Bài giảng Designing Business Plan - Unit 3: Industry and market analysis

NGO QUY NHAM, MBA INDUSTRY AND MARKET ANALYSIS Ngô Quý Nhâm Email: quynham@gmail.com Web: sites.google.com/site/ngoquynham Unit 3: NGO QUY NHAM, MBA Lecture outline  Industry analysis  Industry size, growth rate and sales projections  Industry structure  Key success factors  Industry trends  Market analysis  Market segmentation and target market selection  Buyer behavior  Competitor analysis  Estimate of annual sales and market share NGO QUY NHAM, MBA Industry size, growth rate and sales projections  Rules of thumb  Always display financial information in a multiyear format, making it easy to spot trends.  Display information graphically if possible  Provide information about the industry on a regional, local or segment basis if possible  Avoid the temptation to report only positive or flattering information  Not only data but analysis and implications NGO QUY NHAM, MBA Industry size  Industry size is normally displayed in money  Covers the data over three to five years  The size should be large enough to allow different competitors to serve different segment profitably but small enough that is not attracting large competitors NGO QUY NHAM, MBA E.g. Insurance Industry NGO QUY NHAM, MBA Growth rate  Should be reported in percentage basis  Provide interpretation of what number means  May compare to similar industries  May require a creative way  Use Internet, data from association NGO QUY NHAM, MBA Industry sales projections  Report future sales projections for the industry  Use existing sources for projection  if you project the number yourself, explain how you arrive at your projections NGO QUY NHAM, MBA Industry Structure Analysis Bargaining strength of suppliers Bargaining strength of customers Existence of substitutes Ease of entry into industry Intensity of competition NGO QUY NHAM, MBA Competition Among Existing Firms The extent of competition among established firms depends on:  Competitive structure  Fragmented industry: low entry barriers & commodity-type products  price wars  Consolidated industry tacit agreement  Rate of industry growth  Amount of fixed costs  Excess capacity  Exit barriers (economic, strategic, emotional factors) NGO QUY NHAM, MBA Vietnam’s non-life insurance market concentration NGO QUY NHAM, MBA Potential Competitors  “The greater the barriers to entry, the higher tends to be above-normal profit”  Barriers to entry  Brand loyalty (product differentiation)  Cost advantage over new entrants (technology: learning curve)  Economies of Scale (Size)  Large fixed costs associate with marketing, association, R&D and design  Capital requirements  Government policy NGO QUY NHAM, MBA The bargaining of customers Customers are most powerful when: 1. There are many small companies in supply industry and few, large buyers 2. The buyers purchase in large quantities 3. The supply industry depend on the buyers for a large percentage of its total orders 4. Low switching cost between supply companies 5. Buyers can purchase the input from several companies at once 6. Buyers can use the threat to supply their own needs through vertical integration NGO QUY NHAM, MBA The bargaining power of suppliers  Suppliers become most powerful when: 1. The product that suppliers sell has few substitutes and is important to the company 2. The company’s industry is not an important customer to the company 3. Suppliers’ products are differentiated (to such an extent that it’s costly to change supplier) 4. Suppliers can use the threat to of vertically integrate forward into the company’s industry 5. Buying companies cannot use the threat vertically integrate backward NGO QUY NHAM, MBA The existence of substitutes  Substitute products are ones of industries that serve similar customer needs  The existence of close substitutes presents a strong competitive threat  Key: Elasticity of substitution NGO QUY NHAM, MBA Key Success Factors  Key success factors (KSFs): factors that determine the relative success of market participants.  The keys to unlocking the secrets of competing successfully in a particular market segment.  