In my last blog post on writing your marketing plan with the help of Business Plan Pro (business plan software) we said that market research is all about identifying your potential customers. So, today, I will discuss how to use Business Plan Pro’s market analysis table (the wizard).
Who are your potential customers? It is important to identify them because the success of your marketing and business plan, and ipso facto your business, depends on this analysis. Your business can be as good (successful) as your planning!
The potential market for a restaurant is the local market while the potential market for an e-commerce business is all the businesses (entrepreneurs and business owners) across the world that spend some time on the Internet.
Now, you can use Business Plan Pro’s wizard to create your marketing analysis. The first task is to perform your market segmentation. Your entire marketing plan depends on the correct segmentation of your potential market (i.e. your market profile). You can divide your potential market in different categories for example:
- Geographic areas (e.g. places where people live, work, going for vacation etc.)
- Income groups
- Academic background
- Political orientation
- Behavior patterns (e.g. “yuppies” and “baby boomers”)
The second task in the Market Analysis Table Wizard is to identify the number of potential buyers for the first year per identified segment. It is important to stress here that you need to base this information on some real statistics that you can trust. Different sources are available to assist you with this – please see our last blog post on marketing research resources.
The third wizard step in creating your market analysis is to estimate the annual growth rate per market segment (i.e. the increase in buyers per segment per year). Though it would many times be an educated guess, you should try to obtain more information, based on proper research, on this aspect; if possible. The growth rate will be used by Business Plan Pro to calculate the second, third, fourth and fifth years of your market analysis table.
After you have completed the third step, your Market Analysis Table will be completed and Business Plan Pro will create automatically an easy-to-use spreadsheet. The Market Analysis Table is also linked to a Market Analysis (Pie) chart in Business Plan Pro.
As said previously, market segmentation is the foundation of your marketing strategy. Spend as much time as you need on the segmentation of your market. Successful entrepreneurs are successful because they targeted the right markets and provided in the needs of their customers (categorized per age, size, geographic areas, culture, income groups, profession, academic background, political orientation and behavior patterns).
If you have any questions, you are welcome to contact us.
Michiel Jonker, CISA