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How to Write a Market Analysis for a Business Plan

Dan Marticio

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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How to Write the Market Analysis Section of a Business Plan

Alyssa Gregory is an entrepreneur, writer, and marketer with 20 years of experience in the business world. She is the founder of the Small Business Bonfire, a community for entrepreneurs, and has authored more than 2,500 articles for The Balance and other popular small business websites.

market analysis and business plan

The market analysis section of your business plan comes after the products or services section and should provide a detailed overview of the industry you intend to sell your product or service in, including statistics to support your claims.

In general, the market analysis section should include information about the industry, your target market, your competition, and how you intend to make a place for your own product and service. Extensive data for this section should be added to the end of the business plan as appendices, with only the most important statistics included in the market analysis section itself.

What Should a Market Analysis Include?

The market analysis section of your small business plan should include the following:

  • Industry Description and Outlook : Describe your industry both qualitatively and quantitatively by laying out the factors that make your industry an attractive place to start and grow a business. Be sure to include detailed statistics that define the industry including size, growth rate , trends, and outlook.
  • Target Market : Who is your ideal client/customer? This data should include demographics on the group you are targeting including age, gender, income level, and lifestyle preferences. This section should also include data on the size of the target market, the purchase potential and motivations of the audience, and how you intend to reach the market.
  • Market Test Results : This is where you include the results of the market research you conducted as part of your initial investigation into the market. Details about your testing process and supporting statistics should be included in the appendix.
  • Lead Time : Lead time is the amount of time it takes for an order to be fulfilled once a customer makes a purchase. This is where you provide information on the research you've completed on how long it will take to handle individual orders and large volume purchases, if applicable.
  • Competitive Analysis : Who is your competition? What are the strengths and weaknesses of the competition? What are the potential roadblocks preventing you from entering the market?

7 Tips for Writing a Market Analysis

Here is a collection of tips to help you write an effective and well-rounded market analysis for your small business plan.

  • Use the Internet : Since much of the market analysis section relies on raw data, the Internet is a great place to start. Demographic data can be gathered from the U.S. Census Bureau. A series of searches can uncover information on your competition, and you can conduct a portion of your market research online.
  • Be the Customer : One of the most effective ways to gauge opportunity among your target market is to look at your products and services through the eyes of a purchaser. What is the problem that needs to be solved? How does the competition solve that problem? How will you solve the problem better or differently?
  • Cut to the Chase : It can be helpful to your business plan audience if you include a summary of the market analysis section before diving into the details. This gives the reader an idea about what's to come and helps them zero in on the most important details quickly.
  • Conduct Thorough Market Research : Put in the necessary time during the initial exploration phase to research the market and gather as much information as you can. Send out surveys, conduct focus groups, and ask for feedback when you have an opportunity. Then use the data gathered as supporting materials for your market analysis.
  • Use Visual Aids : Information that is highly number-driven, such as statistics and metrics included in the market analysis, is typically easier to grasp when it's presented visually. Use charts and graphs to illustrate the most important numbers.
  • Be Concise : In most cases, those reading your business plan already have some understanding of the market. Include the most important data and results in the market analysis section and move the support documentation and statistics to the appendix.
  • Relate Back to Your Business : All of the statistics and data you incorporate in your market analysis should be related back to your company and your products and services. When you outline the target market's needs, put the focus on how you are uniquely positioned to fulfill those needs.

Analyze your market like a pro with this step-by-step guide + insider tips

Don’t fall into the trap of assuming that you already know enough about your market.

No matter how fantastic your product or service is, your business cannot succeed without sufficient market demand .

You need a clear understanding of who will buy your product or service and why .

You want to know if there is a clear market gap and a market large enough to support the survival and growth of your business.

Industry research and market analysis will help make sure that you are on the right track .

It takes time , but it is time well spent . Thank me later.

WHAT is Market Analysis?

The Market Analysis section of a business plan is also sometimes called:

  • Market Demand, Market Trends, Target Market, The Market
  • Industry Analysis & Trends, Industry & Market Analysis, Industry and Market Research

WHY Should You Do Market Analysis?

First and foremost, you need to demonstrate beyond any reasonable doubt that there is real need and sufficient demand for your product or service in the market, now and going forward.

  • What makes you think that people will buy your products or services?
  • Can you prove it?

Your due diligence on the market opportunity and validating the problem and solution described in the Product and Service section of your business plan are crucial for the success of your venture.

Also, no company operates in a vacuum. Every business is part of a larger overall industry, the forces that affect your industry as a whole will inevitably affect your business as well.

Evaluating your industry and market increases your own knowledge of the factors that contribute to your company’s success and shows the readers of your business plan that you understand the external business conditions.

External Support

In fact, if you are seeking outside financing, potential backers will most definitely be interested in industry and market conditions and trends.

You will make a positive impression and have a better chance of getting their support if you show market analysis that strengthens your business case, combining relevant and reliable data with sound judgement.

Let’s break down how to do exactly that, step by step:

HOW To Do Market Analysis: Step-by-Step

So, let’s break up how market analysis is done into three steps:

  • Industry:  the total market
  • Target Market: specific segments of the industry that you will target
  • Target Customer: characteristics of the customers that you will focus on

Step 1: Industry Analysis

How do you define an industry.

For example, the fashion industry includes fabric suppliers, designers, companies making finished clothing, distributors, sales representatives, trade publications, retail outlets online and on the high street.

How Do You Analyze an Industry?

Briefly describe your industry, including the following considerations:

1.1. Economic Conditions

Outline the current and projected economic conditions that influence the industry your business operates in, such as:

  • Official economic indicators like GDP or inflation
  • Labour market statistics
  • Foreign trade (e.g., import and export statistics)

1.2. Industry Description

Highlight the distinct characteristic of your industry, including:

  • Market leaders , major customer groups and customer loyalty
  • Supply chain and distribution channels
  • Profitability (e.g., pricing, cost structure, margins), financials
  • Key success factors
  • Barriers to entry preventing new companies from competing in the industry

1.3. Industry Size and Growth

Estimate the size of your industry and analyze how industry growth affects your company’s prospects:

  • Current size (e.g., revenues, units sold, employment)
  • Historic and projected industry growth rate (low/medium/high)
  • Life-cycle stage /maturity (emerging/expanding/ mature/declining)

1.4. Industry Trends

  • Industry Trends: Describe the key industry trends and evaluate the potential impact of PESTEL (political / economic / social / technological / environmental / legal) changes on the industry, including the level of sensitivity to:
  • Seasonality
  • Economic cycles
  • Government regulation (e.g. environment, health and safety, international trade, performance standards, licensing/certification/fair trade/deregulation, product claims) Technological change
  • Global Trends: Outline global trends affecting your industry
  • Identify global industry concerns and opportunities
  • International markets that could help to grow your business
  • Strategic Opportunity: Highlight the strategic opportunities that exist in your industry

Step 2: Target Customer Identification

Who is a target customer.

One business can have–and often does have–more than one target customer group.

The success of your business depends on your ability to meet the needs and wants of your customers. So, in a business plan, your aim is to assure readers that:

  • Your customers actually exist
  • You know exactly who they are and what they want
  • They are ready for what you have to offer and are likely to actually buy

How Do You Identify an Ideal Target Customer?

2.1. target customer.

  • Identify the customer, remembering that the decision-maker who makes the purchase can be a different person or entity than the end-user.

2.2. Demographics

  • For consumers ( demographics ): Age, gender, income, occupation, education, family status, home ownership, lifestyle (e.g., work and leisure activities)
  • For businesses ( firmographic ): Industry, sector, years in business, ownership, size (e.g., sales, revenues, budget, employees, branches, sq footage)

2.3. Geographic Location

  • Where are your customers based, where do they buy their products/services and where do they actually use them

2.4 Purchasing Patterns

  • Identify customer behaviors, i.e., what actions they take
  • how frequently
  • and how quickly they buy

2.5. Psychographics

  • Identify customer attitudes, i.e., how they think or feel
  • Urgency, price, quality, reputation, image, convenience, availability, features, brand, customer service, return policy, sustainability, eco-friendliness, supporting local business
  • Necessity/luxury, high involvement bit ticket item / low involvement consumable

Step 3: Target Market Analysis

What is a target market.

Target market, or 'target audience', is a group of people that a business has identified as the most likely to purchase its offering, defined by demographic, psychographic, geographic and other characteristics. Target market may be broken down to target customers to customize marketing efforts.

How Do You Analyze a Target Market?

So, how many people are likely to become your customers?

To get an answer to this questions, narrow the industry into your target market with a manageable size, and identify its key characteristics, size and trends:

3.1. Target Market Description

Define your target market by:

  • Type: B2C, B2B, government, non-profits
  • Geographic reach: Specify the geographic location and reach of your target market

3.2. Market Size and Share

Estimate how large is the market for your product or service (e.g., number of customers, annual purchases in sales units and $ revenues). Explain the logic behind your calculation:

  • TAM (Total Available/Addressable/Attainable Market) is the total maximum demand for a product or service that could theoretically be generated by selling to everyone in the world who could possibly buy from you, regardless of competition and any other considerations and restrictions.
  • SAM (Serviceable Available Market) is the portion of the TAM that you could potentially address in a specific market. For example, if your product/service is only available in one country or language.
  • SOM (Service Obtainable Market / Share of Market) is the share of the SAM that you can realistically carve out for your product or service. This the target market that you will be going after and can reasonably expect to convert into a customer base.

3.3. Market Trends

Illustrate the most important themes, changes and developments happening in your market. Explain the reasons behind these trends and how they will favor your business.

3.4. Demand Growth Opportunity

Estimate future demand for your offering by translating past, current and future market demand trends and drivers into forecasts:

  • Historic growth: Check how your target market has grown in the past.
  • Drivers past: Identify what has been driving that growth in the past.
  • Drivers future: Assess whether there will be any change in influence of these and other drivers in the future.

How Big Should My Target Market Be?

Well, if the market opportunity is small, it will limit how big and successful your business can become. In fact, it may even be too small to support a successful business at all.

On the other hand, many businesses make the mistake of trying to appeal to too many target markets, which also limits their success by distracting their focus.

What If My Stats Look Bad?

Large and growing market suggests promising demand for your offering now and into the future. Nevertheless, your business can still thrive in a smaller or contracting market.

Instead of hiding from unfavorable stats, acknowledge that you are swimming against the tide and devise strategies to cope with whatever lies ahead.

Step 4: Industry and Market Analysis Research

The market analysis section of your business plan should illustrate your own industry and market knowledge as well as the key findings and conclusions from your research.

Back up your findings with external research sources (= secondary research) and results of internal market research and testing (= primary research).

What is Primary and Secondary Market Research?

Yes, there are two main types of market research – primary and secondary – and you should do both to adequately cover the market analysis section of your business plan:

  • Primary market research is original data you gather yourself, for example in the form of active fieldwork collecting specific information in your market.
  • Secondary market research involves collating information from existing data, which has been researched and shared by reliable outside sources . This is essentially passive desk research of information already published .

Unless you are working for a corporation, this exercise is not about your ability to do professional-level market research.

Instead, you just need to demonstrate fundamental understanding of your business environment and where you fit in within the market and broader industry.

Why Do You Need To Do Primary & Secondary Market Research?

There are countless ways you could go collecting industry and market research data, depending on the type of your business, what your business plan is for, and what your needs, resources and circumstances are.

For tried and tested tips on how to properly conduct your market research, read the next section of this guide that is dedicated to primary and secondary market research methods.

In any case, tell the reader how you carried out your market research. Prove what the facts are and where you got your data. Be as specific as possible. Provide statistics, numbers, and sources.

When doing secondary research, always make sure that all stats, facts and figures are from reputable sources and properly referenced in both the main text and the Appendix of your business plan. This gives more credibility to your business case as the reader has more confidence in the information provided.

Go to the Primary and Secondary Market Research post for my best tips on industry, market and competitor research.

7 TOP TIPS For Writing Market Analysis

1. realistic projections.

Above all, make sure that you are realistic in your projections about how your product or service is going to be accepted in the market, otherwise you are going to seriously undermine the credibility of your entire business case.

2. Laser Focus

Discuss only characteristic of your target market and customers that are observable, factual and meaningful, i.e. directly relate to your customers’ decision to purchase.

Always relate the data back to your business. Market statistics are meaningless until you explain where and how your company fits in.

For example, as you write about the market gap and the needs of your target customers, highlight how you are uniquely positioned to fill them.

In other words, your goal is to:

  • Present your data
  • Analyze the data
  • Tie the data back to how your business can thrive within your target market

3. Target Audience

On a similar note, tailor the market analysis to your target audience and the specific purpose at hand.

For example, if your business plan is for internal use, you may not have to go into as much detail about the market as you would have for external financiers, since your team is likely already very familiar with the business environment your company operates in.

4. Story Time

Make sure that there is a compelling storyline and logical flow to the market information presented.

The saying “a picture is worth a thousand words” certainly applies here. Industry and market statistics are easier to understand and more impactful if presented as a chart or graph.

6. Information Overload

Keep your market analysis concise by only including pertinent information. No fluff, no repetition, no drowning the reader in a sea of redundant facts.

While you should not assume that the reader knows anything about your market, do not elaborate on unnecessary basic facts either.

Do not overload the reader in the main body of the business plan. Move everything that is not essential to telling the story into the Appendix. For example, summarize the results of market testing survey in the main body of the business plan document, but move the list of the actual survey questions into the appendix.

7. Marketing Plan

Note that market analysis and marketing plan are two different things, with two distinct chapters in a business plan.

As the name suggests, market analysis examines where you fit in within your desired industry and market. As you work thorugh this section, jot down your ideas for the marketing and strategy section of your business plan.

Final Thoughts

Remember that the very act of doing the research and analysis is a great opportunity to learn things that affect your business that you did not know before, so take your time doing the work.

Related Questions

What is the purpose of industry & market research and analysis.

The purpose of industry and market research and analysis is to qualitatively and quantitatively assess the environment of a business and to confirm that the market opportunity is sufficient for sustainable success of that business.

Why are Industry & Market Research and Analysis IMPORTANT?

Industry and market research and analysis are important because they allow you to gain knowledge of the industry, the target market you are planning to sell to, and your competition, so you can make informed strategic decisions on how to make your business succeed.

