Four Steps to Analyzing a Market

I asked Jim Littlefield for marketing advice for high-tech entrepreneurs.  His reply follows.  Thank you very much, Jim!

The first three of these steps need to be visited and revisited until they are answered sufficiently.  The fourth step may then be evaluated.

1. Choose and analyze geographic markets for the first few years of product/service introduction.  Before going abroad, it may be appropriate to limit introduction to domestic markets until those become strong and are producing a profit.

2. Determine the market size for the geographic markets chosen.  One of the ways to do this is to estimate how many potential customers there are in each domestic market and how much of the product/service each customer is likely to buy/use annually.

3. Answer "What is the competition for this product/service and how well does our product compete in a technological and user need sense?"  Remember, few products/services are unique…in spite of what entrepreneurs would like to think.  By considering the competition, one may narrow the scope of the target market.

4. After completing the preceding three analyses and estimating costs and gross margin one can estimate when it is likely that a profit will be shown.

Jim Littlefield
Professor of Marketing
Pamplin College of Business
Virginia Tech

[email protected]
(540) 231-9170

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