How to Do a Market Analysis for a Business Plan

The integral side of any random business plan is market analysis and cautious research. This division constantly asks for practical expertise in the specific market and the catchiness of the sector of the market based on a financial aspect.

The article purely focuses on what exactly is asked by the market research right before we start with: “how to jot down a good business plan for your business”. For better results, one can always make use of a freemarket analysis template available on the internet.

What do you mean by market analysis?

The term can be explained as a combination of a quantitative and qualitative assortment of a specific market. It observes the market size in terms of value and volume. The different categories of customer buying patterns and purchase behavior, the fierce competition along with the economic ambiance concerning the obstacles to regulation and entry.

How to get a market analysis properly?

The main reason behind conducting market research is that the study of the specific division stresses more on analysis of a business tactic is to demonstrate the investors that you are well versed with your market. The market size is huge enough to have enough business for a completely new business.

The first stage is the study which comprises the scale of a market.

1. Demographics and Segmentation

When inspecting the size of a market it is very important for you to decide smartly a method which will be dependent on the category of business you are going to propose your business strategy that is intended for a small business or an eatery that will have a demand for local methods and make an attempt to analyze the market concerned with your business.

Just in case in the event of you scribbling a precise business strategy for a chain of restaurants then you will need to check the market at a national level.

This is something that is closely related to the market and you may also need to chop down various sectors or divisions. It is particularly related if you wish to concentrate fully on specific divisions.

Value of Volume

Value and volume are the two most significant factors you need to pay close attention to, especially when running a check on the size of the Market. And that number is directly proportional to the total number of potential customers to the size of the market.

2. Target Market {Focused market)

The segmented market is the sort of consumer that you will be focusing on the market.

For instance, let’s assume you are a dealer of diamonds, so you will need to decide which of your customers should be catered to first, as some may buy a solitaire while the others may go for the bigger uncut and raw diamonds.

You will need to differentiate or in simpler words need to distinguish which customers should be taken care of first.

Therefore, it is clear that there is a need to take care of the demands of those customers with a demand that usually is going to be a better revenue generator for the company.

Also, it means that where the value of the money is greater the company needs to steer its focus on those specific channels that are a good source of revenue for the business.

And now it is about time to concentrate on the qualitative aspect of the market analysis and research by observing what are the factors that are the driving factor of the overall demand of the product originating from the company.

3. The need for a market

This division mainly is of high significance as this is where you will need to show your prospective investors that you are having sound knowledge of the market you are dealing with why.

This means you have a better idea for what reason are they buying. Also, here you will require the complete details of factors that steer the overall demand of the product and services.

This is just a single way of looking at what the driving element, is to look at the takeaways.

So, it is the key reason for the factor persistence. This simply can be put up as if you have purchased a coffee from one shop that does not mean that the coffee which is available next door is not good enough. Just in case you don’t reside in that particular area then you don’t know the true worth of that coffee.

On the other hand, you will have a better idea that the same coffee chain will offer a similar taste irrespective of the location. Therefore, the majority of the people who keep moving around often buy only from specific coffee chains instead of opting for regular coffee shops.

4. Competition

The basic objective of the competition section is to offer a just and honest perception of who you are standing against. Also, you will be needing to explain or elaborate the contender’s market positioning and explain it as the weaknesses and strengths altogether.

While writing a business plan this is something that should be included right away as it will help to understand your situation and SWOT factors in contrast with the competitor’s advantage of the tactical advantage division.

The main idea behind writing this section is to fully analyze and study the competitor’s side of the market so to come across a loophole which can be exploited by your company so to being able to come up with a breakthrough and use it as a competitive edge in terms of market re-positioning.

This is the best method to get done with the benchmarking of your contenders’ position against every one of the prime factors of the market (quality, add-on services, price, features, etc.) and show the difference in the plan table.

Potential customer

The term potential customer is something that could be explained as it is relying on the nature of your line of work.

For instance, if you are opening up a small electronic store then the competitors will be the electronic distributors in your vicinity.

A similar majority of the companies would have just one person who will be making decisions about procuring the electronics from the vendors, therefore it might be the reason why you miss out on scaling the size of such business determinations when analyzing the scale of prospect customers. You will need to run a check when you are trying to get a read on the market.

The methods of creating an estimate.

There are total 2 techniques which can be opted for creating an estimate namely

1. The bottom-up method

2. The bottom down method

The bottom-up method comprises creating an international figure beginning with which it only holds unitary value. In some cases, the overall count of probate clientele is magnified by an aggregate value of the transaction

Let’s take the market analysis example of commercial furniture and attempt to assume the total worth of the “desk” section. We probably would put the initial factor as the scale of the business sector so to cope with the desk area.

Then we surely attempt to assume the rate of the renewable park so to obtain the quantity of aggregate amount to yearly volume of total transactions so as to achieve an assumed valuation of the market.

Below are the details of the mandatory steps which include the steps of where the information could be obtained from.

The total scale of the desk area

(A) The overall count of delivery in business area x total workforce

(B) Rate of renewal = 1/ utilization value of a desk

(C) Number of transactions = Total scale of desk area x rate of renewal

(D) The overall value of a single transaction = Aggregate price of a single desk

(E) Value of market = Number of transaction x count of a single transaction

Okay, so that was the bottoms-up approach now let’s take a look at down method.

The down approach is usually comprising of an international figure and minimizing it into professional data. It can be simply be seen as the total space of desk park x count of employees / overall count of employees in the office.

Hence it could be understood that the count of employees is a constant number or a value that remains unchanged in both approaches of understanding the query what is marketplace analysis.

5. Obstacles to Entry

This section is mainly comprised of all the queries that come up in the mind of your present and existing investors.

What averts the majority of people from staring at the same shop in front of yours. and if opened why does it snatch away 50% of the overall business away.

Answer to that question may be quite simple as it will not be something worth it if trying to compete with a contender who is already in the business for the past 2 decades.

As one can for sure guess what can be the probable hurdles maybe while entering a new line of work. This is something that the investors are crazy about and which makes them invest more to get maximum business from startups

All the probable and most reliable revert to the hurdles of questions will have relied greatly on the type of business, the managing team or any business relations can have. Hence it is difficult for anyone to give some handouts to these questions

6. Regulations

Normally regulations are some of the greatest hurdles in entering a new business and its the word from the experts to be very cautious with this section.

The best is to combine it with the previous section. Else wise, the section could be an ignoble one which can in future be a problem or else it’s just most people do comply with.


So, by following the market analysis summary one can make the best out of a new startup as it successfully covers all the pointers that will help any individual who has either started with his business or is going to start a new one.