How Can Industry & Market Research and Analysis BENEFIT a Business?

Industry and market research and analysis benefit a business by uncovering opportunities and threats within its environment, including attainable market size, ideal target customers, competition and any potential difficulties on the company’s journey to success.

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How to Write the Market Analysis Section of a Business Plan

Written by Dave Lavinsky

industry description and target market analysis

What is the Market Analysis in a Business Plan?

The market analysis section of your business plan is where you discuss the size of the market in which you’re competing and market trends that might affect your future potential such as economic, political, social and/or technological shifts.

This helps you and readers understand if your market is big enough to support your business’ growth, and whether future conditions will help or hurt your business. For example, stating that your market size is $56 billion, has been growing by 10% for the last 10 years, and that trends are expected to further increase the market size bodes well for your company’s success.

Download our Ultimate Business Plan Template here

What Should a Market Analysis Include?

You’ll want to address these issues in your market analysis:

  • Size of Industry – How big is the overall industry?
  • Projected Growth Rate of Industry – Is the industry growing or shrinking? How fast?
  • Target Market – Who are you targeting with this product or service?
  • Competition – How many businesses are currently in the same industry?

Learn how to write the full market analysis below.

How to Write a Market Analysis

Here’s how to write the market analysis section of a business plan.

  • Describe each industry that you are competing in or will be targeting.
  • Identify direct competition, but don’t forget about indirect competition – this may include companies selling different products to the same potential customer segments.
  • Highlight strengths and weaknesses for both direct and indirect competitors, along with how your company stacks up against them based on what makes your company uniquely positioned to succeed.
  • Include specific data, statistics, graphs, or charts if possible to make the market analysis more convincing to investors or lenders.

    Finish Your Business Plan Today!

Industry overview.

In your industry overview, you will define the market in which you are competing (e.g., restaurant, medical devices, etc.).

You will then detail the sub-segment or niche of that market if applicable (e.g., within restaurants there are fast food restaurants, fine dining, etc.).

Next, you will describe the key characteristics of your industry. For example, discuss how big the market is in terms of units and revenues. Let the reader know if the market is growing or declining (and at what rate), and what key industry trends are facing your market.

Use third-party market research as much as possible to validate the discussion of your industry.

Here is a list of additional items you may analyze for a complete industry overview:

  • An overview of the current state of the industry . How big is it, how much does it produce or sell? What are its key differentiators from competitors? What is its target customer base like – demographic information and psychographics? How has the industry performed over time (global, domestic)?
  • Analyze the macro-economic factors impacting your industry . This includes items such as economic growth opportunities, inflation, exchange rates, interest rates, labor market trends, and technological improvements. You want to make sure that all of these are trending in a positive direction for you while also being realistic about them. For example, if the economy is in shambles you might want to wait before entering the particular market.
  • Analyze the political factors impacting your industry . This is an often-overlooked section of any business plan, but it can be important depending on what type of company you are starting. If you’re in a highly regulated industry (such as medical devices), this is something that you’ll want to include.
  • Analyze the social factors impacting your industry . This includes analyzing society’s interest in your product or service, historical trends in buying patterns in your industry, and any effects on the industry due to changes in culture. For example, if there is a growing counter-culture trend against big oil companies you might want to position yourself differently than a company in this industry.
  • Analyze the technological factors impacting your industry . This includes analyzing new technologies being developed in software, hardware, or applications that can be used to improve your product or service. It also includes emerging consumer trends and will be highly dependent on your business type. In a technology-related venture, you would analyze how these changes are impacting consumers. For an educational-related venture, you would analyze how these changes are impacting students, teachers, and/or administrators.

For each of these items, you want to provide some detail about them including their current state as well as what external factors have played a role in the recent past. You can also include many other important factors if they apply to your business including demographic trends, legal issues, environmental concerns, and sustainability issues.

When you are done analyzing all of these factors, wrap it up by summing them up in a statement that includes your view on the future of the industry. This should be positive to attract investors, potential customers, and partners.

If you’re having trouble thinking about all of these factors then it might be helpful to first develop a SWOT analysis for your business.

Once you have an understanding of the market, you’ll need to think about how you will position yourself within that potential market.

Picking Your Niche

You want to think about how large your market is for this venture. You also want to consider whether you’d like to pick a niche within the overall industry or launch yourself into the mainstream.

If you have an innovative product it can be easier to enter the mainstream market – but at the same time, you might face some additional competition if there are similar products available.

You can choose to specialize in a niche market where you’ll face less competition – but might be able to sell your services at a higher price point (this could make it easier for you to get potential customers).

Of course, if your product or service is unique then there should be no competition. But, what happens if it isn’t unique? Will you be able to differentiate yourself enough to create a competitive advantage or edge?

If you are planning on entering the mainstream market, think about whether there are different sub-niches within your specific market. For example, within the technology industry, you can choose to specialize in laptops or smartphones or tablets, or other categories. While it will be more difficult to be unique in a mainstream market, you will still be able to focus on one type or category of products.

How Will You Stand Out?

Many companies are able to stand out – whether by offering a product that is unique or by marketing their products in a way that consumers notice. For example, Steve Jobs was able to take a business idea like the iPhone and make it into something that people talked about (while competitors struggled to play catch up).

You want your venture to stand out – whether with an innovative product or service or through marketing strategies. This might include a unique brand, name, or logo. It might also include packaging that stands out from competitors.

Write down how you will achieve this goal of standing out in the marketplace. If it’s a product, then what features do you have that other products don’t? If it’s a service, then what is it about this service that will make people want to use your company rather than your competition?

You also need to think about marketing. How are you going to promote yourself or sell your product or service? You’ll need a marketing plan for this – which might include writing copy, creating an advertisement, setting up a website, and several other activities. This should include a description of each of these strategies.

If you’re struggling with the details of any of these sections, it might be helpful to research what other companies in your market are doing and how they’ve been successful. You can use this business information to inform your own strategies and plans.

Relevant Market Size & Competition

In the second stage of your analysis, you must determine the size and competition in your specific market.

Target Market Section

Your company’s relevant market size is the amount of money it could make each year if it owned a complete market share.

It’s simple.

To begin, estimate how many consumers you expect to be interested in purchasing your products or services each year.

To generate a more precise estimate, enter the monetary amount these potential customers may be ready to spend on your goods or services each year.

The size of your market is the product of these two figures. Calculate this market value here so that your readers can see how big your market opportunity is (particularly if you are seeking debt or equity funding).

You’ll also want to include an analysis of your market conditions. Is this a growing or declining market? How fast is it growing (or declining)? What are the general trends in the market? How has your market shifted over time?

Include all of this information in your own business plan to give your readers a clear understanding of the market landscape you’re competing in.

The Competition

Next, you’ll need to create a comprehensive list of the competitors in your market. This competitive analysis includes:

  • Direct Competitors – Companies that offer a similar product or service
  • Indirect Competitors – Companies that sell products or services that are complementary to yours but not directly related

To show how large each competitor is, you can use metrics such as revenue, employees, number of locations, etc. If you have limited information about the company on hand then you may want to do some additional research or contact them directly for more information. You should also include their website so readers can learn more if they desire (along with social media profiles).

Once you complete this list, take a step back and try to determine how much market share each competitor has. You can use different methods to do this such as market research, surveys, or conduct focus groups or interviews with target customers.

You should also take into account the barriers to entry that exist in your market. What would it take for a new company to enter the market and start competing with you? This could be anything from capital requirements to licensing and permits.

When you have all of this information, you’ll want to create a table like the one below:

Once you have this data, you can start developing strategies to compete with the other companies which will be used again later to help you develop your marketing strategy and plan. 

Writing a Market Analysis Tips

  • Include an explanation of how you determined the size of the market and how much share competitors have.
  • Include tables like the one above that show competitor size, barriers to entry, etc.
  • Decide where you’re going to place this section in your business plan – before or after your SWOT analysis. You can use other sections as well such as your company summary or product/service description. Make sure you consider which information should come first for the reader to make the most sense.
  • Brainstorm how you’re going to stand out in this competitive market.

Formatting the Market Analysis Section of Your Business Plan

Now that you understand the different components of the market analysis, let’s take a look at how you should structure this section in your business plan.

Your market analysis should be divided into two sections: the industry overview and market size & competition.

Each section should include detailed information about the topic and supporting evidence to back up your claims.

You’ll also want to make sure that all of your data is up-to-date. Be sure to include the date of the analysis in your business plan so readers know when it was conducted and if there have been any major changes since then.

In addition, you should also provide a short summary of what this section covers at the beginning of each paragraph or page. You can do this by using a title such as “Industry Overview” or another descriptive phrase that is easy to follow.

As with all sections in a business plan, make sure your market analysis is concise and includes only the most relevant information to keep your audience engaged until they reach your conclusion.

A strong market analysis can give your company a competitive edge over other businesses in its industry, which is why it’s essential to include this section in your business plan. By providing detailed information about the market you’re competing in, you can show your readers that you understand the industry and know how to capitalize on current and future trends.

Business Plan Market Analysis Examples

The following are examples of how to write the market analysis section of a business plan:

Business Plan Market Analysis Example #1 – Hosmer Sunglasses, a sunglasses manufacturer based in California

According to the Sunglass Association of America, the retail sales volume of Plano (non-prescription) sunglasses, clip-on sunglasses, and children’s sunglasses (hereinafter collectively referred to as “Sunwear”) totaled $2.9 billion last year. Premium-priced sunglasses are driving the Plano Sunwear market. Plano sunglasses priced at $100 or more accounted for more than 49% of all Sunwear sales among independent retail locations last year. 

The Sunglass Association of America has projected that the dollar volume for retail sales of Plano Sunwear will grow 1.7% next year. Plano sunglass vendors are also bullish about sales in this year and beyond as a result of the growth of technology, particularly the growth of laser surgery and e-commerce.

Business Plan Market Analysis Example #2 – Nailed It!, a family-owned restaurant in Omaha, NE

According to the Nebraska Restaurant Association, last year total restaurant sales in Nebraska grew by 4.3%, reaching a record high of $2.8 billion. Sales at full-service restaurants were particularly strong, growing 7% over 2012 figures. This steady increase is being driven by population growth throughout the state. The Average Annual Growth Rate (AGR) since 2009 is 2.89%.

This fast growth has also encouraged the opening of new restaurants, with 3,035 operating statewide as of this year. The restaurant industry employs more than 41,000 workers in Nebraska and contributes nearly $3 billion to the state economy every year.

Nebraska’s population continues to increase – reaching 1.9 million in 2012, a 1.5% growth rate. In addition to population, the state has experienced record low unemployment every year since 2009 – with an average of 4.7% in 2013 and 2014.

Business Plan Market Analysis Example #3 – American Insurance Company (AIC), a chain of insurance agencies in Maine

American Insurance Company (AIC) offers high-quality insurance at low prices through its chain of retail outlets in the state of Maine. Since its inception, AIC has created an extensive network of agents and brokers across the country with expanding online, call center and retail business operations.

AIC is entering a market that will more than double in size over the next 50 years according to some industry forecasts. The insurance industry is enjoying low inflation rates, steady income growth, and improving standards of living for most Americans during what has been a difficult period for much of American business. This makes this a good time to enter the insurance industry as it enjoys higher margins because customers are purchasing more coverage due to increased costs from medical care and higher liability claims.

American Insurance Company provides affordable homeowners, auto, and business insurance through high-quality fulfillment centers across America that have earned a reputation for top-notch customer service.

AIC will face significant competition from both direct and indirect competitors. The indirect competition will come from a variety of businesses, including banks, other insurance companies, and online retailers. The direct competition will come from other well-funded start-ups as well as incumbents in the industry. AIC’s competitive advantages include its low prices, high quality, and excellent customer service.

AIC plans to grow at a rate that is above average for the industry as a whole. The company has identified a market that is expected to grow by more than 100% in the next decade. This growth is due to several factors: the increase in the number of two-income households, the aging population, and the impending retirement of many baby boomers will lead to an increase in the number of people who are purchasing insurance.

AIC projects revenues of $20M in year one, which is equivalent to 100% growth over the previous year. AIC forecasts revenue growth of 40%-60% each year on average for 10 years. After that, revenue growth is expected to slow down significantly due to market saturation.

The following table illustrates these projections:

Competitive Landscape

Direct Competition: P&C Insurance Market Leaders

Indirect Competition: Banks, Other Insurance Companies, Retailers

Market Analysis Conclusion

When writing the market analysis section, it is important to provide specific data and forecasts about the industry that your company operates in. This information can help make your business plan more convincing to potential investors.

If it’s helpful, you should also discuss how your company stacks up against its competitors based on what makes it unique. In addition, you can identify any strengths or weaknesses that your company has compared to its competitors.

Based on this data, provide projections for how much revenue your company expects to generate over the next few years. Providing this information early on in the business plan will help convince investors that you know what you are talking about and your company is well-positioned to succeed.  

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Other Resources for Writing Your Business Plan

How to Write a Great Business Plan Executive Summary How to Expertly Write the Company Description in Your Business Plan The Customer Analysis Section of Your Business Plan Completing the Competitive Analysis Section of Your Business Plan The Management Team Section of Your Business Plan Financial Assumptions and Your Business Plan How to Create Financial Projections for Your Business Plan Everything You Need to Know about the Business Plan Appendix Best Business Plan Software Business Plan Conclusion: Summary & Recap  

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How to Conduct a Market Analysis in 4 Steps — 2024 Guide

Posted february 5, 2021 by noah parsons.

Understanding your customers is the key to success—which is where market analysis applies. Here's a process to get to know your customers in 4 simple steps.

Understanding your customers is the key to success for any startup. If you don’t have a deep understanding of who your customers are, you’ll have trouble developing products that truly fit their needs, and you’ll struggle to develop a successful marketing strategy.

This is where a market analysis comes in. It may sound like a daunting and complex process, but fortunately, it’s not.

What is a market analysis?

A market analysis is a thorough qualitative and quantitative assessment of the current market .

It helps you understand the volume and value of the market, potential customer segments and their buying patterns, the position of your competition, and the overall economic environment, including barriers to entry, and industry regulations.

Why you should conduct a market analysis

Whether you are writing a one-page plan or putting together a detailed business plan for a bank or other investor, a solid market analysis is expected. But, don’t just do a market analysis because you’re developing a plan. Do it because it will help you build a smarter strategy for growing your business.

