Industry analysis is a tool that makes businesses and entrepreneurs to understand their position on the market and to other companies that produce the same or similar products or services. The product of industry analysis is a document that will help us to make quality decisions about future development of our business. Also, this document will help us to improve our competitive strategies that will positioning us better in the particular industry. Industry analysis can be a part from the business plan also.
Here are some of the basic questions that must be answered when conducting an industry analysis.
Identifying Industry
- What is the Standard Industry Classification – SCI?
Overview of the Industry
When you know the history of the industry, and it is easier to understand the basic rules that exist there.
- What is the history of the industry?
- What affecting growth?
- Who are the leaders in the industry?
- Are there any government regulations about industry?
Industry Trends
Industry trends are looking in the history and finding some trends into that statistical data for forecasting the future.
- What is estimated size of the industry in money and products sold?
- What are the trends in sales over recent years?
- What is sensitivity of the industry?
- What type of marketing strategy is usually used?
- What are management trends in the industry?
Customers/Buyers/Potential Customers
Customers, or buyers, or potential customers are the central element of every business analysis. Our business serves for their needs. Better knowing them will bring better competitive advantage for our business.
- What is the size of the population on the market?
- What is average age on the market?
- What are the percent of males and females?
- What is the average income in the market?
- What is the percent of ethnicity?
- What family statuses exist on the market and what is the percentage?
- What type of lifestyle is relevant for the market?
- What is buying habits on the market?
- Where are potential customers?
- What is the Bargaining Power of Buyers?
- Is it difficult for customers to make a switch between your products and competitors products?
Competitors
Competitors are an important element on the market. If they have smaller part of the market you will have been greater, and vice versa. However, there are possibilities for other companies to enter on the market and take part of your market share.
- How much competitors exist in industry?
- Who are the major competitors in the industry?
- How long they are in the industry?
- How much market share they have?
- Where is their location?
- How easy is for other businesses to enter your market and become your competitors?
Suppliers
Suppliers are businesses that supplies your business with raw materials or other products and services that is crucial for normal functioning of the business. Too many business activities depend on suppliers. Sometimes the powerful suppliers can become competitors.
- Who are the major suppliers in the industry?
- How much power suppliers have over you and your competitors?
- Are there more than one supplier?
- Is it difficult for your suppliers to enter in your market, selling directly to your customers?
- What is the portion of your business with them from whole their business?
- Can you easily can switch to substitute products from other suppliers?
Products
For the products, your business and your competitor take money from the customers. It is important to make analysis for positioning of your products on the market comparing with competitors and substitutes.
- What type of product is offered in the industry?
- What is the uniqueness of your products?
- What are the products that are offered by competitors?
- What products could your customers buy instead of yours?
- Is there substitute products on the marketplace?
- How substitute products affect the marketplace?
- What are the crucial factors that affect the thread of substitution?
Carefully, and precise answering the questions you will have a good industry analysis report for the industry where your small business operates.
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