Wondering how to write the market analysis section of a business plan?
Don’t worry, you have come to the right place.
In this article, we will tell you how to write an effective market analysis section in your business plan that will help your investor and readers to understand you business better.
Market analysis is the section where you will talk about the target market in your business plan. Effectiveness of your analysis will depend how well you have examined the market to which you want to sell your product or services.
The ultimate goal of a new business is to find customers, solve their problems, and promote product and services to ultimately solve customer’s problems to get more sales.
Things to cover in your market analysis section of business plan
Market analysis section is placed after the products or services section of a business plan.
This section in your business plan provides a detailed overview of the industry in which you will work to sell your products or services, your niche, the demand of your product or services and the percentage of market share you are planning to capture.
Before we start, we suggest you to understand the type of people interested in buying your product or services, what is your geographical area, who are your competitors and how well the market is placed.
After establishing your target market, you can research to have a thorough understanding of the key things that require you to succeed.
While writing marketing plan, experts concentrate on following 3 C’s;
Where to find information to use
You can contact your nearest government authorities, chamber of commerce, trade groups, government publications, research papers, government statistics, trade journals and economic data to get your key data on industry analysis to help you with the research.
The easiest way to find information related to preparing a business plan or market plan is by using the internet. You can get many published information by using Google searches on keyword phrases.
These data will help you on getting certain information about the market, but you should not rely completely on these. You need to do your own research to know the market better.
We suggest you prepare your own questionnaires to get answers about the market based on your products and services.
The first and foremost thing to get started your market analysis is to know your customer. You first required gathering information about your customers to help and understand them better. It will help you improve your customer service in future and help you to develop new products.
Questions to help you draft your own market analysis section of business plan
You need to design your own questionnaires to understand the market better.
We have prepared a sample list of questionnaires for you, answer to following sample questions might help you to understand the market better;
- What is the size of your industry?
- Who are the major players in the market?
- What are the sectors the industry include?
- What age range will be interested in your product or services? What is their spending capability? What is their educational background?
- What is their marital status? What is their gender?
- What will be the geographical area? Are you going to sell locally or regionally or nationally or internationally?
- What is their income range, lifestyle and what they do for living?
- Why do they take interest in your product or services?
- Before buying your product or service, what are the other products they have used or using?
- Why were they attached to your competitor?
- What is the market share of your competitor?
- What is the problem that needs to be solved by your product or services?
- How is your competitor solving that problem? How will your product or services solve that problem in a better and effective way?
- Are they active in social media? What will be the impact of social media marketing on them?
- What is the estimated total sales of the industry this current year?
- What are projected sales of the industry for next 5 years?
- What is the industry wise trade volume and trends?
- How government regulation affects the industry?
- What are the key financial measures in your industry?
- In which industry are you going to work, its growth rate, size, trends and outlook.
- Whether the demand for your product or services is growing?
- Your target market, who will be your client or customers, demographics of the group and purchase potential.
- Who are your competitors, what are their strengths and weaknesses and what their market share is.
- How are you planning to make a place for your product or services?
- Your research on the market and how you are going to achieve your business goals.
When you collect data from your consumer, you need to understand that the research sample group should be relevant and representative of your target market population.
To know the growth potential of your product or services, try to collect data from the market to do research. Answer to following questions might help you to understand your product or services growth potential;
- What is the proportion of market share your competitors enjoy?
- Which group of people are taking more interest in your competitor’s product or services? Why and how they will be interested in your product or services?
- What is the impact of government policies on your product or services?
- How large enough is the market to sustain your business goals?
- How economic, social and political forces shape the business?
If the size of the market is very big to do your own research and you don’t have that much time to research, then we suggest you hire any professional firm to help you with the research.
Remember, research is not a one-time activity. You need to constantly get feedback from the market to update your data about the trend and direction in which it’s moving.
After getting all the information, you can start writing the market analysis section of the business plan in the form of several short paragraphs.
You can use appropriate heading for each paragraph. Your paragraphs should be written in the form of a summary. Following headings might help you to write down your market analysis section;
- Industry Overview
- Our position in the industry
- The competition
- What makes our product unique
Above paragraph will help you write about the industry and your position within it.