Once you have in-depth knowledge of your market, you’ll be better positioned to develop products and services that your customers are going to love. And while diving into market research may seem like a daunting task it can be broken up into four simple elements:

  • Industry overview: You’ll describe the current state of your industry and where it is headed.
  • Target market: Who are your actual customers? You’ll detail how many of them are there, what their needs are, and describe their demographics.
  • Competition: Describe your competitors’ positioning, strengths, and weaknesses.
  • Pricing and forecast: Your pricing will help determine how you position your company in the market, and your forecast will show what portion of the market you hope to get.

How to conduct a market analysis

Now, let’s go into each step in more detail so you know exactly what you need for your market analysis.

1.  Industry overview

In this step, you’ll describe your industry and discuss the direction that it’s headed. You’ll want to include key industry metrics such as size, trends, and projected growth.

Industry research and analysis is different than market research . When you’re researching your industry, you’re looking at all of the businesses like yours. This is different than market research, where you are learning about your customers.

Your industry overview shows investors that you understand the larger landscape that you are competing in. More importantly, it helps you understand if there’s going to be more demand for your products in the future and how competitive the industry is likely to be.

For example, if you are selling mobile phones, you’ll want to know if the demand for mobile phones is growing or shrinking. If you’re opening a restaurant, you’ll want to understand the larger trends of dining out. Are people eating at restaurants more and more over time? Or is the market potentially shrinking as consumers take advantage of grocery delivery services?

If you’re in the United States, the U.S. Census has excellent industry data available . I’ve also found Statista to be useful. You should also look up your industry association—they often have a wealth of information on the trends in your industry.

2. Define your target market

Your target market is the most important section of your industry analysis. This is where you explain who your ideal customer is.

You may find that through the course of your analysis, that you identify different types of customers. When you have more than one type of customer, you do what’s called market segmentation. This is where you group similar types of customers into segments and describe the attributes of each segment.

You’ll need to start broadly and refine your research by defining the following elements.

Market size

Unlike industry size, which is usually measured in dollars, your market size is how many potential customers there are for your product or service. We’ve got a great method for figuring out your market size that you can read about here .

Demographics

Describe your customer’s typical age, gender, education, income, and more. If you could paint a picture of your perfect customer, this is where you’ll describe what they look like.

Where are your customers located? A specific country, region, state, city, county, you’ll want to describe that here. You may even find that your customer base is segmented based on location which can help you determine where you’ll be doing business.

Psychographics

It’s here that you need to get inside the mindset of your customers, know their needs, and how they’ll react. What are your customers’ likes and dislikes? How do they live? What’s their personality?

This piece can even help you better approach analyzing the competition.

This is essentially an extension of some of your psychographic information. Explain how your customers shop for and purchase products like yours.

Customer behavior is always changing. If there are trends that you’ve noticed with your target market, detail them here.

3. Competition

Your market analysis isn’t complete without thinking about your competition . Beyond knowing what other businesses you are competing with, a good competitive analysis will point out competitors’ weaknesses that you can take advantage of. With this knowledge, you can differentiate yourself by offering products and services that fill gaps that competitors have not addressed.

When you are analyzing the competition, you should take a look at the following areas.

Direct competition

These are companies that are offering very similar products and services. Your potential customers are probably currently buying from these companies.

Indirect competitors

Think of indirect competition as alternative solutions to the problem you are solving. This is particularly useful and important for companies that are inventing brand new products or services. For example, the first online task management software wasn’t competing with other online task managers—it was competing with paper planners, sticky notes, and other analog to-do lists.

How you’re different

You don’t want to be the same as the competition. Make sure to discuss how your company, product, or service is different than what the competition is offering. For a common business type, such as hair salons, your differentiation might be location, hours, types of services, ambiance, or price.

Barriers to entry

Describe what protections you have in place to prevent new companies from competing with you. Maybe you have a great location, or perhaps you have patents that help protect your business.

The best way to research your competition is to talk to your prospective customers and ask them who they are currently buying from and what alternate solutions they are using to solve the problem you are solving. Of course, spending some time on Google to figure out what else is out there is a great idea as well.

4. Pricing and forecast

The final step in a market analysis is to figure out your pricing and create a sales forecast to better understand what portion of the market you think you can get.

Pricing your product or service

First, think about your pricing . Of course, you should ensure that your price is more than what it costs you to make and deliver your product or service. But, beyond that, think about the message that your price sends to consumers.

Customers usually link high prices to quality. But, if you are pricing on the higher end of the spectrum, you need to make sure the rest of your marketing is also signaling that you are delivering a high-quality product or service. From what your business looks like to its logo and customer service experience, high-prices should come with a high-quality experience during the entire sales process.

On the other end of the spectrum, maybe you’re competing as a low-priced alternative to other products or businesses. If that’s the case, make sure your marketing and other messaging are also delivering that same, unified message.

Forecasting for initial sales volume

Once you have an idea of your pricing, think about how much you expect to sell. Your industry research will come into play here as you think about how much of the overall market you expect to capture. For example, if you’re opening a new type of grocery store, you’ll want to know how much people spend on groceries in your area. Your forecast should reflect a realistic portion of that total spend. It’s probably not realistic to gain 50 percent of the market within your first year.

However, don’t make the mistake of assuming that you can easily get 1 percent of a very large market. 1 percent of a 3 billion dollar market is still $30 million and even though 1 percent seems like a small, attainable number, you need to understand and explain how you will actually acquire that volume of customers.

When you build your forecast, use it as a goal for your business and track your actual sales compared to what you had hoped you would sell. Tools like LivePlan can help you automatically compare your forecast to your accounting data, so it’s easy to do. But, even if you use a spreadsheet, tracking your progress will help you adjust your business strategy quickly so that you can do more of what’s working and less of what isn’t.

Prepare your business with a market analysis

Creating a good market analysis is a very worthwhile exercise. It will help you uncover your blind spots and prepare you to compete with other businesses. More importantly, it will help you understand your customers so you can deliver the best possible service to them.

Looking for some examples of market analysis? Take a look at our free sample business plans on Bplans . There are more than 500 of them across a wide range of industries, and each one of them has a market analysis section.

Editor’s note: This article was originally published in 2018 and updated for 2021.

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Noah Parsons

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How to Write and Conduct a Market Analysis

A landscape of large and small buildings. Represents conducting a market analysis to understand your audience and market.

3 min. read

Updated January 3, 2024

A market is the total sum of prospective buyers, individuals, or organizations that are willing and able to purchase a business’s potential offering. A market analysis is a detailed assessment of the market you intend to enter. It provides insight into the size and value of the market, potential customer segments, and their buying patterns.

In this section, we’ll be covering what information to include in your business plan after completing your research. If you’re struggling with the research itself, you should check out our market research resources for step-by-step guidance.

  • How to write your market analysis

The information featured in your market analysis should focus on firmly defining who your customers are. Here are the two steps you need to take:

Define your target market

Finding your target market requires segmentation based on demographic and psychographic information until you reach the ideal customer. You need to address who they are and how you identified them.

Target market examples

A target market analysis is a key part of any business plan. Let’s walk you through some examples.

Determine your market size

Identifying your potential customers isn’t enough. You also need to prove that the size of the market can support your business. To do this, it’s helpful to define what’s available, serviceable, and can be obtained.

Optional information to include

The main purpose of the market analysis is to show who your customers are. While defining your target market may be enough, it can be helpful to include some of the following supporting details.

Show that you know your industry

Before starting a business, you should know the state of your industry and where it’s headed. This includes industry metrics you’ve collected, any barriers to entry, emerging trends, or common success factors.

Write a customer analysis

Conducting a customer analysis provides additional depth to your target audience. You’ll know them better and go beyond just segmentation.

Use a customer persona to describe your customers

It can be difficult for you, your employees, and potential investors to visualize who your customers are based solely on data. Creating a customer persona can bring them to life and support your target market choice.

  • Why conduct a market analysis?

Conducting any sort of in-depth research can be a time-intensive process. However, the benefits far outweigh the investment—so much so that it’s recommended that you revisit your market analysis at least once a year in order to stay on top of emerging trends or changes in the market.

As part of your business plan, it demonstrates that you have a firm understanding of your customers. Here are the other benefits gained by completing a market analysis:

Reduce risk

If you really understand your potential customers and market conditions, you’ll have a better chance of developing a viable product or service. It also helps you explore if your idea will work or not. If you determine that the market size can’t sustain your business, there are too many barriers, high starting costs, intense competition, or some other factor that would lead to a higher chance of failure—you can pivot and avoid wasting your hard-earned time and money.

Better position your business

Researching the market landscape will help you strategically position your business. This may be done through pricing, specific features, production/distribution, or any other method to differentiate your business and make it more attractive to your target audience.

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Verify product/market fit

Part of positioning your business is determining if there is a sustainable market for your business. This starts with segmenting and identifying your ideal customers. It then involves a process of gathering feedback, gauging interest, and finding any sort of demonstrable traction. To learn more about finding product market fit, check out the market research section of our Starting a Business Guide.

Inform investors

Research is not only valuable for informing you as a business owner but in convincing investors and lenders that your idea is worth funding. In many ways, the fact that you spent time pulling together viable information is just as important as the information itself. It shows that you care about finding success as a business owner and are willing to put in the work, even at this early stage.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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How to Do a Market Analysis for a Business Plan?

  • What is Market Analysis in a Business Plan?

Market analysis for a  business plan serves the purpose of exploring the suitability of your product or service for the market. 

Why you should do Market Analysis for a business plan?

What should you include in market analysis, how to do market analysis for a business plan, market research from wisebusinessplans.

  • Market Research Institutes and Databases we use

Sample Research

Your market analysis for a business plan lets you see your position in the market. It helps you identify the market trends, product demand, buying trends, seasonality, competition, etc.

A good market analysis will prepare you for a successful launch and steady growth. The time you invest in exploring your target market is well-spent. 

In this article, we have discussed how to conduct market research for a business plan. Make sure you read till the end to fully understand  how to do a market analysis in business plan .

Market Analysis for a business plan

Want to write a business plan? Get help from our business plan writers for hire !

When you analyze your target market in-depth, you understand it better. You understand what market demands are and how your product can serve the market. This market knowledge will help you convince your lenders and investors to work with you. 

These are some reasons why you should include a market analysis business plan.

Reduce Risk

Target on the right customer base, know the trend, project revenues, set growth benchmarks , optimize marketing strategy .

Doing a market analysis will lower your risk of failure by helping you spot market pitfalls. When you know what lies ahead, you can plan better and prepare better. 

A market analysis for a business plan will help you identify the right customer base for your product or service. 

Many people cast a wide net at the start but a market analysis proves them wrong. 

For example, if we say that many Indians live in a neighborhood and an Indian food restaurant will be a sure hit there may be wrong. Maybe all they are eating at home is Indian food and they don’t wish to eat the same food at a restaurant. 

Another example would be thinking that since your product or service is a good match for small businesses, all small businesses are your target customers. 

When you do market analysis and look critically at your customer base, you can dodge false optimism.

All markets are unpredictable in one way or another. Knowing how the market behaves when changes occur and understanding the market trends is important for long-term success. 

Check for seasonality, innovation in the market, and consumer behavior trends. See how your industry responds to the changes in economy.

 A market analysis for a business plan can help you make sound revenue projections for your business. Your projections with data are no longer your wishful thoughts. 

If your revenue forecast is based on solid market research, potential investors and lenders will know it and consider you a serious candidate for funding. 

Every industry moves in a distinct way. Some industries have favorable business conditions and growth is rapid in that industry. 

Doing a market analysis and knowing your industry will help you set realistic growth benchmarks. When you set aggressive growth benchmarks with a reasonable chance of success, you can maximize your business growth. 

Your marketing strategy is how you’ll raise awareness and drive sales for your product or service. Your market analysis can tell you:

  • how to reach your customers, 
  • how you should design your offers, 
  • how much will you need to spend 
  • When will you achieve your marketing goals

Why you should do market analysis for a business plan

You will analyze the target market in business plan in this section. Here is what you should include in a market analysis for business plan.

Industry Outlook

Industry outlook shows the direction of your industry. It shows if you are in a growing industry, a stagnant, or a declining industry. 

Consider adding these points to  your industry outlook:

  • Are you in a big market like casual wear clothing or a niche market like heavy snow coats 
  • Discuss the product life cycle 
  • Discuss projected year-over-year growth

Target Market 

Determine and specify your target market. Your initial, super-optimistic estimations about your target market may be incorrect. 

Base your assumptions on data. Specify your target market by using these markers. 

  • Identify your target customers’ demographics like gender, age, location, income, education, etc. 
  • Create a buyer persona to show what your ideal customer looks like 
  • Include research and surveys about your target market like focus groups, and feedback surveys

Product/Service Demand 

Document your product or service demand in the market. See how many units of similar products or services are sold per year and how many people make the purchase. 

Market Growth Prospects 

Assess the overall change in your industry. Every industry has different dynamics. Some industries react to economic shocks with a rapid decline while others may show resilience. 

Many consumer goods industries stay stable for a long stretch of time and you can spot the decline years ahead. On the same lines, discuss the growth prospects of your industry and the market.

Market Trends 

Trends are the sudden changes that disrupt. The fashion industry is one of the best examples to study market trends. 

Watch for similar market trends in your industry and document them. 

Competitor Analysis 

Competitor analysis is the meat of your market analysis for a business plan. These businesses are like case studies as you can learn from their business practices and growth trajectories. 

Industry Entry Barriers 

If the industry entry barriers are low, you’ll compete with a lot of businesses. However, your chances of early success are higher in such industries as you can easily reach the breakeven point and sustain your business. 

Hard entry barriers mean there are established players in that industry and it will take time for you to grab a share of the market. 

Industry Regulations 

See the level of regulations for your industry and make a plan ahead to deal with them. The regulations increase business operating and overhead costs.

When doing industry analysis in business plan, list the industry regulations you’ll need to care for. 

What should you include in market analysis

Access our free business plan examples now!

A market analysis is about collecting all the necessary information and research and getting into the details of your industry and competitors. 

You can do a market analysis using this simple framework.

Decide your Purpose 

Do industry research, define your customer, understand competition, collect more data for the market , make use of this data .