An industry may have 6-10 KSFs  KSFs vary widely by industry NGO QUY NHAM, MBA Identifying Key Success Factors List the skills, characteristics, and core competencies that your business must possess to be successful in its market segment. Key Success Factor How Your Company Rates 1. Low 1 2 3 4 5 6 7 8 9 10 High 2. Low 1 2 3 4 5 6 7 8 9 10 High 3. Low 1 2 3 4 5 6 7 8 9 10 High 4. Low 1 2 3 4 5 6 7 8 9 10 High 5. Low 1 2 3 4 5 6 7 8 9 10 High Conclusions: NGO QUY NHAM, MBA Example of KSFs  Quality of products  Competitive price  Brand name recognition  Quality of customer service  Access to distribution channels  Marketing  New product development NGO QUY NHAM, MBA Industry trends  Environment trends  Economic trends  Social trends  Legal and policy trends  Technological trends  Business trends  Profit margins  Innovation  Inputs costs  New markets NGO QUY NHAM, MBA Application Question NGO QUY NHAM, MBA MARKET ANALYSIS NGO QUY NHAM, MBA Contents of market analysis  Market segmentation and target market selection  Buyer behavior  Competitor analysis  Estimate of annual sales and market share NGO QUY NHAM, MBA Market Segmentation  Step 1: Identify segmentation criteria  Step 2: Market segment Analysis  Size and growth rate  Profitability and sales  Competitive intensity  Customers’ Purchasing criteria  Risk  Company’s capability of meeting the market demand  Step 3: Segment evaluation and categorization  Step 4: Making choice of market segment NGO QUY NHAM, MBA Market segmentation  Identify segmentation criteria : Market can be segmented in different ways:  Geography o Region, Province  Demographic variables o Age, Gender, family size, income  Psychographic variables o personality, lifestyle, values  Behavioral variables: o benefits sought, product usage rate, brand loyalty  Product types NGO QUY NHAM, MBA Market segmentation NGO QUY NHAM, MBA Buyer Behavior  Consumer Buying Behavior refers to the buying behavior of the ultimate consumer.  A firm needs to analyze buying behavior for:  Buyers reactions to a firms marketing strategy has a great impact on the firms success.  The marketing concept stresses that a firm should create a marketing mix that satisfies (gives utility to) customers, therefore need to analyze the what, where, when and how consumers buy.  Marketers can better predict how consumers will respond to marketing strategies. NGO QUY NHAM, MBA Buyer Behavior Key question the company must address in Buyer Behavior Analysis:  why consumers make the purchases that they make?  what factors influence consumer purchases?  What are the changing factors in our society that influence consumer purchases? NGO QUY NHAM, MBA Competitor Analysis  Direct competitors  Offer the same products and services  Customers often compare prices, features and deals among these competitors when they shop  Significant competitors  Offer some of the same or similar products or services  Product or service lines overlap but not completely  Indirect competitors  Offer same or similar products in only a small number of areas NGO QUY NHAM, MBA Analyze Competitors Analyzing key competitors allows an entrepreneur to:  Avoid surprises from existing competitors’ new strategies and tactics.  Identify potential new competitors and the threats they pose.  Improve reaction time to competitors’ actions.  Anticipate rivals’ next strategic moves. NGO QUY NHAM, MBA Analyze Competitors Techniques do not require unethical behavior:  Monitor industry and trade publications.  Talk to customers and suppliers.  Debrief employees, especially sales representatives and purchasing agents.  Attend trade shows and conferences and study competitors’ sales literature.  Watch for competitor’s employment ads.  Conduct patent searches for patents competitors have filed. NGO QUY NHAM, MBA Analyze Competitors Techniques do not require unethical behavior:  Learn about the kinds of equipment and raw materials competitors are importing from the Journal of Commerce Port Import Export Reporting Service.  Buy competitors’ products and “benchmark” them.  Get competitors’ credit reports.  Check out the reports publicly-held competitors must file with the SEC.  Investigate UCC reports.  Check out the resources in your local library.  Use the Internet to learn more about competitors.  Visit competing businesses to observe their operations. (continued) NGO QUY NHAM, MBA Competitive Profile Matrix