Apply: Market Analysis Research DAT 565 Context
One of the most important elements in a business plan is the market analysis. A market analysis is a qualitative and quantitative assessment of a market. It includes data collection and estimation in reference to the market size and value; characteristics of the intended customer base; in-depth understanding of the competition; barriers to entry and the regulatory environment. An accurate and detailed market analysis allows entrepreneurs to determine whether the market is sufficiently large to build a sustainable, profitable business. In this assignment, you will prepare a portion of the market analysis for your proposed business. You will create a report that can be included as part of your digital portfolio.
Instructions
Write a 525-word report that includes the following sections:
Section 1: Business overview, mission and vision
Section 2: Market analysis
Section 3: Recommendation
Use the Market Analysis Research document for details on what to include in each section.
Section 1 – Business overview, mission and vision
Describe the proposed business. Address the following in your summary:
What type of product/service will it offer?
What is the intended market?
What is the business model?
Articulate the business’s mission and vision statements.
Section 2 – Market analysis
Based on your intended product or service, describe the characteristics of your customer base.
Investigate and list your current competitors. For example, if you’re manufacturing and selling exercise equipment, current competitors would be companies like NordicTrack or Nautilus, Inc. To simplify the process, limit yourself to businesses you are competing directly against. If your business is a local bistro, then your competitors are other local similar restaurants.
Research and estimate the size of your intended market. Market size is the number of potential customers or unit sales for your products/services. Consider the nature of your business when researching market size. For instance, if your business is a local bistro, then your market size is determined by the population within a reasonable radius of the restaurant, say, 5-15 miles maximum. On the other hand, if your business intends to sell a low-weight mountain bicycle online, then the market size is the average number of low-weight mountain bicycles sold nationwide annually.
Estimate the value of your market. Market value is the potential revenues the market has to offer. For instance, suppose low-weight mountain bicycles have a market size of 300,000 units a year with a $500 average price. Then the market value would be $150,000,000.
It can be difficult to estimate market value as you must make assumptions related to market size and average unit price. Use the expected value concept introduced in Chapter 6 of the textbook and the chartbelow to do the estimation.
EXPECTED MARKET VALUE: MOUNTAIN BICYCLE SCENARIO
Assumptions
Probability p(x)
Units (‘000)
Avg. Unit Price ($)
Market Value (‘$000)
Pessimistic
0.30
200
450
90,000
Most Likely
0.50
300
500
150,000
Optimistic
0.20
375
550
206,250
Expected Market Value (‘$000)
102,110
Estimate the total addressable market or TAM. This is the fraction of the total market you realistically estimate to get. Most businesses have a relatively modest market share, well under 20%. For example, if we expect to get a 5% share of the mountain bicycle market, then our TAM would be: 0.05 * $102,110,000 = $5,105,500 or approximately $5.1 million.
Section 3: Recommendation
Based on the information collected, do you feel it is a good idea to continue with the implementation of the business? Explain why or why not.
Cite references to support your assignment.
Format your citations according to APA guidelines.
Cite references to support your assignment.
Format your citations according to APA guidelines. Wk 3 – Apply: Market Analysis Research DAT 565