You may be doing a market analysis for knowing your industry better or for convincing a potential lender or investor. Once you determine the purpose of market analysis, you can estimate the time and type of research the process will take.

Discuss the industry trends and see how the market is changing over the past few years. You’ll also need to include industry forecasts to complete the picture. 

A comparative market analysis helps you identify your competitive advantage. Make sure to include this in the market analysis.

Defining your customer helps you understand their needs. Define your customer in terms of demographics like:

  • Occupation 

Build a buyer persona for your product or service. This will help you understand the customer well and design products and services for your ideal customer. 

Pro Tips: Learn how to write a business plan products and services section.

Understanding your competition will prepare you for the market. Look into their strengths and weakness. See what businesses are successful in your industry and study them to understand how they are doing it. 

Steps for doing competitor analysis business plan.

  • List your top competitors 
  • Do a SWOT analysis for each competitor 
  • Compare their product or service with yours 
  • Analyze why a customer chooses their product over others 
  • Identify opportunities on how you can improve your product

The more data you have, the better your chances are of doing a top-notch market analysis. 

Collect your data from credible sources. Make sure your data is factually correct. You will be making decisions on the basis of this data. 

Here are some reliable and credible data sources that you use in your market analysis. 

  • U.S. Bureau of Labor Statistics
  • U.S. Census Bureau
  • Local Chamber of Commerce & Industries 
  • Trade Journals and Academic Research
  • Your own SWOT analysis
  • Market surveys or feedback

It is time to make sense of the numbers. 

The market analysis includes details from business conditions to long-term success in the industry. It calculates risk for your business.  Some factors may not be in your favor and you’ll have to decide on your chances of success.  

Keep your data organized in sections. Organize your data with a goal to present it before investors, lenders, and the team. That way, you’ll keep it simple and easy to understand.

Do you want to see an example of market analysis in a business plan? See our business plan examples to understand how it is done. 

How to do market analysis in a business plan

Still wondering what is a market analysis in a business plan? See this example of market analysis in a business plan and writer a killer market analysis. Download the  Business Plan Market Analysis Example PDF  here. 

At Wise Business Plans™ we pride ourselves on giving you the best market research for business plans available. We subscribe to commercial software programs and pay hefty licensing fees to give your business a competitive edge. 

Instead of spending hours on figuring out how to do market research for a business plan, hire professionals from WiseBusinessPlans and get a top-notch market research report for your business plan. 

Market Research Institutes and Databases we use 

IBIS World’s Industry Market Research Reports are powerful business tools that provide strategic insight and analysis on over 700 U.S. industries. 

ESRI: Market Research combines GIS (Geographic Information System) technology with extensive demographic, consumer spending, and business data for the entire United States to deliver on-demand, boardroom-ready reports and maps.

Dun & Bradstreet: D&B’s products and services are drawn from a global database of more than 130 million companies.

Hoovers : Hoover’s database of industry information, 65 million company records, and 85 million people records you can deliver valuable business insight to your employees and customers.

First Research: First Market Research is the leading provider of market analysis tools that help sales and marketing teams perform faster and smarter, open doors, and close more deals.

Worried about writing a business plan? Hiring a business plan writer can ease your worries and create a strong plan.

Sample Market Analysis for a business plan

Base your Market Research on data and expertise you can trust.   Hire professional market researchers from WiseBusinessPlans and take a solid start. 

A market analysis in a business plan is an assessment of the target market and industry in which your business operates. It involves researching and analyzing factors such as market size, competition, customer needs, trends, and growth potential.

Gather information for a market analysis by conducting market research through various methods like surveys, interviews, online research, and analyzing industry reports. Collect data on customer demographics, market trends, competitors, and customer preferences.

Include key components in a market analysis, such as an overview of the industry, target market segmentation, customer profiles, competitor analysis, market trends and growth projections, and barriers to entry. Use this information to identify opportunities and assess the viability of your business.

Analyze the competition by identifying direct and indirect competitors in your target market. Assess their strengths, weaknesses, market share, pricing strategies, and unique selling propositions. This analysis will help you understand your competitive landscape and differentiate your business.

A market analysis is crucial for a business plan as it provides insights into the market potential, customer demand, and competitive landscape. It helps you make informed decisions, develop effective marketing strategies, and demonstrate to investors or lenders that there is a viable market for your products or services.

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Table of Contents

A market analysis is a thorough assessment of a market within a specific industry. These analyses have many benefits, such as reducing risk for your business and better informing your business decisions. A market analysis can be a time-intensive process, but it is straightforward and easy to do on your own in seven steps.

To perform a market analysis for your business, follow the steps outlined in this guide.

What does a market analysis include?

In a market analysis, you will study the dynamics of your market, such as volume and value, potential customer segments , buying patterns, competition, and other important factors. A thorough marketing analysis should answer the following questions:

  • Who are my potential customers?
  • What are my customers’ buying habits?
  • How large is my target market ?
  • How much are customers willing to pay for my product?
  • Who are my main competitors?
  • What are my competitors’ strengths and weaknesses ?

What are the benefits of running a marketing analysis?

A marketing analysis can reduce risk, identify emerging trends, and help project revenue. You can use a marketing analysis at several stages of your business, and it can even be beneficial to conduct one every year to keep up to date with any major changes in the market.

A detailed market analysis will usually be part of your business plan , since it gives you a greater understanding of your audience and competition. This will help you build a more targeted marketing strategy.

These are some other major benefits of conducting a market analysis:

  • Risk reduction: Knowing your market can reduce risks in your business, since you’ll have an understanding of major market trends, the main players in your industry, and what it takes to be successful, all of which will inform your business decisions. To help you further protect your business, you can also conduct a SWOT analysis , which identifies the strengths, weaknesses, opportunities and threats for your business.
  • Targeted products or services: You are in a much better position to serve your customers when you have a firm grasp on what they are looking for from you. When you know who your customers are, you can use that information to tailor your business’s offerings to your customers’ needs.
  • Emerging trends: Staying ahead in business is often about being the first to spot a new opportunity or trend, and using a marketing analysis to stay on top of industry trends is a great way to position yourself to take advantage of this information.
  • Revenue projections: A market forecast is a key component of most marketing analyses, as it projects the future numbers, characteristics and trends in your target market. This gives you an idea of the profits you can expect, allowing you to adjust your business plan and budget accordingly.
  • Evaluation benchmarks: It can be difficult to gauge your business’s success outside of pure numbers. A market analysis provides benchmarks or key performance indicators (KPIs) against which you can judge your company and how well you are doing compared to others in your industry.
  • Context for past mistakes: Marketing analytics can explain your business’s past mistakes or industry anomalies. For example, in-depth analytics can explain what impacted the sale of a specific product, or why a certain metric performed the way it did. This can help you avoid making those mistakes again or experiencing similar anomalies, because you’ll be able to analyze and describe what went wrong and why.
  • Marketing optimization: This is where an annual marketing analysis comes in handy – regular analysis can inform your ongoing marketing efforts and show you which aspects of your marketing need work, and which are performing well in comparison to the other companies in your industry.

A market analysis can benefit your business in many ways, especially if you conduct regular analyses to make sure you have current information for your marketing efforts.

What are the drawbacks of running a marketing analysis?

The below drawbacks of running a market analysis pertain less to the method itself than the resources it requires.

  • Market analysis can be expensive. If you’re not as familiar with marketing concepts such as market volume and customer segmentation, you might want to outsource your market analysis. Doing so can be great for your analysis’s quality, but it can also leave a big dent in your budget. Narrow your market analysis to a certain group – perhaps current customers – to lower your costs.
  • Market analysis can be time-consuming. Market analysis can take precious time away from more directly business-related tasks. You can analyze one area at a time – say, buying patterns or competition – to free up your day-to-day schedule.
  • Market analysis can require extra staff. Some larger companies retain in-house market analysis staff, and you can follow their lead. Doing so, though, comes with all the usual costs of hiring a new employee . The question then becomes: Do you conduct your market analysis yourself, outsource it, or hire in-house? The more expensive options can often yield more meaningful insights.
  • Market analysis can be narrow. The most successful market analyses use actual customer feedback, which analysts often get through customer surveys. These surveys may reach only a portion of your entire customer base, leading to an inaccurate sample size. The result is that market analysis may not fully detail your customers and what you should know about them.

Market analysis vs. conjoint analysis vs. sentiment analysis

Where market analysis is broad and comprehensive, conjoint analysis focuses on how customers value what you offer. Surveys are often the backbone of conjoint analysis – they’re a great way for customers to share what drives their purchases. Product testing is an especially common application of conjoint analysis. This method can yield insights into pricing and product features and configurations.

Sentiment analysis goes beyond number-driven market and conjoint analysis to identify how customers qualitatively feel about your offerings. It can show you what customers are happy and unhappy about with your offerings or buying process. You can also wade into deeper emotional territory such as anger, urgency and intention, or you can dig up descriptive feedback. It’s a great tool to use alongside market analysis, whereas conjoint analysis is all but included in market analysis.

How to conduct a market analysis

While conducting a marketing analysis is not a complicated process, it does take a lot of dedicated research, so be prepared to devote significant time to the process.

These are the seven steps of conducting a market analysis:

1. Determine your purpose.

There are many reasons you may be conducting a market analysis, such as to gauge your competition or to understand a new market. Whatever your reason, it’s important to define it right away to keep you on track throughout the process. Start by deciding whether your purpose is internal – like improving your cash flow or business operations – or external, like seeking a business loan. Your purpose will dictate the type and amount of research you will do.

Use our guide to choosing a business loan to make the right decision after conducting a market analysis. Visit our business loan reviews page to find options and learn all about easy-approval options.

2. Research the state of the industry.

Map a detailed outline of the current state of your industry. Include where the industry seems to be heading, using metrics such as size, trends and projected growth, with plenty of data to support your findings. You can also conduct a comparative market analysis to help you find your competitive advantage within your specific market.

3. Identify your target customer.

Not everyone in the world will be your customer , and it would be a waste of your time to try to get everyone interested in your product. Instead, use a target market analysis to decide who is most likely to want your product and focus your efforts there. You want to understand your market size, who your customers are, where they come from, and what might influence their buying decisions. To do so, look at demographic factors like these:

During your research, you might consider creating a customer profile or persona that reflects your ideal customer to serve as a model for your marketing efforts.

4. Understand your competition.

To be successful, you need a good understanding of your competitors, including their market saturation, what they do differently than you, and their strengths, weaknesses and advantages in the market. Start by listing all your main competitors, then go through that list and conduct a SWOT analysis of each competitor. What does that business have that you don’t? What would lead a customer to choose that business over yours? Put yourself in the customer’s shoes.

Then, rank your list of competitors from most to least threatening, and decide on a timeline to conduct regular SWOT analyses on your most threatening competitors.

5. Gather additional data.

When conducting marketing analyses, information is your friend – you can never have too much data. It is important that the data you use is credible and factual, so be cautious of where you get your numbers. These are some reputable business data resources:

  • U.S. Bureau of Labor Statistics
  • U.S. Census Bureau
  • State and local commerce sites
  • Trade journals
  • Your own SWOT analyses
  • Market surveys or questionnaires

6. Analyze your data.

After you collect all the information you can and verify that it is accurate, you need to analyze the data to make it useful to you. Organize your research into sections that make sense to you, but try to include ones for your purpose, target market and competition.

These are the main elements your research should include:

  • An overview of your industry’s size and growth rate
  • Your business’s projected market share percentage
  • An industry outlook
  • Customer buying trends
  • Your forecasted growth
  • How much customers are willing to pay for your product or service

7. Put your analysis to work.

Once you’ve created a market analysis, it’s time to actually make it work for you. Internally, look for where you can use your research and findings to improve your business. Have you seen other businesses doing things that you’d like to implement in your own organization? Are there ways to make your marketing strategies more effective?

If you conducted your analysis for external purposes, organize your research and data into an easily readable and digestible document to make it easier to share with lenders.

Retain all of your information and research for your next analysis, and consider making a calendar reminder each year so that you stay on top of your market.

Making market analysis easy

If you have the time to conduct a market analysis yourself, go for it – this guide will help. If you don’t have the time, hiring an in-house expert or outsourcing your analysis is often worth the cost. Your analysis will help you figure out who to target and how – and that’s a huge part of business success.

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Market Analysis

Connecting the Dots, Quantifying Technology Trends & Measuring Disruption

How to do a market analysis for a business plan

A market analysis is an important part of a business plan because it helps you understand the market in which your business will operate. It involves researching and analyzing the target market, competitors, and industry trends in order to identify opportunities and challenges. Here are the steps you can follow to do a market analysis for a business plan:

Define your target market: The first step in a market analysis is to identify the specific group of customers that you will be targeting with your products or services. This may include demographics (age, gender, income, education level, etc.), geographic location, and other characteristics that are relevant to your business.

Research the market size: Next, you’ll need to determine the size of the market you are targeting. This will help you understand the potential demand for your products or services and determine whether the market is large enough to support your business. You can use various sources of data, such as industry reports and government statistics, to estimate the size of the market.

Analyze competitors: It’s important to understand who your competitors are and what they are offering. This will help you identify unique selling points for your business and determine how you can differentiate yourself from your competitors. You can research your competitors online, ask customers about their preferences, and even visit their stores or websites to get a sense of their product offerings and pricing.

Assess industry trends: Understanding industry trends can help you anticipate changes in the market and position your business to take advantage of them. Look for trends in areas such as technology, consumer behavior, and regulatory changes that may affect your business.

Determine your target market’s needs and preferences: To effectively market your products or services, you need to understand what your target customers need and want. You can gather this information through customer surveys, focus groups, and other market research methods.

Determine your target market’s purchasing power: It’s important to understand how much your target customers are willing and able to pay for your products or services. This will help you determine your pricing strategy and determine whether there is enough demand at your target price point.

Analyze your target market’s attitudes and behaviors: Understanding your target customers’ attitudes and behaviors can help you tailor your marketing efforts to their preferences. For example, if your target market values sustainability, you may want to highlight the eco-friendliness of your products in your marketing materials.

By conducting a thorough market analysis, you can gain a better understanding of the market in which your business will operate and make informed decisions about your marketing, pricing, and product development strategies.

