Market Analysis: by P.K.Mathan Raj
Market Analysis: by P.K.Mathan Raj
Market Analysis: by P.K.Mathan Raj
By
P.K.Mathan Raj
What is Market Analysis?
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…
Inventory
Purchase
Work force expansion/contraction
Facility expansion
Purchases of capital equipment
Promotional activities and
Many other aspects
Goal of Market Analysis
To determine the attractiveness of a
market
◦ Both Now
&
◦ The Future.
InvestmentDecisions
Findings Various Investment Strategies
Dimensions of a Market Analysis
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
Size of the market can be evaluated based on
◦ Present Sales
◦ Potential Sales (If the use of the product were
expanded)
Information sources for determining market
size
◦ Government data
◦ Trade associations
◦ Financial data from major players
◦ Customer surveys
Market Growth Rate (MGR)
Study Growth Drivers
◦ Demographic information
◦ Sales growth in complementary products
Important Inflection points in the MGR can
be predicted by constructing product
diffusion curve.
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…)
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
Avg Profit potential for a market Can
be used as Guideline
Michael Porter devised a useful
framework for evaluating the
attractiveness of an industry or market,
known as Porter's five forces
Porter’s Five Forces
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
Important for identifying key factors for
success
Porter's value chain model is useful for
determining where value is added and for
isolating the costs.
Also helpful for formulating strategies to
develop a competitive advantage.
Distribution Channels
Existing distribution channels - can be
described by how direct they are to the
customer.
Trends and emerging channels - new channels
can offer the opportunity to develop a
competitive advantage.
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
Source of new opportunities and threats
◦ Changes in the market
Relevant trends are industry-dependent
Egs:
◦ Changes in price sensitivity
◦ Demand for variety
◦ Level of emphasis on service and support.
Regional trends also may be relevant.
Key Success Factors
◦ Access to essential unique resources
◦ Ability to achieve economies of scale
◦ Access to distribution channels
◦ Technological progress