Market Analysis

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Chapter 5
Market Analysis
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As the economy, led by the automobile industry,
rose to a new high level in the twenties, a
complex of new elements came into existence to
transform the market installment selling, the
used-car trade-in, the closed body, and the
annual model. (I would add improved roads if I
were to take into account the environment of the
automobile.) - Alfred P. Slaon, Jr., General
Motors
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Imagining the future may be more important than
analyzing the past. I daresay companies today are
not resource-bound, they are imagination-bound.
- C.K. Prahalad University of Michigan
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The most effective way to cope with change is to
help create it. - I.W. Lynett
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Dimensions of a Market Analysis

• Actual and potential market size
• Market growth
• Market profitability
• Cost structure
• Distribution systems
• Trends and developments
• Key success factors

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Detecting Maturity and Decline

• Price pressure
• Buyer sophistication and knowledge
• Substitute products or technologies
• Saturation
• No growth sources
• Customer disinterest

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Porters Five-Factor Model ofMarket
Profitability
Threat of Potential Entrants
Competition Among Existing Firms
Bargaining Power of Suppliers
Bargaining Power of Customers
Threat of Substitute Products
Source Adapted from Michael E. Porter, Industry
Structure and Competitive Strategy Keys to
Profitability Financial Analysis
Journal,July-August 1980,p.33.
Figure 5.3
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Risks of High-Growth Markets

• Competitive Risk
• Overcrowding
• Superior competitive entry

• Firm Limitations
• Resource constraints
• Distribution unavailable

• Market Changes
• Changing KSFs
• New technology
• Disappointing growth
• Price instability

Figure 5.5