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Business Plan Section 5: Market Analysis

Find out the 9 components to include in the market analysis portion of your business plan, plus 6 sources for market analysis information.

Market Analysis

This is the part of your business plan where you really get to shine and show off that awesome idea you have. Of course, your product or service is the best! Now, let’s talk about how you know it’s a hit. Be prepared to show you know your market AND that it’s big enough for you to build a sustainable, successful business .

In writing up your market analysis, you’ll get to demonstrate the knowledge you’ve gained about the industry, the target market you’re planning to sell to, your competition, and how you plan to make yourself stand out.

A market analysis is just that: a look at what the relevant business environment is and where you fit in. It should give a potential lender, investor, or employee no doubt that there is a solid niche for what you’re offering, and you are definitely the person to fill it. It’s both quantitative, spelling out sales projections and other pertinent figures, and qualitative, giving a thoughtful overview of how you fit in with the competition. It needs to look into the potential size of the market, the possible customers you’ll target, and what kind of difficulties you might face as you try to become successful. Let’s break down how to do that.

What Goes Into A Business Plan Market Analysis?

Industry description and outlook.

Describe the industry with enough background so that someone who isn’t familiar with it can understand what it’s like, what the challenges are, and what the outlook is. Talk about its size, how it’s growing, and what the outlook is for the future.

Target Market

Who have you identified as your ideal client or customer ? Include demographic information on the group you’re targeting, including age, gender and income level. This is the place to talk about the size of your potential market, how much it might spend, and how you’ll reach potential customers. For example, if women aged 18 to 54 are your target market, you need to know how many of them there are in your market. Are there 500 or 500,000? It’s imperative to know. Similarly, if your product or service is geared toward a high-end clientele, you need to make sure you’re located in an area that can support it.

Market Need

What factors influence the need for your product or service? Did the need exist before or are you trying to create it? Why will customers want to do business with you, possibly choosing you over someone else? This is where you can briefly introduce the competitive edge you have, although you’ll get into that in more depth in following sections. Focus on how the product or service you’re offering satisfies what’s needed in the market.

Market Growth

While no one can predict the future, it’s important to get a possible idea of what business may be like down the road and make sales projections. Have the number of people in your target market been increasing or decreasing over the last several years? By how much per year? To make an intelligent forecast, you have to start with current conditions, then project changes over the next three to five years.

Market Trends

You need to take a look at trends the same way you look at population and demographics. Is there a shift to more natural or organic ingredients that might impact your business? How might energy prices figure in? The easy availability of the internet and smartphone technology? The questions will be different for every type of business, but it’s important to think about the types of changes that could affect your specific market. In this section, you can cite experts from the research you’ve done-a market expert, market research firm, trade association, or credible journalist.

Market Research Testing

Talk about what kind of testing and information gathering you’ve done to figure out where you stand in the market. Who have you spoken to about the viability of your product? Why are you confident of its success? Again, if you can, cite experts to back up your information.

Competitive Analysis

There’s no way to succeed unless you’ve examined your competition. It might be helpful to try analyzing your position in the market by performing a SWOT analysis. You need to figure out their strengths and the weaknesses you can exploit as you work to build your own business. You do need to be brutally honest here, and also look at what the potential roadblocks are-anything that might potentially stand in your way as you try to meet your goals and grow your business.

Barriers to Entry

Lenders and investors need to have a reasonable assurance they’ll be paid back, so they’ll want to know what would stop someone else from swooping in, doing what you do, and grabbing half the available business. Do you have technical knowledge that’s difficult to get? A specialized product no one else can manufacture? A service that takes years to perfect? It’s possible your industry has strict regulations and licensing requirements. All of these help protect you from new competition, and they’re all selling points for you.

Regulations

As we touched on above, you should cover regulations as a barrier to entry. If your field is covered by regulations, you do need to talk about how they apply to your business and how you’ll comply with them.

Six Sources for Market Analysis Information

The Market Analysis section of your business plan is far more than a theoretical exercise. Doing an analysis of the market really gives YOU the information you need to figure out whether your plans are viable, and tweak them in the early stages before you go wrong.

So, where do you start? Research is the key here, and there are several sources available.

1. The Internet

Some of the first information you need is about population and demographics: who your potential customers are, how many there are, and where they live or work. The U.S. Census Bureau has an impressive amount of these statistics available. USA.gov’s small business site is another good source for links to the U.S. Departments of Labor and Commerce, among others.

2. Local Chamber of Commerce

A lot of local information can be gotten from the chamber of commerce in the area where you plan to operate. Often, they can provide details into what the general business climate is like, and get even more specific about how many and what type of businesses are operating in their jurisdiction.

3. Other Resources

When actual statistical information isn’t available, you’ll often be able to put together a good picture of the market from a variety of other sources. Real estate agents can be a source of information on demographics and population trends in an area. Catalogs and marketing materials from your competition are useful. Many industry associations have a great amount of relevant information to use in putting your analysis together. Trade publications and annual reports from public corporations in your industry also contain a wealth of relevant information.

4. Customer Mindset

Take yourself out of the equation as the owner and stand in your customer’s shoes when you look at the business. As a customer, what problems do you have that need to be solved? What would you like to be able to do better, faster, or cheaper that you can’t do now? How does the competition work to solve those issues? How could this business solve them better?

5. the Competition

If you have a clothing store, visit others in your area. If you’d like to open a pizzeria, try pies from surrounding restaurants. If you’re a salon owner, park across the street and see what the store traffic is like and how customers look when they come out. Check out websites for pricing and other marketing information. Follow their Facebook pages. If you can’t be a customer of the competition, ask your customers and suppliers about them. Always be aware of what’s going on in the market.

6. Traditional Market Research

While you can gather a lot of data online, your best information will come from potential customers themselves. Send out surveys, ask for input and feedback, and conduct focus groups. You can do this yourself or hire a market research firm to do it for you.

What to Do With All That Data

Now that you’ve gathered the statistics and information and you’ve done the math to know there’s a need and customer base for your product or service, you have to show it off to your best advantage. You can start the market analysis section with a simple summary that describes your target customers and explains why you have chosen this as your market. You can also summarize how you see the market growing, and highlight one or two projections for the future.

If your information is dense with numbers and statistics, someone who reads your business plan will probably find it easier to understand if you present it as a chart or graph. You can generate them fairly easily with tools built into Google docs and free infographic apps and software .

Don’t assume that your readers have an understanding of your market, but don’t belabor simple points, either. You want to include pertinent, important information, but you don’t want to drown the reader in facts. Be concise and compelling with the market analysis, and remember that a good graphic can cover a lot of text, and help you make your point. It’s great to say you project sales to increase by 250% over the next five years, but it makes an even bigger wow when you show it in a graphic.

Always relate the data back to your business. Statistics about the market don’t mean much unless you describe how and where you fit in. As you talk about the needs of your target market, remember to focus on how you are uniquely positioned to fill them.

Don’t hesitate to break down your target market into smaller segments, especially if each is likely to respond to a different message about your product or service. You may have one market that consists of homes and another of small businesses. Perhaps you sell to both wholesale and retail customers. Talk about this in the market analysis, and describe briefly how you’ll approach each. (You will have more of an opportunity to do this in detail later in the plan.) Segmentation can help you target specific messages to specific areas, focusing in on the existing needs and how you fill them.

Remember to tailor your information to the purpose at hand. If your business plan is for internal use, you may not have to go into as much detail about the market since you and your team may already know it well. Remember, however, that the very act of doing the research may help you learn things you didn’t know, so don’t skimp on doing the work. This is a great opportunity to get information from outside that might affect your business.

It’s not about your ability to do professional-level market research; a plan intended for a bank or other lender needs to show your understanding of where your business fits into the grand scheme of things. Yes, you need to detail the information, but your main goal is to show how you’ve incorporated that knowledge into making solid decisions about the direction of your company. Use this section of your business plan to explain your understanding of your industry, your market and your individual business so that lenders and investors feel comfortable with your possibility for success.

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Performing a Strategic Business Plan Market Analysis

market analysis and business plan

Before getting too far down the road with your business planning process , you will need to complete a thorough market analysis based on the research you did in deciding to launch your business.

Your market analysis not only provides an overview of your industry, but also the conclusions you were able to draw from your market research findings. While there is no absolute method for including a market analysis, under most circumstances you are going to want to include most or all of the following points as you create this valuable section of your plan:

Business Plan Market Analysis

Business plan swot analysis, customizing your business plan, your business plan should communicate to investors, business planning mistakes to avoid, crafting a strategic business plan.

1. Industry description and outlook

Regardless of how you decide to proceed with your market analysis, you will almost certainly want to start this section of your business plan with a description of your company’s industry. Research your industry’s growth and note its current scope. Then, discuss some of the business characteristics of your industry, such as its projected growth rate. Include the major customer segments.

2. Introduce your target market

Once you have described the overall industry and marketplace, next indicate how you have narrowed down your target market to a workable size. One of the biggest errors new business owners make is in keeping their target market too broad, which leaves them in the impossible position of trying to meet the needs of too many diverse customer groups. This obviously runs the risk of stretching limited resources too thin.

3. Distinguish target customer characteristics

Next, describe the critical needs of your targeted customer base and to what extent–and by whom–these needs are currently being met. This is also the place to detail the demographics of your customer group. If there are cyclical purchasing trends, including seasonal buying, this is the place to note them as well.

4. Target market size and growth

You will also want to include additional details about the size of your targeted market. Conduct sufficient research to provide data on total annual purchases within your targeted marketplace. In addition, do sufficient research to create a reasonable forecast of market growth.

5. Market share percentage

Once you have described the size and potential growth for your targeted market, next identify the market share percentage and number of customers you believe you will be able to gain within a defined demographic area. Include justification for the numbers you come up with.

6. Pricing and gross margin targets

Explain your pricing strategy, gross margin levels and any special pricing schemes you plan to use, such as discounts.

7. Competitive analysis

Finally, identify your competitors and their targeted markets. Also, make note of any indirect or secondary competitors impacting your target markets. Include information on their current marketshare as well as what you perceive as their strengths and weaknesses.

8.  Barriers and regulatory restrictions

Discuss any barriers to entering the market that you have identified. These might include technology changes, unusually high investment costs, lack of qualified personnel, and other hurdles. In some cases, there may be regulatory restrictions impacting your business. In that case, describe how you plan to comply with these regulations.

Your market analysis forms a key part of your business plan. Interpreting your market research results in a clear and concise manner will provide a strong foundation for your overall plan.

Unfortunately, the SWOT (Strengths, Weaknesses, Opportunities & Threats) analysis is one of the more cliched components of any business plan. While the cliche exists, the exercise of running through the components of a thorough SWOT is helpful for any business, regardless of its “stage.” Furthermore, including a SWOT (or at least some form of one) in a business plan has become somewhat of an expectation among private equity investors who might fund your business.

Internal Analysis

The S.W. portion of your SWOT encompasses an  internal  analysis of the strength of the business including the plan itself, the ability of management to execute and the robustness of any intellectual property or tacit knowledge held by the company. It’s a visceral look at the businesses’ ability to succeed. For some individuals, it can be difficult to find personal and business strengths within yourself or your own organization. In the case of entrepreneurs, I’ve always found the opposite to be the case.

In many startup venture, it can be difficult to avoid what could be called “startup bias.” From the founders’ perspective, the bias generally leans toward the “we’ll never fail.” From the perspective of investors a bias will lean more on the side of “you’ll probably fail.”

Like strengths, weaknesses are always internal. Weaknesses can be as simple as understanding a gap in talent to finding highly-deleterious legal blockades to your product or service. Full-fledged analysis is helpful to understand the chinks in the proverbial armor, whether large or small.

An Industry View 

The O.T. portion of your business plan comes from the 30,000 foot-level. It represents an industry view, an in-depth look at where the Blue Ocean of opportunity truly exists. In some instances, it a story told about how a product or service provides such an innovative leap that the company can easily capture low-hanging fruit and gain an advantage–some might call it first movers.

But where low-hanging fruit exists, competition is sure to follow. Since the term “first mover’s advantage” has been effectively written-off as a misnomer, threats must remain extremely credible to the livelihood of your organization. Understanding existing and potential threats can also paint a preemptive picture for planning on how to deal with them even before they may arise in the future–an extremely helpful exercise for the entrepreneur.

 Not Just for Startups

SWOTs are developed for all types of business plans, not just startups. They are particularly helpful for the company looking to launch a new product or service or seeking of potential opportunities and problems inherent in entering new markets with an existing product. Plans may help to clarify the direction of an existing business or justify lofty future growth assumptions in the case of a merger or acquisition. In short, SWOT is universal in its business application, just be careful not to overuse or abuse it.

My personal suggestion: don’t spell out S, W, O, T in the plan itself, but include the meat and potatoes of a typical SWOT, complete with an in-depth dive into how the company will most-likely succeed and how it will possibly fail. Ultimately, the goal of your analysis is for both internal managers and potential external investors or buyers go gain a deep understanding into the potential risks and rewards inherent in the company.

Developing a business plan is an important part of owning and operating a business, but if you think of the process only as a means of attracting investment or guiding you through startup, you are ignoring the many other ways a business plan becomes essential to the success of your business.

Here are a few examples of business plan needs throughout the life of your business:

When thinking about the need for a business plan, a business launch is usually the first thing that comes to mind. This popular type of business plan differentiates itself from other types due to its focus on describing the company, explaining the products or services your business will provide, marketing analysis and plan and financial projections, including cash flow projections, profit, expenses and income.

Also an internal plan, this type of business plan is often viewed as the natural successor to a business launch plan and includes some of the same components, but updated. Your operations plan should map out company operations for the coming year and include specifics regarding individual employee roles and responsibilities.

Internal project analysis

Unlike the business launch plan, this business plan is narrow in its approach and developed to provide projections for internal business decision-making. Its purpose it to evaluate a proposed project or action. Your financial analysis should include any additional personnel costs, technology needs and operating expenses. Include the project’s capital needs and assumptions for repayment. You will also want to include a marketing plan specifically targeting the proposed project.

The primary function of your strategic business plan is to focus on your company’s vision, mission, goals and action plan for achieving them, including timeline. This plan should also define critical success factor. A hallmark of this type of business plan is that it cuts across all department to provide the big picture for your business. Often, advisory boards are more involved in development of this type of business plan over any other.

