Industry Analysis (Part One)

Industry Analysis (Part One)

Industry Analysis (Part One)

Size and Trends

A comprehensive size and trends analysis helps businesses assess the potential of the market, understand consumer behaviour, and forecast growth. 

Market Size

Determining how large the market is in terms of total value and volume, and how much it has the potential to grow.

Total Addressable Market (TAM):  Overall revenue opportunity available if a product or service achieves 100% market share

Serviceable Available Market (SAM):  The segment of (TAM) targeted by your product or service

Serviceable Obtainable Market (SOM):  The portion of (SAM) that realistically captures short to medium term based on factors like competition, distribution channels, and brand recognition

Market Growth Rate:  Historical growth rate and projections for future growth in the target market

Revenue Potential:  How much revenue the market is currently generating and its expected growth trajectory

Market Size Estimation

  • Top-down approach:  Uses secondary research and applies  percentages to industry data
  • Bottom-up approach:  Uses primary data from surveys or customer analysis to estimate potential sales or revenue

Trends

Useful for identifying market opportunities or potential risks.

  • Consumer Behaviour:  Shifts in consumer preferences, values, and behaviours (e.g., digital transformation, eco-consciousness, or health trends).
  • Technology:  Advancements in technology are affecting market demand, customer experience, and product innovation
  • Economic:  Conditions such as disposable income, unemployment rates, and global trade policies that influences purchasing power
  • Regulatory:  Regulations and legal frameworks, such as data privacy laws, environmental policies, or trade restrictions
  • Competition:  Assessing what competitors are doing
  • Demographics:  Shifts in population size, age distribution, and income levels
  • Cultural and Social:  Social norms and cultural preferences that impact market behaviour

Segmentation

  • Demographics:  Age, gender, income level, education
  • Psychographics:  Lifestyle, interests, and values
  • Geographics:  Location-based segmentation
  • Behaviour:  Purchasing behaviour of, product usage, or brand loyalty.

Competitive Landscape

See previous article : Competitive Landscape (Part One), Competitive Landscape (Part Two)

Business Environment

Examination of the current state of a specific industry within the business environment, understanding its dynamics, and forecasting future trends.

Overview

  • Industry Definition:  What exactly is the industry?
  • Size and Growth:  Total size of the industry, growth rates, and projected future trends
  • Key Players:  Major companies or stakeholders in the industry
  • Market Segmentation:  Breaks the industry into relevant segments based on product/service type, geography, customer demographics

PESTEL Analysis (Macro Environment)

A PESTEL analysis helps determine the broader business environment and identify the external factors that impacts the industry.

  • Political:  Government policies, regulations, political stability, tax policies, trade regulations, tariffs, and labour laws.
  • Economic:  Economic growth, inflation rates, exchange rates, unemployment levels, and disposable income.
  • Social:  Demographics, cultural attitudes, lifestyle trends, consumer preferences, and population growth rates.
  • Technological:  Technological advancements, innovation, R&D activities, automation, and the rate of technological adoption.
  • Environmental:  Sustainability trends, climate change, natural resource availability, and environmental regulations.
  • Legal:  Laws regarding intellectual property, labour laws, health and safety regulations, and industry-specific legal requirements.

Trends and Innovations

  • Current Trends:  Emerging trends helps businesses understand where the industry is heading
  • Technological Innovations:  Advancements or shifts that disrupt the industry
  • Consumer Trends:  How are consumer demands evolving?

Regulation

  • Government:  Regulations specific to the industry that could affect operations
  • Taxation and Trade Policies:  Tax laws, tariffs, or trade restrictions that impact profitability

Market and Consumer Behaviour

  • Customer Needs:  Pain points for customers, and how can the industry address them
  • Demand Drivers:  Factors driving demand
  • Customer Segments:  Primary market segments

  

Risks and Challenges

Risk assessment is a key components of market research, especially for businesses that are evaluating new markets, products, or expansion strategies. 

Market Risks

  • Demand Fluctuations:  Consumer preferences, economic downturns, or seasonality can lead to fluctuations in market demand
  • Price Sensitivity:  Customers who are highly sensitive to price changes can affect sales volume and profitability

Competitive Risks

  • Competitive Pressures:  Can erode profit margins and market share
  • Innovation and Technology:  Superior or disruptive technologies that render existing products obsolete

Economic Risks

  • Economic Recession:  A decrease in purchasing power, leading to reduced demand for products or services
  • Exchange Rate Fluctuations:  Currency volatility increasing costs or reducing profitability
  • Inflation and Cost Increases:  Rising operational or material costs squeezing margins

Regulatory Risks

  • Changes in Laws and Regulations:  New government policies, tariffs, or tax reforms impacting operations
  • Environmental Regulations:  Environmental laws leading to increased costs 

Technological Risks

  • Obsolescence:  Technological advancements making existing products or services obsolete
  • Cybersecurity Threats:  Digital infrastructure risks of data breaches, hacking, and cyber-attacks

Operational Risks

  • Supply Chain Disruptions:  External factors like natural disasters, pandemics, or geopolitical instability disrupting supply chains
  • Labor Shortages:  Shortages of skilled labour or high turnover rates impacting production efficiency and quality.
  • Management and Strategy Risk:  Poor leadership decisions or failure to adapt to changing market conditions.

 

Conducting a Risk Assessment

  • Identify the Risks
  • Assess the Impact and Likelihood of Each Risk
  • Quantify the Risks
  • Develop Mitigation Strategies
  • Monitor and Review Risks Continuously

 

Risk Assessment Tools

  • Risk Matrix
  • SWOT Analysis
  • Scenario Planning
  • Monte Carlo Simulation

 

Risk Matrix

  • Regulatory Risk: High Impact / Medium Likelihood
  • Technological Risk: High Impact / High Likelihood
  • Supply Chain Disruptions: Medium Impact / Medium Likelihood
  • Market Risk: Medium Impact / High Likelihood
  • Competition Risk: High Impact / High Likelihood

 

Mitigation Strategies

  • Regulatory
  • Technological
  • Supply Chain Disruptions
  • Market Risk
  • Competition Risk

 

Industry analysis is the foundation for creating a successful market entry strategy.  The key to a successful market entry is selecting a strategy that balances risk, cost, and control, while aligning with your business objectives and available resources.

An in-depth industry analysis provides essential insights into the business environment by assessing both external factors (e.g., PESTEL) and internal market dynamics (e.g., Porter's Five Forces, SWOT).

Incorporating risk assessment into industry analysis is essential for understanding and preparing for potential challenges.

 

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News Details:

  • Studio Name
  • TES - Dublin Studio
  • Location
  • Ireland
  • Country
  • United Kingdom
  • Keywords
  • Industry Analysis Trends Business Environment Risks and Challenges

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