A professional business plan can only be created with a meaningful and detailed target market analysis. Without customers, every project remains without economic success. Business founders should be aware of whether they want to reach private and/or business customers and their target groups accordingly define exactly, e.g. B. in relation to the following points:
Based on this, start-ups can determine which markets and market segments are most valuable for their company, or which previously undiscovered market potential still needs to be exploited. This is followed by a competitive analysis in which the competitors and their products from the overall market and the market segments are examined more closely.
Knowledge of the customers and the market
First of all, it has to be clarified whether you want to serve private customers (B2C = Business to Customer) and/or business customers (B2B = Business to Business) with a product or service as part of the marketing strategy. The customers in B2C area are e.g. B. according to the following factors:
- region, population density
- age, gender,
- Profession, income, social class
- Buying behavior, product use
For customers in B2B area segmentation is possible according to the following criteria:
- company size
- turnover, number of employees
- Purchasing Conditions
- regional or national presence
First general information entrepreneurs can obtain quickly and inexpensively from the following sources:
- State and federal statistical offices
- trade associations
- Economics institutes
- Chambers of Commerce and Industry
- departments of credit institutions
- Reports from consulting firms
- Market studies by market research companies
- Specialist literature and industry magazines
- Research through discussions with market participants
- via internet research
Market analysis, development and forecast
When creating a business plan, it is particularly important that projects with numbers about the market and the market potential. Both the entire market (e.g. bicycle market in Germany) and the market segment (e.g. e-bikes in Germany) should be considered. The market potential reflects the ability to absorb a service or a product and forms the upper limit for the market volume. Actual and potential customers must be taken into account. Furthermore z. B. sold quantities are recorded.
It is helpful to make reasonable assumptions, estimates and projections when exact data cannot be found. This also applies to market potential and volume, e.g. B. in short-term and rapidly expanding industries, trends in customer behavior, new laws and regulations, etc. Making these types of assumptions is a challenge for most entrepreneurs big challenge represent.
Evidence of industry trends can e.g. B. can be found out via “Google Trends”. There it is possible Frequency and geographic location of search queries to research. There are also service providers who provide a large number and variety of statistics.
A well-established and always up-to-date method of market research is interviewing people. This allows various and individually required information to be obtained, such as:
- opportunities in the market
- Expectations, needs and requirements of potential/actual customers
- Relationship of customers to competitors
In order to obtain technical information, the Conducting expert interviews helpful. Technically competent people with many years of professional and industry experience are interviewed. Finally, it is important to bring these findings together in the business plan.
At this point, it is checked how many suppliers/companies are competing with which products and services with a start-up project. The following criteria can help:
- Sales volume
- Unit volume
- market share
- Product Offerings
- distribution channels
In addition, the analysis of the strengths and weaknesses of the products or services in comparison to the competition helps. When comparing multiple competitors with similar products, it is important to note key differentiators. A tabular representation offers a good overview. The SWOT analysis, which is essential when creating a business plan, can be very helpful for this.
Relevant competitors can three categories be subdivided:
- Direct competitors who serve the same target groups with comparable services and products
- Indirect competitors who offer alternatives or substitute products
- Potential competitors such as start-ups that offer modular and highly customizable solutions and companies that have the skills to become active in the market segment of their project.
If there are dependencies on suppliers, it is important to evaluate them as well. Can you be affected by supply bottlenecks and raw material shortages? Do enormous price increases endanger economic success?
The most common mistakes
- Business founders often wrongly believe that there is no competition for their new product or service. To avoid this, founders should proceed in a structured manner.
- exaggerated representation of market potential
- Target groups are not precisely defined.
- You don’t build on market metrics.
- There is no distinguishing feature to competitors.
- You serve too small a group of customers and are only dependent on trends.
- Laws and regulations in the destination country are ignored.
With the target market analysis, start-ups determine in which market segment they establish their product or service and what influence competitors have on their economic success. Without specialist knowledge or experience in the target market analysis, mistakes can quickly arise, since market potential is ignored, the target market is assessed as too large or the start-up project is generally incorrectly assessed and positioned. This can deter business plan readers and question the market knowledge of the entrepreneurs.
Recognize and eliminate sources of error early on with business start-up advice
With the help of a routine and experienced management consultant, sources of error can be identified at an early stage excluded will. Would you like professional advice on your target market analysis? Simply fill out the consultant search form and we will put you in touch with an expert.
You do not have to dig deep into your pocket for such business start-up advice, as this government sponsored can be. With our free funding check, you can find out which funding programs are right for you.