Also known as a growth plan, this customized business plan may be written for either internal or external purposes. Whether internal or external, financial projections will be the primary focus. A plan meant to attract outside investors, however, will also need to include background information on the company and its operations to-date to provide potential investors with the details necessary to make a decision. If your expansion does not involve outside capital and will only be used internally, there is no need to include obvious company details.

Feasibility plan

A feasibility plan includes elements of both project analysis plans and expansion plans. However, a feasibility plan’s primary purpose is just as its name implies: to establish the feasibility of a proposed business venture and make recommendations for moving forward (or not). This type of plan focuses on demand for the proposed product or services made possible by the new venture. A feasibility plan will also include capital needs and profit projections in formulating recommendations.

Most small business startups can benefit from outside acquisition financing and most often, at least a portion of that funding will come in the form of business loans. As you ready your business plan for review by a lender, your focus is likely on the financial projections in your plan. But don’t sell other areas short. Your management competency, market outlook and assets are just a few of the other components that will be scrutinized.

Here are some of the factors your lender will consider when making the decision whether to provide you with a business loan.

Management Experience

Your potential lender is going to want assurances you have the necessary expertise onboard. Be sure your plan details your education and experience, as well as that of your management team. In addition, include information on your board officers and advisors, if applicable. Your plan should communicate a high level of both competency and commitment.

Marketing Analysis

Your lender is going to want to understand your business, your competitors, your customers and the industry in which your business will operate. Completing a thorough market analysis as part of your business plan before applying for a loan will provide this necessary information to your lender.

Your lender is going to want collateral in the form of personal and business assets that could be sold for cash if your business does not meet its financial goals. Identifying all your business assets within your business plan provides a listing of potential collateral for your lender to consider. Keep in mind, however, that the value of most of your assets will be discounted from market value when viewed as collateral. The lender will also determine your collateral coverage ratio, calculated by dividing the total discounted collateral value by the amount of your loan request. Both collateral and projected cash flow are taken into account when determining your ability to repay a loan.

Debt-to-Equity Ratio

The more you are able to invest in your business, the easier it will be to obtain financing. New businesses will most often use a combination of equity financing and debt financing. Be sure your business plan describes in detail all anticipated outside funding. Your lender will want to review your plan to determine if your request for debt financing keeps your debt-to-equity ratio within acceptable limits.  If your debt-to-equity ratio dictates, seek additional equity investment before requesting a loan.

There are a lot of steps to take when launching a new business or embarking on a new product venture, but writing your business plan is probably one of the most important.

However, there are many common missteps that can occur when putting together a business plan. Number one on the list is the biggest error you can make:  thinking you don’t need a formal business plan at all. This is often the mindset when a business owner isn’t seeking outside investment. But a business plan does more than attract investment. The business planning process itself will help you determine if your great idea is truly a viable business . It’s the single most important step you will take in becoming an entrepreneur.

Here are five more typical–but avoidable–errors that harm the process:

1. Failing to acknowledge competition

In your pursuit to show your business idea in the best possible light to investors, it can be easy to gloss over the competition. But that would be doing yourself a disservice. One of the purposes of your business plan is to do the necessary research to determine if your business idea can be transformed into a viable business. Not digging deeply enough when researching competitors will make investors wary of your ability to succeed.

2. Being amateurish

It may sound like one of the least important things to worry about, but how well your plan is written and how it is presented in final printed form are important. You don’t want an important investor to get a few pages into your plan and start to doze off or find it riddled with grammatical errors. Unless you are a professional writer, invest in a professional business plan writer or consultant. Likewise, an eye-catching, well-designed logo for your new business gracing the cover of your business plan will give a professional finish.

3. Being inconsistent

Business plans con be complicated. It is common to rewrite some portions and not others. But be sure to read the final version several times over, enlisting friends or trusted colleagues to review it as well, to avoid any errors or inconsistencies. Don’t make a financial assumption in one section of your plan, then turn around and contradict it later in the document.

4. Too much hype

You might think your business idea is the next great thing, but you need to back up that kind of enthusiasm with hard research, not a bunch of hype and hyperbole. Peppering your business plan with too many meaningless superlatives like “greatest” and “incredible” doesn’t add anything of substance. Instead, rely on the thoroughness of your market research and analysis to “wow” readers.

5. Poor quality research

Doing thorough research and analysis is not something you can fake. An investor will immediately identify “fluff” in place of facts. Again, if this is not your forte, hire a consultant to provide some assistance based on your knowledge and experience.

There are plenty of land mines to avoid as you go through one of the most important steps for launching a business. These are just a few of the mistakes to avoid in bringing your plan to fruition.

These components of your business plan are not the only areas a lender will want to review closely, nor will everything your lender consider be addressed by your business plan. For example, you will also want to check your personal credit report before applying for a loan.

Your business will not have a proven financial track record at its launch, but you can boost a lender’s confidence in its credit worthiness by providing a detailed business plan that uses market analysis, management expertise, assets and financial projections to clearly communicate the ability of your business to repay its loan.

Nate Nead

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How to do a market analysis?

Analysing a market can be tough which is why The Business Plan Shop has put together this practical guide where we go through all the steps needed to obtain and utilise market analysis for your business.

In this market analysis guide:

  • What is market analysis?
  • Steps & tips to do a market analysis
  • Market analysis and business planning
  • Our market analysis guides by business activity
  • Market analysis FAQ

how to write a market analysis?

1. What is market analysis?

Definition and key uses of market analysis.

Market analysis is the process of gathering, analyzing, and interpreting data about a particular market. It involves looking at both the demand (customers) and supply side (your competitors), and the industry as a whole (regulation, supply chain, etc.).

Conducting a market analysis helps businesses like yours achieve the following objectives:

  • Position the business with a concept that is likely to be popular within your chosen location, and yet differentiated from competition
  • Evaluate the commercial potential for your business on the local market - how much sales can you generate in the coming years?
  • Gather the data necessary to start using the market analysis by developping a concrete business plan for your venture

For startups and existing businesses alike, conducting regular market analysis can help reduce many of the risks associated with running a business.

This is because you'll be asking yourself key questions such as which customer segments are best to target, what services to offer to meet their need, and how to gain and defend market share from competitors.

What is a market analysis?

2. Steps & tips to do a market analysis

What are the key steps in market analysis.

There are five key steps in market analysis. Let's take a look at each one in more detail.

  • Current industry trends and regulations: understanding how trends are evolving and regulation is changing helps you identify the direction in which the market is moving and any legal or compliance factors that may impact your business.
  • Demand in your serviceable area: this involves analysing whether there is demand for your products or services in your chosen area. It helps you assess whether there is a sufficient market for your offerings. It involves researching potential customers, their needs, and purchasing behavior. Related: what is TAM SAM SOM .
  • Direct and indirect competition: this involves evaluating both direct competitors and indirect competitors. Doing so helps you understand the competitive landscape, verify that the market is not saturated and identify potential gaps or niches to exploit.
  • Unique Selling Proposition (USP): this involves developing a point of difference to set your business apart from competitors. Why should customers choose your products or services over others in the market?
  • Validate the USP or new positioning: once you've identified your USP or new positioning, it's important to validate it with your target market. This can involve conducting surveys, focus groups, or other research methods to ensure that your USP resonates with potential customers and meets their needs.

steps to do a market analysis?

3 tips for more impactful market research and analysis

Primary research (data collected firsthand) is likely to be of greater importance to your business than secondary research. You should perform extensive research on customers, suppliers and competitors in your local or addressable market to form an accurate picture of the overall market.

Whilst secondary research (existing data and reports) may not always be totally up-to-date, it can provide valuable context and save time and resources. Using secondary research to supplement your primary research is perhaps the best way to go about it.

Document your market analysis findings in your business plan as this helps demonstrate to investors and lenders that you understand your market well.

tips to do a market analysis?

3. Market analysis and business planning

Business planning is the logical next steps after market analysis.

Market analysis is a vital routine for both small and large businesses. It's necessary when they start, expand into new markets, launch new products or services, or just to stay updated and competitive.

In order to use the results of a market analysis and make it actionable, the next step is to start creating a financial forecast to assess how much sales and profit the business is likely to make in the years to come.

Multiple scenarios can be brainstormed until you start forming a view of what is going to be the central case in your business plan.

Depending on your circumstances, the business plan can be used internally, or used to secure funding from investors or lenders.

A fully fledged business plan written to secure financing will contain a dedicated market analysis section in which you should include comprehensive information about your target market, competitors and trends amongst other things.

market analysis in the outline of the business plan software offered by The Business Plan Shop

How a platform like The Business Plan Shop can help you write a professional business plan

Using a platform like The Business Plan Shop is usually the next logical step after completing market analysis as the data is used as a key input during the business planning and forecasting processes.

We help you write a business plan by providing guidance at every step, through examples, instructions, ensuring your plan follows the structure investors & lenders expect. You'll also be able to plan growth, anticipate future cash flows with confidence and check that you are on track to deliver your forecasts.

PDF document obtained from the business plan software developed by The Business Plan Shop

Frequently Asked Questions About Market Analysis

Market analysis is the process of gathering, analyzing, and interpreting data about a particular market.

Here are some of the key reasons as to why market analysi is important for your business:

  • Understanding customer needs: market research and analysis help you gain insights into your target customers' needs, preferences, and behaviors. This information allows you to tailor your products or services to meet customer demands more effectively.
  • Identify gaps in the market: it allows you to identify underserved customer segments or geographical areas.
  • Analyse competiton: market analysis helps you assess your competitors, their strengths, weaknesses, and strategies. This knowledge enables you to differentiate your business and develop a competitive advantage over time.
  • Set realistic goals: knowing where your market is headed helps set realistic goals for your business that you can achieve and aim towards within the next 3 or 5 years.
  • Reduce risk: market research can help prevent costly mistakes. It allows you to test concepts and ideas before committing significant resources, potentially saving time and money.

Ultimately, it helps you make informed decisions, reduces risks, identifies opportunities, and contributes to the long-term success and sustainability of your business.

There are four key approaches to market research: primary, secondary, quantitative and qualitative.

Let's look at each one in more detail:

  • Primary research: this involves collecting data first-hand, usually from individuals or groups. It is valuable for obtaining data tailored to your research objectives and can provide fresh insights. Common methods of primary research include surveys, interviews, observations, and focus groups.
  • Secondary research: collates existing information or research for analysis. The main benefit of this is that it can be cost-effective and time-saving as it relies on already available data sources like market reports, industry publications, academic studies and government statistics.
  • Quantitative research: this focuses on collecting and analyzing numerical data to quantify relationships and patterns. It usually involves structured surveys, questionnaires, experiments, and statistical analysis. The main aim is to measure specific variables test hypotheses, generalize findings to a larger population and provide precise, numerical results that are often used for statistical analysis.
  • Qualitative research: emphasizes understanding behaviours, attitudes, motivations, and perceptions through non-numerical data. In-depth interviews, focus groups and content analysis are three common examples of qualitative research. This method aims to extract information about what people think and why they hold that opinion.

Using all four research approaches together can provide a more comprehensive understanding of the overall market and increases the likelihood that your conclusions are accurate.

Market research and market analysis are related but distinct processes used by businesses to understand and evaluate market conditions, opportunities, and potential strategies.

Let's take a look at each of them in detail:

  • Market research focuses on gathering data related to a specific market, including its size, demographics, trends, customer preferences, competition, and more. It involves both primary and secondary research and is typically conducted as a preliminary step.
  • Market analysis is the process of evaluating and interpreting the collected market research data to make informed business decisions. It is, therefore, the next step after conducting market research. It focuses on the analysis of data, drawing conclusions, and developing strategies based on the insights obtained from market research. Unlike market research, market analysis is a key section of any business plan.

In summary, market research is the process of gathering data and insights about a market, while market analysis involves interpreting that data to make strategic decisions. Both are integral to the development of a business plan, with market analysis being a core component used to create a strategic roadmap for a business.

Whether or not you need to hire a market research company as a business depends on various factors, including your specific research needs, available resources, expertise, and the complexity of the research required.

Here are some considerations to help you decide:

  • Nature and scope: assess the nature and scope of your research needs. If you require in-depth, specialized, or large-scale market research that is beyond the capabilities of your internal team, hiring a market research company with expertise in your industry or area of interest may be beneficial.
  • Expertise: consider the expertise and experience of your internal team. If your team lacks the necessary skills and knowledge to design and execute effective market research studies, it may be advantageous to bring in external experts.
  • Loss of control: on the flip side, when you hire an external research company, you are relinquishing some control over the research process. You may not have direct oversight of every aspect of the study, which can lead to concerns about the quality of the data collection and analysis.
  • Cost: hiring a market research company can often be very expensive and is probably unfeasible for the vast majority of small businesses.

Overall, hiring a market research firm has its advantages, though it's generally not something small businesses do, and it's important to weigh up the potential benefits against the drawbacks and costs involved before making a decision.

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entrepreneur who has completed her market analysis and started writing her business plan

How to Do Market Analysis for a Business Plan?

Lindsey Rudy

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How to Do Market Analysis for a Business Plan?

When launching a business, having a clear business plan is critical for success. One aspect of the business plan, how to do market analysis, often eludes new business owners. Below you’ll learn how to identify your market, analyze competitors, read market trends, and more, to create a realistic market analysis for a business plan.

What Is Market Analysis for a Business Plan?

A market analysis is a comprehensive exploration of the target market a business wishes to enter. It aims to determine a company’s position in the market, develop marketing strategies, and identify areas where competitors lack or fail to effectively reach their target audience. 

A market analysis works for all types of businesses, be it a courier business or an organization business or a laundry business . Market analysis looks at a company’s strengths, weaknesses, opportunities, and threats to effectively capture market share and capitalize on growth opportunities. Whether you’re starting a business with $1,000 , launching a stay-at-home-mom business , or considering low-maintenance businesses with big returns, market analysis for business plans can build the foundation for long-term growth. 

7 Steps to Conduct Market Analysis for a Business Plan

Conducting market analysis for a business plan is perhaps the most foundational aspect of a business. Choose the wrong niche, and your business could be a flop; choose an oversaturated market, and you’ll struggle to break in. Here are seven simple steps for effective market analysis:

Identify Your Target Market

Identifying your target market includes describing your potential customers and defining the characteristics of your target market. This is also the stage to clearly define your objective and consider different industries to understand current trends, size, and scope. 

