2 18 14 Chapter 6 Analyzing the Industry the Market Industry a grouping of similar businesses that interact in a common environment Market a grouping of customers that an entrepreneur targets Primary Customer represents that segment of the marketplace that needs the product or service most Interview Analysis How is the industry described Is the industry growing Where are the opportunities What does the future look like Are there any threats to the industry What are the typical margins in the industry Frameworks for Understanding Industries Birth Growth adaptation Differentiation competition Maturity decline Shakeout Industry Trajectories 4 changes in industry Progressive Change most common companies grow geographically increase profits through innovations Ex Wal Mart Southwest airlines Intermediating Change change that comes when there are major shifts in the value chain in the form of backward or forward integration strategic partners developing new ways to transect business with customers Ex card swipes for in home work done Radical Change occurs when an innovation results in the obsolescence of previous technology drives old line companies out of business Ex iPod took CDs out of business Creative Change found in industries where resources turn over frequently must continually be replaced Ex film music industries Porter s Five Forces Model Barriers to entry if high they may present a significant challenge to the entrepreneur Economies of scale hard for new venture to achieve Brand loyalty not easy to get loyal customers to switch Capital requirements R D or plant equipment Switching costs for the buyer time effort to switch starting over the learning process with a new company Access to distribution channels will retailers sell your product Proprietary factors must stick with supplier who holds patent to make the product you need Government regulations licensing of airwaves zoning FDA approval Threats from substitute products Products services which accomplish same function in different way or at a different price bowling alleys compete with miniature golf courses Threats from buyers bargaining power Threats from suppliers bargaining power Competitive rivalry among existing firms A highly competitive industry will drive down profits Random fact companies pay to have their brand placed on shelves in the average customers line of sight when s the last time a Kroger brand was the first thing you ve seen on a shelf Characterizing the Target Market Step in Market Research identify profile customer Primary research techniques Mail phone surveys Overview Internet In person Market Industry Radical change Creative change Intermediating change Progressive change Porters five force model Primary research
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