Setting the market research
Many entrepreneurs with brilliant business ideas will fail because they do not analyze enough deep the market demand for their ideas. Start a business without previous analysis is like shooting in the darkness. Therefore, the next step will be the market definition for your product. For this, we need to ask questions, starting with wide context and later working to more specific aspects of the market.
Market situation
First, analyze what necessities you expect to satisfy, and then make a general description about the coverage of the market:
- Estimated size, growth rate
- Geographic extension and segments
- Clients, needs, perceptions, buying behavior
- Market operation and main media from competitors: price, quality, service and reputation
Defining potential customers:
- Explain how the market divided is, and identify which segments for your business interest are.
Product Situation
- Selling competitive products or complementary products
- Pricing competitive products or complementary products
- Establish margin profit media of the business
Competence situation
- Who are my potential competitors, how big they are and how are organized? What are my competitor expertise areas? What are they weaknesses, and how I can explode this?
- Market Share: How is distributed the market share among mayor players of my business?
- How is it compared my product with those available in terms of price, performance, trustworthy and other factors? What makes my product superior or different and how can I protect its originality from imitation.
- Market strategies: What factors determine competence among my competitors: price, sells, volume, reputation, product design, quality, reliability, service?
- Other features: How do my competitors see me?
- What kind of problems will have a new competitor and how will react to entrance of new competitors in the market? Will they work against me and if so, how? Will they follow others my initiative?
Competitor analysis may provide useful information. The business plan should summarize it and demonstrate it.
Distribution systems
- Explain where your products are being sold and how they have taken there. Does my competitors are selling products to final users or by other intermediaries? This last case, which is the average profit margin of the intermediaries?
Business Environment
- Economic environment
- Technological environment
- Political environment
- Social/culture environment