Target market and industry outlook analysis will demonstrate to lenders and potential investors that your business has a reasonable chance of success. It can also help you gauge potential sales and how to effectively reach the target market. 

Determine Market Size and Potential

To understand growth potential, it’s important to define your market size and potential. Market size is measured by segmentation, the process of aggregating prospective buyers into groups (or segments) with common needs. Assuming they will respond similarly to a marketing action, you can use this information to effectively build a marketing plan.

To understand market potential, consider the total market of your target industry, and calculate the market share of major players. Then, consider growth opportunities, new pain points, and potential revenue to gauge business potential. Discuss both market potential and market segmentation as part of your market analysis for a business plan.

Conduct Competitor Analysis

Once you have an industry and target market, it’s time to identify key competitors. Analyze their products, pricing, marketing, and distribution strategies. Consider their market share, presence, and offerings in terms of the pain points of potential consumers. Based on this, explore how to differentiate your business from the competition and enumerate key value propositions that stand out from competitors. 

Determine Market Entry Barriers

Identify any barriers to entry into the target market, such as high capital requirements, legal and regulatory restrictions, or strong competitor presence. Evaluate the challenges and potential risks associated with entering the market. This is the perfect moment to do a SWOT analysis – looking at the strengths, weaknesses, opportunities, and threats for your business positioning and those of your competitors. 

Analyze Market Trends

Market trends can change the landscape of a market over time. While some markets don’t respond to trends, many are highly vulnerable to changes, such as technological advancements. Understand industry trends that can impact your business launch and potential growth. Determine potential opportunities and threats in the market and its current trends to identify opportunities for growth and future demand for your product or service.

Outline a Marketing Strategy

Once you understand market trends, barriers to entry, market potential, and the target market’s pain points, you can develop an effective marketing strategy. A marketing strategy should utilize the right channels and messaging to reach your target audience. As part of the marketing strategy, consider brand voice, positioning, shared beliefs of your audience, and an emotional connection to build brand loyalty and stand out from competitors.

Summarize Findings and Projections

The final step of market analysis for a business plan is to put it all together in an actionable report. Consolidate your market research findings and projections into a concise summary. Highlight key insights, market opportunities, competitive analysis, and potential risks. Use charts, graphs, and data to support your analysis. Effective market analysis for a business plan should show and tell key market opportunities while addressing potential hurdles or threats. 

Clear market analysis will demonstrate value not only to investors or lenders but may provide additional insights into how to effectively market to the target audience and new opportunities to leverage for faster business growth. 

Key Takeaways and Best Practices for Effective Market Analysis

When conducting market analysis for a business plan, make sure to consider each of the following:

Conduct Focus Groups/Surveys

To truly understand your market and target audience, use focus groups or surveys to gather valuable insights. There are several free or paid sites to do this including HubSpot Free Online Form Builder, SurveyMonkey, SurveySparrow, Lucky Orange, and ProProfs Survey Maker. If you already have a mailing list of clients, you can send surveys out and offer entry into a giveaway or any other incentive. If you’re launching the business from scratch, consider paid surveys with a niched-down target audience for relevant findings. 

Gather Secondary Data

Use secondary sources like industry research reports, government statistics, and articles to supplement your primary research. Government and industry reports, in particular, can offer valuable insights and in-depth industry trends that can shape your market analysis with actionable data. 

Track Market Changes and Modify Strategies Accordingly

Market analysis for business plans isn’t a stagnant document. It must be updated regularly as the market shifts and the business grows. Update your SWOT analysis every three months, or more frequently, if needed, to address and build on marketing strategies and increase market share. 

Why Do You Need Market Analysis?

Market analysis for a business plan is the engine that drives business growth. It provides key data and insights. A great product in a vacuum won’t sell. By conducting market analysis, you’ll understand the industry, competitors, potential customers, and opportunities to fill unique targeted needs, capture a greater market share, and build long-term business success. 

To help achieve business success, consider opening an LLC for your business. In addition, get the tools and resources to ensure your business succeeds. Doola Books is designed for founders like you to automate accounting and give you more time to focus on business growth. Get Doola bookkeeping services here!

What are the benefits of conducting market analysis for a business plan?

Market analysis for a business plan means you can understand the current shape of the market and identify opportunities for growth or weaknesses in competitors’ offerings. It allows you to realistically predict business opportunities and analyze clients’ needs to build effective solutions. 

How can I conduct market analysis for my business plan?

Conducting market analysis for your business plan involves conducting direct market research and relying on secondary sources like industry and government reports. Together, these can give you a picture of your business plan’s strengths, weaknesses, opportunities, and threats and help identify the best course of action to build your business.

What are some common methods used for conducting market analysis?

Market analysis includes surveys, focus groups, and analysis of industry-wide trends, government reports, and competitors’ positioning within the market. Market analysis involves deeply examining your industry, objective, potential clients, and brand offerings. 

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market analysis and business plan

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Market Analysis Business Plan

Market Analysis Business Plan Examples

At first, you may think that a market analysis business plan is complex and formal. However, if you are already aware of the basics of its development and execution, then you can easily understand how easy it is to create this document.

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Market analysis can be done in an efficient manner as long as you have all the firsthand details that you need, the equipment and tools that can help you within the entire market analysis, and the knowledge about the proper integration of analysis processes and results to your business plan.

Do not feel dissuaded in creating a market analysis business plan just because you think it is a critical document that you cannot create on your own or from scratch. If you are already planning to execute the steps that will help you draft a marketing analysis for your business, there are actually guidelines that will allow you to be more prepared in developing the document.

Do not worry on how to find these guides and other help that you need as we got you covered. Make sure to download the examples of market analysis business plans available in this post for references.

Market Analysis and Business Development Strategy Planning Example

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Business Plan Template with Marketing Analysis Example

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What Makes a Market Analysis Business Plan an Important Part of Your General Business Plan?

It is already evident that customers play a vital role when it comes to the successes of the business. Hence, it is of utmost importance for you to continuously provide what they need and meet their expectations as well. However, this will not be possible if you do not know anything about them. This is where the benefits of planning, developing, and implementing a marketing analysis business plan come in. You may also see marketing plan examples .

A comparative market analysis , or any other kinds of market analysis business plan for this matter, is an essential process and document that will help you achieve efficiency and sustainability within the implementation of your marketing efforts, operational action plans, and business development strategies .

Listed below are a few of the reasons why it is recommended for you to include a market analysis business plan in your general business plan are as follows:

1. A market analysis business plan can help provide a thorough explanation of the market segmentation that you have considered as well as the focus that you allotted both for your current market and potential sales leads. With this, you can be more aware of the threats and opportunities that you can face in the future through a valuable market forecast. You may also like marketing strategy plan examples .

2. A market analysis business plan presents the needs, demands, and expectations of your target market. This helps a lot in terms of providing information that will guide you in the development of action plans that can meet the requirements for business sustainability and market relevance.

3. A market analysis business plan can showcase a more in-depth description of your audience. With the help of this document, you can specifically point out your target market, their locations, the things that are relevant and beneficial to their daily activities, and the factors that can affect their purchasing or buying decisions. You might be interested in define marketing plan and its purpose ?

4. A market analysis business plan can show not only the reaction of the market to your offers but also to those coming from the competitors. With this, you can analyze the difference of your products, services, and offers from that of your competition. This can help you a lot when there is a need to plot new market strategies, which can effectively get the attention and trust of your desired audience. You may also see business marketing plan examples .

Business Plan: Market Research and Analysis Example

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Supply Market Analyis and Business Plan Example

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How to Develop an Impressive Market Analysis Business Plan

Are you aware of what a market analysis – demand and supply is? Simply put, it presents the concept that there should be balance with regards the demands of the market and the supply that you provide them with. It is essential for you to know the market that you are catering to so you can successfully use your resources and present your offers. This can result to the improvement of your marketplace standing and operational efficiency.

Developing a market analysis business plan can be very helpful as this document can make it easier and faster for you to organize the call-to-actions that you need to execute and the tactics that you need to incorporate in your efforts and movements to achieve maximum results. You may also see strategic marketing plan examples .

Some of the guidelines that you can follow if you want to develop an impressive market analysis business plan include the following:

1. Know the market segments that you have a hold of and define the kinds or types of customers that are present in each segment. It is essential for you to know the groupings of your target customers so that you can point out the specific key factors that can affect their decisions when buying an item or acquiring services. You always have to be reminded that different market segments have different qualities and characteristics. You may also like apartment marketing plan examples .

Hence, there is a need for your market analysis business plan to provide particular strategies and tactics.

2. Be aware of the factors that can affect the implementation of your market analysis business plan. This includes the nature of the activities of your market segment, the description of the forces that can affect your competitive advantage, the communication and distribution channels that you will use, and the required simple action plans that you need to execute in a timely manner to achieve your goals and objectives.

3. Know the ways on how you can effectively get information of your market. Aside from surveys and questionnaires , there are still different tools and equipment that you can use to have a hand on the details that you need to analyze to come up with the strategies and general action plans that fit your business operations and marketing efforts.

Marketing Business Plan Example

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Market Analysis to Support Business Planning Example

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Business Plan: Market Research Report for Advanced Product Example

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Elements to Consider When Developing a Market Analysis Business Plan

Not all elements of a comparative market analysis are the same with that of a market analysis business plan. There are also differences when you compare the functions of each elements in both documents. Before you create a market analysis business plan, you have to make sure that you will make yourself knowledgeable of the things that you will work on so that you can achieve your desired final document.

Some of the most important elements that you need to consider if you have already decided to start the processes of developing a market analysis business plan are as follows:

1. Geographical and demographic conditions.

How many of your desired audience are within a particular market segment? Is the location of the marketplace convenient to your business and your operations? You have to know the number of people that you can reach through your marketing efforts as well as the areas in which specific activities are needed to be done. You may also see restaurant marketing plan examples .

In this manner, your market analysis business plan can present whether it is really reasonable to tap the particular market specified in the document.

2. Sales leads and potential customers.

Do not just focus on the current customers who provide you with their purchasing power. You always have to be innovative when creating a market analysis business plan as not all customers will forever be there to execute repeat business. Know how to analyze market segments that can be your next target. Doing this can give you a higher possibility of bigger sales and wider market reach. You may also like event marketing plan examples .

3. Market movement, purchasing power and buying habits.

The financial and sales aspect of the business should be prioritized when making a market analysis business plan. Analyzing a market whose activities does not align to the business offers will only waste your time, efforts, and resources. This is the reason why you first need to have an initial findings about your target or desired audience. With this, you can assess how they match your business operations and needs. You may also check out digital marketing plan examples .

4. Direct competition and their activities.

A market analysis business plan does not only rely on the evaluation and assessment of the consumers, customers, and/or clients. You also have to look into the activities of your direct competitors.

Doing this can help you become more aware on how their processes affect or impact their operations and brand. Hence, you can veer away from activities that can produce negative results and you can also give more focus on the strategies that can provide you with the most benefits. You might be interested in personal marketing plan examples .

Market Research and Analysis for a Business Plan Example

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Transmedia Marketing Plan and Analysis for a Business Example

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Market Analysis and Business Plan Example

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In Need of Tips for Creating a Market Analysis Business Plan?

Having the best products and/or services is not enough. If you cannot carry out the exact marketing message that you would like to disseminate in the marketplace, then you cannot expect the best returns from your audience. You may also see annual marketing plan examples .

More so, not knowing how you can connect to your audience or how you can incorporate the usage and benefits of your offers to their needs and activities will most likely lessen the potential successes of your business.

Developing a market analysis business plan is very important as it helps you focus on the environment rather than just internal functions and abilities. With this, you can thoroughly align and use your resources based on the expected results and reactions of your market. All the useful tips that can help you create an outstanding market analysis business plan are listed below. You may also like marketing strategy business plan examples .

1. You should have enough knowledge on how to do the market analysis for a business plan . Aside from the discussions and examples in this post, it will be best if you will still research and find resources that will help you understand the full concept of market analysis. The more you know about the development of this document, the easier it will be for you to put together necessary and relevant information.

2. Make sure that you will come up with a concise and well-defined industry description. You have to know the size and growth forecast of the marketplace where your business belongs. In this manner, you can point out the life cycle of market processes as well as the changes in trends that can affect the decision-making processes of your target audience. You may also check out importance of business plan .

3. Focus not only on your desired market size and the characteristics of your target market segment. You also have to look into the competition and other external factors that you cannot control. This can help you be prepared when facing threats and risks from elements that you do not have a hold of. You might be interested in simple marketing plan examples .

4. Present the market analysis business plan accordingly. Use clauses that can group all the discussion areas or parts that are intended to be together. Using proper headings and subheadings is also a great way to make the document more organized and presentable. If you need help in formatting the document, do not hesitate to use market analysis business plan template examples .

Do not skip the evaluation, review, and assessment of your market when making a business plan document. Knowing the quality standards that you incorporate in your operations and offers is one thing. Knowing how the market will react to your marketing message is another. For you to ensure that your practices and activities are relevant, you have to perform market analysis. Try developing your own market analysis business plan now.

market analysis and business plan

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Alibaba Calls Off Cainiao’s IPO After Market Slump Worsens

Alibaba

Alibaba Group Holding Ltd. is calling off an initial public offering for its Cainiao logistics arm in Hong Kong, shelving a much-anticipated debut that could have raised more than $1 billion.

China’s e-commerce pioneer, which owns 64 percent of Cainiao, said in a Tuesday filing it now plans to buy out all remaining stock held by investors and employees for $3.75 billion. The company decided to postpone the transaction because of poor market conditions, people familiar with the matter said. It lost its taste for the deal this year as stocks waned, the people said, asking to remain anonymous discussing a private matter. Still, Alibaba could choose to revive the IPO should markets recover, they added.

It’s the second time Alibaba has nixed a high-profile coming-out party for one of its main businesses. In 2023, the Chinese internet firm stunned the market when it called off a listing of its $11 billion cloud unit. Cainiao Smart Logistics Network Ltd., which handles a major chunk of the millions of parcels that Alibaba’s e-commerce business generates daily, was considered one of its fastest-growing enterprises.

