For example, if a start-up plans to begin the manufacturing and sales of a new smart phone in the UK, the population and the percentage of the population that uses a smart phone gives an estimate of the market size of smartphones. The population can be further broken down into age and sex segments to further narrow down the target in terms of the age brackets and sex of the market – this will inform the positioning of the product and the identification of the target market (Hooley et al, 2012). As can be expected a larger market size would be preferred (Kotler and Keller, 2012). The economic and socio-economic factors of the business environment or the market gives insight into the purchasing power of the market – again this should inform the target market and the positioning of the product. For example, if the economy is generally bad, consumers may not be willing to make high end purchases. Similarly, if the gross domestic product of a country is low, high-end products may not be suitable for the market. The technological, legal and environmental factors also affect the capability of the market to make a purchase or how the market now makes a purchase. In the smartphone example, perhaps it has become a trend that consumers now prefer “greener” phones, or the government has passed a law limiting the number of mobile phones one person can have or technological advancements now influence the kind of smartphones consumers want or the methods in which they purchase these smartphones – perhaps they now make more purchases online than they do in brick and mortar shops.
The information required to carry out this analysis can be found via the internet on sites such as Office for National Statistics UK which provides statistics on the population, the ratio of men to women across different ages and how much per household is earned in the UK amongst other relevant information. Alternatively or in addition, a customer survey using questionnaires may prove quite useful in determining the preferences of the market.
Having identified the market size, the next step would be to segment the market and identify the market in order to shape the product and value offering. The market can be segmented by geography, demography and behavior (Kotler and Keller, 2012). Having segmented the market thus, one of these segments or all of the segments could be identified as the target market. It is however worthy to note that a larger market segment with an equally attractive purchasing power may be the obvious preference but a niche may sometimes be found in a smaller or sometimes larger market with a low purchasing power. An example of this is insurance companies India, selling policies for as low as a pound because the population of India is quite large making it’s a large market albeit one with a low purchasing power (Kotler and Keller, 2012). It is recommended that a diagrammatic representation of the relevant information sourced for this section is included in this chapter of the business plan to make for easy reference of facts and figures.
Competition and Strategy
This chapter of the business plan should detail the industry attractiveness and the business strategy for competing in that industry. The attractiveness of an industry may be analysed and discovered by carrying out a Porter’s 5 forces analysis which essentially determines the profitability of the industry as determined by the 5 sources of competitive pressure (Grant, 2015), Porters’ 5 forces is diagrammatically represented below in Fig 1.
Threat of substitute products or services – The price customers a
