MARKET ANALYSIS MARKET ANALYSIS

By
P.K.Mathan Raj
What is Market Analysis? What is Market Analysis?
y A documented investigation of a market
that is used to inform a firm's planning
activities particularly around decisions of
the different aspects of a company.
Different Aspects include Different Aspects include
y Inventory
y Purchase
y Work force expansion/contraction
y Facility expansion
y Purchases of capital equipment
y Promotional activities and
y Many other aspects
Goal of Market Analysis Goal of Market Analysis
y To determine the attractiveness of a
market
Both Now
&
The Future.
y Investment Decisions
y Findings Various Investment Strategies
Dimensions of a Market Analysis Dimensions of a Market Analysis
y David A. Aaker outlined the following
dimensions of a market analysis:
Market size (current and future)
Market growth rate
Market profitability
Industry cost structure
Distribution channels
Market trends
Key success factors
(David A. Aaker Consultant & Author in the field of marketing,
particularly in the area of Brand Strategy.)
Market Size Market Size
y Size of the market can be evaluated based on
Present Sales
Potential Sales (If the use of the product were
expanded)
y Information sources for determining market
size
Government data
Trade associations
Financial data from major players
Customer surveys
Market Growth Rate (MGR) Market Growth Rate (MGR)
y Study Growth Drivers
Demographic information
Sales growth in complementary products
y Important Inflection points in the MGR
can be predicted by constructing product
diffusion curve.
y The shape of the curve can be estimated
by studying the characteristics of the
adoption rate of a similar product in the
past.
MGR (Cont) MGR (Cont)
y Leading indicators of the decline phase
(PLC) include,
Price pressure caused by competition
Decrease in brand loyalty
Emergence of substitute products
Market saturation and
Lack of growth drivers.
Market Profitability Market Profitability
y Avg Profit potential for a market Can be
used as Guideline
y Michael Porter devised a useful
framework for evaluating the
attractiveness of an industry or market,
known as Porter's five forces
Porters Five Forces Porters Five Forces
y Five factors that influence the market
profitability:
Buyer power
Supplier power
Barriers to entry
Threat of substitute products
Rivalry among firms in the industry
Industry Cost Structure Industry Cost Structure
y Important for identifying key factors for
success
y Porter's value chain model is useful for
determining where value is added and for
isolating the costs.
y Also helpful for formulating strategies to
develop a competitive advantage.
Distribution Channels Distribution Channels
y Existing distribution channels - can be
described by how direct they are to the
customer.
y Trends and emerging channels - new channels
can offer the opportunity to develop a
competitive advantage.
y Channel power structure - for example, in the
case of a product having little brand equity,
retailers have negotiating power over
manufacturers and can capture more
margins.
Market Trends Market Trends
y Source of new opportunities and threats
Changes in the market
y Relevant trends are industry-dependent
y Egs:
Changes in price sensitivity
Demand for variety
Level of emphasis on service and support.
y Regional trends also may be relevant.
Key Success Factors Key Success Factors
Access to essential unique resources
Ability to achieve economies of scale
Access to distribution channels
Technological progress
y Key success factors may change over time,
especially as the product progresses
through its life cycle