People who share the same demographic profile usually have the same purchasing behavior. As a result, demographic analysis is an important component of marketing. Effective marketing campaigns target a specific audience. Demographic information is particularly useful when marketing mangers lack enough knowledge about a market or when the market is changing.
Town B Although Town B looks more competitive 10 competitors vs. The definition of a potential customer will depend on your type of business. For example if you are opening a small shop selling office furniture then your market will be all the companies within your delivery range.
You would however factor it when assessing the value of the market. Market value Estimating the market value is often more difficult than assessing the number of potential customers.
The first thing to do is to see if the figure is publicly available as either published by a consultancy firm or by a state body. It is very likely that you will find at least a number on a national level.
If not then you can either buy some market research or try to estimate it yourself. Methods for building an estimate There are 2 methods that can be used to build estimates: The bottom up approach consist in building a global number starting with unitary values.
In our case the number of potential clients multiplied by an average transaction value. We would first factor in the size of the businesses in our delivery range in order to come up with the size of the desks park.
Then we would try to estimate the renewal rate of the park to get the volume of annual transactions. Finally, we would apply an average price to the annual volume of transactions to get to the estimated market value.
Here is a summary of the steps including where to find the information: You can get the number and size of businesses in your delivery area from the national statistics.
Your accountant should be able to give you the useful life of a desk but you should know it since it is your market! You can compare the desk prices of other furniture stores in your area.
As a side note here: The top down approach consist in starting with a global number and reducing it pro-rata. When coming up with an estimate yourself it is always a good practice to test both the bottom up and top down approaches and to compare the results. If the numbers are too far away then you probably missed something or used the wrong proxy.
Once you have estimated the market size you need to explain to your reader which segment s of the market you view as your target market.
Target Market The target market is the type of customers you target within the market. For example if you are selling jewellery you can either be a generalist or decide to focus on the high end or the lower end of the market.
This section is relevant when your market has clear segments with different drivers of demand. In my example of jewels, value for money would be one of the drivers of the lower end market whereas exclusivity and prestige would drive the high end. Now it is time to focus on the more qualitative side of the market analysis by looking at what drives the demand.
Market Need This section is very important as it is where you show your potential investor that you have an intimate knowledge of your market. You know why they buy! Here you need to get into the details of the drivers of demand for your product or services.
One way to look at what a driver is, is to look at takeaway coffee. One of the drivers for coffee is consistency. The coffee one buys in a chain is not necessarily better than the one from the independent coffee shop next door.A key part of any business plan is the market analysis.
This section needs to demonstrate both your expertise in your particular market and the attractiveness of the market from a financial standpoint.
When writing a business plan, the focus of the Market Analysis section is a thorough examination of your target market: those people to whom you intend to sell your products or services..
Even if you intend on selling a product service only within your own community, . Target Demographic The detailed profile of your customer gives you your target demographic, which is often a combination of more than one characteristic or trait.
Don’t be confused by the terminology -- a target demographic is a term for a customer group that consists of several character demographics. Learn how to write the Market Analysis section of the business plan. Defining your target market is key to your business plan and your new business.
Learn how to write the Market Analysis section of the business plan. How might your target market be affected by demographic shifts? Understanding the demographics of your target customers is critical for the success of your business. Not only do you need to understand them in order to decide exactly what your product and.
Know Your Target Market When crafting your business plan or giving it an overhaul, it's critical to thoroughly understand your target customers. Another way to use demographic research is.