald’s and a local sushi restaurant.
Questions about your competitors?
What are the number + size of your competitors in your market area?
What is the success rate of competing businesses? Difficult to gather this information=> try to search for past articles describing new business launches to gauge for the frequency of new entrants into the industry, or past articles that describe business success or failures.
Who are the market leaders among the competitors… what makes them more successful than others?
Examples: price, quality, customer service, location, interior/exterior décor, accessibility, technological advantages, brand image, etc.
