Industry analysis is a tool that help businesses and entrepreneurs to understand their position on the market and compare it with other companies that produce the same or similar products or services.
The product of industry analysis is a document that will help you to make quality decisions about future development of your company.
Also, this document will help you to improve your competitive strategies that will position your company better in the particular industry. Industry analysis, also can be a part of your business plan.
Here are some of the basic questions that must be answered when conducting such an industry analysis.
Identify Your Industry
- What is the Standard Industry Classification – SCI?
Overview of Your Industry
When you know the history of the industry, it is easier to understand the basic rules that exist there and that have impact on the operations of your company.
- What is the history of the industry?
- What affect the growth of the industry?
- Who are the leaders in the industry?
- Are there any government regulations related to this specific industry?
The industry trends look at the history data in order to discover specific trends for the purpose of 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, or buyers, or potential customers are the central element of every type of business analytics. Your business serves for their needs. If you know better your customers it will bring you better competitive advantage for your company.
- 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 their percentage?
- What type of lifestyle is relevant for the market?
- What type of habits related to consumption exists 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 are also an important element on all markets. If they have smaller part of the market you will have bigger, and vice versa. However, there are possibilities for other companies to enter on the market and take part of your current market share.
- How much competitors exist there?
- Who are the major competitors there? (In the post titled as a How to Differentiate Yourself you can read about how to find your real competitors.)
- 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 are other companies that supply your company with raw materials or other products and services that is crucial for normal operations of the business. Too many business activities depend on suppliers. Sometimes the powerful suppliers can become competitors.
- Who are the major suppliers there?
- How much power they 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 switch to substitute products from other suppliers?
For the products, your company and your competitor take money from 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?
Answer carefully and precise these questions if you want to have excellent industry analysis report for the industry where your small business operates.