Last year, Alibaba also put plans to debut its Freshippo grocery chain on the backburner. Its retreat coincides with growing uncertainty in public markets as Beijing grapples with a property crisis, loss of foreign investor confidence and the resultant economic downturn. At the same time, domestically oriented businesses are struggling to grow their topline because of waning consumer confidence.

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“Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building out a global logistics network, we believe this is an appropriate time to double down on Alibaba’s investment in Cainiao,” Alibaba chairman Joseph Tsai said in a blogpost Tuesday.

Alibaba is still grappling with fundamental questions surrounding the once-dominant internet company — a barometer of Chinese demand. Its performance underscored a loss of market share to rivals such as PDD and ByteDance Ltd. It posted a lower-than-projected 5 percent rise in December quarter revenue to 260.3 billion yuan ($36.2 billion), well off the pace of previous years.

Fuelling the uncertainty, the company is going through a complicated multi-way split intended to create several independent businesses and rejuvenate the national icon. The company last year outlined plans to float its Freshippo grocery chain and Cainiao logistics arm. But Tsai last month appeared to soften its stance on those plans, saying Alibaba was in no hurry to float Cainiao because challenging market conditions would prevent it from reaping fair value.

Cainiao, which filed for its IPO about six months ago in September, was valued at about $10.3 billion in the minority shareholder buyout.

Alibaba — which after years of frenetic investment now controls a vast portfolio of assets — is now actively looking to sell off some of those non-core holdings, he added. It’s exploring ways to offload the InTime department store chain and other retail operations, Bloomberg News has reported.

Learn more:

Alibaba’s Logistics Arm Files for $1 Billion-Plus IPO

Cainiao Smart Logistics Network Ltd., the logistics arm of Alibaba Group Holding Ltd., has filed for its Hong Kong initial public offering, potentially making it among the first of the Chinese e-commerce leader’s units to go public.

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Trump Media Merger Provides Trump a Potential Cash Lifeline

Having closed the merger of his social media company, Mr. Trump could find ways to raise cash against the value of his stake in the company, estimated at more than $3 billion.

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Former President Donald Trump stands at an outdoor podium with a large microphone, wearing a red hat that has "45-47" written on the side.

By Matthew Goldstein

Former President Donald J. Trump’s social media company — and the parent of his favorite communications platform, Truth Social — became a public company on Friday through a merger that will raise Mr. Trump’s wealth by billions of dollars and potentially help pay his mounting legal bills.

Trump Media & Technology Group is poised to debut on Wall Street at a market value of around $5 billion — based on the $37 share price of its merger partner, Digital World Acquisition Corp. Given that Mr. Trump owns more than 60 percent of the company, his overall net worth will increase by $3 billion — instantly doubling his wealth from the $2.6 billion estimate by Forbes magazine in October.

So far, those gains are on paper, and Mr. Trump is unlikely to be able to quickly turn it into cash because of restrictions in the merger agreement that prevent major shareholders from selling shares for at least six months, or using them as collateral for loans. But because Mr. Trump controls so much of Trump Media, and because his allies are expected to make up a majority of the new board, they could waive those restrictions on his request.

The question of where Mr. Trump can raise cash has become an urgent one because he is on the hook for hundreds of millions of dollars of legal bills tied to the multiple cases against him. Mr. Trump is facing a Monday deadline to cover a $454 million penalty in a civil fraud case brought by the New York State attorney general, which accuses him of greatly inflating the value of his real estate holdings in deals with banks.

If Mr. Trump cannot come up with the cash or a bond to cover the penalty while he appeals the ruling, the attorney general’s office could seize some of his properties.

Trump Media’s board might be reluctant to allow Mr. Trump to sell shares early as that would likely deflate the company’s share price. But lifting the restriction on using shares as collateral would help him secure a bond and minimize the negative impact on the stock price.

Before the merger closed, Mr. Trump was chairman of Trump Media but neither it nor Digital World disclosed whether he will continue to retain the title. Either way, Mr. Trump will hold enormous sway over the company as the company’s new seven-member board includes Mr. Trump’s eldest son, Donald Trump Jr., and three former members of his administration. His 79 million shares give him a large majority stake in the company and his brand is critical to the success of Truth Social, which has become his main megaphone with communicating to his supporters.

There is no guarantee that the stock of Trump Media will continue to trade at its current levels. If the share price falls over the coming months, the sizable increase to his net worth could be smaller over time. Digital World’s shares dropped about 14 percent after the shareholder vote approving the merger.

As part of the merger, investors in Digital World — the cash-rich shell company that voted to merge with Trump Media — will now become shareholders of Mr. Trump’s three-year-old company. The deal will transfer more than $300 million from Digital World’s coffers to Trump Media, a struggling business with little revenue, and allow Truth Social to keep operating.

Shares of Trump Media could begin trading on the stock market as early as Monday under the stock symbol DJT.

Many of Digital World’s 400,000 shareholders are ordinary investors and fans of Mr. Trump, whose enthusiasm about the former president has propped up the shares for years. But it remains to be seen whether they will hold on to the stock now that the merger is done.

In a statement before the vote, Trump Media said that “the merger will enable Truth Social to enhance and expand our platform.”

With the future of his real estate business in flux because of the ruling in the New York civil fraud case, Trump Media could become one of Mr. Trump’s main moneymakers — and a potential source of conflict should he win the presidency in November. Trump Media currently gets most of its revenue from Truth Social, its flagship platform where several upstart companies advertise their products, targeting Mr. Trump’s supporters and using slogans that are variations on America First or Make America Great Again.

In using the stock symbol DJT, Trump Media is taking a trip back in time. One of Mr. Trump’s former publicly traded companies, Trump Hotels and Casino Resorts, had traded under that stock symbol until it filed for bankruptcy in 2004.

The merger of Digital World and Trump Media, first proposed in October 2021, is one of the more prominent deals to emerge from a strategy that many companies used to go public that was all the rage during the pandemic. Special purpose acquisition companies like Digital World are speculative investment vehicles set up for the purpose of raising money in an initial public offering and then finding an operating business to buy.

In going public through a SPAC merger, Trump Media is following other so-called alt-right businesses like Rumble, an online video streaming service that caters to right-leaning media personalities, and PublicSquare, which bills itself as an online marketplace for the “patriotic parallel economy.”

Trump Media took in just $3.3 million in advertising revenue on Truth Social during the first nine months of last year, and the company, during that period, incurred a net loss of $49 million.

“It’s unclear to me what is the strategy to building out the platform especially so it may reach a broader advertiser,” said Shannon McGregor, a professor of journalism and media at the University of North Carolina. “There does seem to be a ceiling in these niche markets.”

The merger was almost derailed by a Securities and Exchange Commission investigation into deal talks between the two companies that took place before Digital World’s initial public offering. Securities rules prohibit SPACs from engaging in meaningful merger talks before going public.

But the deal got back on track after Digital World settled with the S.E.C. in July, agreeing to pay an $18 million penalty after the merger was completed and to revise its corporate filings.

After the deal was done on Friday, many shareholders and Trump fans celebrated online. Chad Nedohin, a vocal proponent of the merger on Truth Social, posted a livestream of the shareholder meeting on Rumble. In a chat room, viewers shared their enthusiasm for the deal, with messages such as “Great day to be alive” and “The day is finally here.”

Matthew Goldstein covers Wall Street and white-collar crime and housing issues. More about Matthew Goldstein

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  1. How to Write a Market Analysis for a Business Plan

    Step 4: Calculate market value. You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value. A top-down analysis tends to be the easier option of the ...

  2. How to do a market analysis for your business plan

    The core components of the market analysis are: Industry analysis: Assesses the general industry environment in which you compete. Target market analysis: Identifies and quantifies the customers that you will be targeting for sales. Competitive analysis: Identifies your competitors and analyzes their strengths and weaknesses.

  3. How to Write a Market Analysis: Guidelines & Templates

    8. Market Share. Build your market analysis and share relevant information about market segments, market share, size and opportunities using this beautiful template. The template will help inform your business plan and strategy and communicate the size of the opportunity to potential investors.

  4. How to Write the Market Analysis in a Business Plan

    The market analysis section of your small business plan should include the following: Industry Description and Outlook: Describe your industry both qualitatively and quantitatively by laying out the factors that make your industry an attractive place to start and grow a business. Be sure to include detailed statistics that define the industry ...

  5. WHAT is Market Analysis?

    Note that market analysis and marketing plan are two different things, with two distinct chapters in a business plan. As the name suggests, market analysis examines where you fit in within your desired industry and market. As you work thorugh this section, jot down your ideas for the marketing and strategy section of your business plan.

  6. How to Write the Market Analysis Section of a Business Plan

    Business Plan Market Analysis Example #2 - Nailed It!, a family-owned restaurant in Omaha, NE. According to the Nebraska Restaurant Association, last year total restaurant sales in Nebraska grew by 4.3%, reaching a record high of $2.8 billion. Sales at full-service restaurants were particularly strong, growing 7% over 2012 figures.

  7. Market Analysis: What It Is and How to Conduct One

    4. Define your target market. Know your customers' unique characteristics and tailor your offers and marketing accordingly. 5. Identify barriers to entry. Know what stands in your way and address challenges head-on. 6. Create a sales forecast. Estimate future sales and make confident business decisions.

  8. How to do a market analysis for a business plan

    Renewal rate = 1 / useful life of a desk. The volume of transactions = size of desks park x renewal rate. Value of 1 transaction = average price of a desk. Market value = volume of transactions x value of 1 transaction. You should be able to find most of the information for free in this example.

  9. How to Conduct a Market Analysis in 4 Steps

    1. Industry overview. In this step, you'll describe your industry and discuss the direction that it's headed. You'll want to include key industry metrics such as size, trends, and projected growth. Industry research and analysis is different than market research.

  10. How to Write and Conduct a Market Analysis

    A market is the total sum of prospective buyers, individuals, or organizations that are willing and able to purchase a business's potential offering. A market analysis is a detailed assessment of the market you intend to enter. It provides insight into the size and value of the market, potential customer segments, and their buying patterns.

  11. How to Write Market Analysis for a Business Plan

    Your market analysis for a business plan lets you see your position in the market. It helps you identify the market trends, product demand, buying trends, seasonality, competition, etc. A good market analysis will prepare you for a successful launch and steady growth. The time you invest in exploring your target market is well-spent.

  12. How to Conduct a Business Market Analysis

    These are the seven steps of conducting a market analysis: 1. Determine your purpose. There are many reasons you may be conducting a market analysis, such as to gauge your competition or to ...

  13. How to Do a Market Analysis for a Business Plan

    7 steps to prepare a market analysis for a business plan. There are a few key steps on how to conduct a market analysis for a business plan. These business analysis techniques will help entrepreneurs get a clear picture of not just the market, but the future health of their company. 1. Identify the primary objectives of the business.

  14. How to do a market analysis for a business plan

    It involves researching and analyzing the target market, competitors, and industry trends in order to identify opportunities and challenges. Here are the steps you can follow to do a market analysis for a business plan: Define your target market: The first step in a market analysis is to identify the specific group of customers that you will be ...

  15. Business Plan Section 5: Market Analysis

    Business Plan Section 5: Market Analysis. Find out the 9 components to include in the market analysis portion of your business plan, plus 6 sources for market analysis information. This is the part of your business plan where you really get to shine and show off that awesome idea you have. Of course, your product or service is the best!

  16. Performing a Strategic Business Plan Market Analysis

    Business Plan Market Analysis. 1. Industry description and outlook. Regardless of how you decide to proceed with your market analysis, you will almost certainly want to start this section of your business plan with a description of your company's industry. Research your industry's growth and note its current scope.

  17. The Business Plan Shop's guide to conducting market analysis

    Unlike market research, market analysis is a key section of any business plan. In summary, market research is the process of gathering data and insights about a market, while market analysis involves interpreting that data to make strategic decisions.

  18. How to Do Market Analysis for a Business Plan?

    The final step of market analysis for a business plan is to put it all together in an actionable report. Consolidate your market research findings and projections into a concise summary. Highlight key insights, market opportunities, competitive analysis, and potential risks. Use charts, graphs, and data to support your analysis.

  19. Market Analysis: What It Is and How to Conduct One

    Marketing analytics is studying the metrics of specific marketing efforts, such as landing page sign-ups and social media engagement, to increase return on investment. Here, we focus on market analysis as a thorough business plan component. Continue reading to conduct your market analysis and lay a strong foundation for your business.

  20. What is market analysis? Definition and examples

    Definition: Market analysis. Market analysis is a large part of market research and an important component of a business plan. In this plan, business founders document their business idea in writing. During the course of the market analysis, a specific market is taken into account. With the help of the results displayed, companies can identify ...

  21. Market Analysis Business Plan

    2. A market analysis business plan presents the needs, demands, and expectations of your target market. This helps a lot in terms of providing information that will guide you in the development of action plans that can meet the requirements for business sustainability and market relevance. 3. A market analysis business plan can showcase a more ...

  22. How to do a Market Analysis for a Business Plan? (Examples and Tips

    Conducting a thorough market analysis is a critical component of any business plan. Your market analysis allows you to demonstrate a clear understanding of your industry, target market, and…

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    B2B marketing leverages a range of marketing channels and strategies, each with unique strengths and challenges. By a significant lead, email (73%) remains the biggest channel that B2B marketers use to effectively connect with prospective buyers, followed by phone (39%) and events (31%), according to April 2023 data from Ascend2 and Zoominfo.

  24. Alibaba Calls Off Cainiao's IPO After Market Slump Worsens

    26 March 2024. Alibaba Group Holding Ltd. is calling off an initial public offering for its Cainiao logistics arm in Hong Kong, shelving a much-anticipated debut that could have raised more than $1 billion. China's e-commerce pioneer, which owns 64 percent of Cainiao, said in a Tuesday filing it now plans to buy out all remaining stock held ...

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    Social media is an easy, affordable and effective way to promote your business and connect with customers. Use social media to: attract new customers. grow your market, including overseas. build loyalty and trust in your brand. interact directly with customers in real time. advertise and sell your products or services.

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  27. Trump Media Merger Approved, Allowing Truth Social to Go Public

    Trump Media & Technology Group is poised to debut on Wall Street at a market value of around $5 billion — based on the $37 share price of its merger partner, Digital World Acquisition Corp.