Market Features and Customer Profiles

Fundamentals of Studying Markets

  • Key Knowledge Requirements for Businesses:

    • Understanding how big the market is.
    • Understanding how fast the market is changing.
    • Identifying who the target customers are.

  • Core Purposes of Market Analysis:

    • 1. Reduce risk
    • 2. Increase sales
    • 3. Meet customer needs

Core Market Features

  • 1. Market Size:

    • The total number of customers or the total sales value in a market.
    • Shows how big the opportunity is for a business.

  • 2. Market Growth:

    • Measures how fast demand in a market is increasing (or decreasing) over time.
    • Indicates whether a market is expanding or becoming risky.

  • 3. Competitors:

    • Other businesses offering similar products in the same market.
    • Affect prices, promotion, and market share.

Market Size Metrics and Calculation

  • Strategic Implications:

    • Large market →\rightarrow higher sales potential.

  • Key Measurement Approaches:

    • Number of Customers:
    • Definition: The total count of unique individuals interacting with or purchasing from a business over a set time.
    • Example: PDAM (a water utility) reporting 57,57657,576 household customers in 2024.
    • Total Sales Value (Total Revenue / Gross Sales):
    • Definition: The cumulative income generated from selling products or services before deducting expenses, taxes, or returns.
    • Formula:       TOTAL SALES=PRICE PER UNIT×QUANTITY SOLD\text{TOTAL SALES} = \text{PRICE PER UNIT} \times \text{QUANTITY SOLD}
    • Numerical Example: If 10,00010,000 units are sold at $200\$200 each, the total sales value is $2,000,000\$2,000,000.

Market Growth Dynamics

  • Strategic Implications:

    • Growing market = attractive for businesses.

  • Demand Trajectories Revealed by Market Growth:

    • 1. Increasing demand
    • 2. Stable demand
    • 3. Decreasing demand

  • Examples of Market Growth:

    • Artificial Intelligence: The market for artificial intelligence, which was under $1\$1 billion in 2019, is projected to grow to over $190\$190 billion by 2030.
    • Global Cross-Border E-Commerce: Global cross-border e-commerce sales reached over $1\$1 trillion in 2021, illustrating rapid digital market growth.
    • Netflix: Expanded from a U.S. DVD rental service to a global streaming giant, reaching over 190190 countries.

Competitive Landscape and Competitor Classification

  • Intensity of Competition:

    • More competitors →\rightarrow stronger competition.

  • Four Categories of Competitors:

    • 1. Direct Competitors:
    • Definition: Sell identical or very similar products/services to the same target audience.
    • Examples: Coke vs. Pepsi; two local coffee shops.
    • 2. Indirect Competitors:
    • Definition: Offer different products/services that satisfy the same customer need or want.
    • Example: McDonald's vs. Subway.
    • 3. Replacement / Substitute Competitors:
    • Definition: Provide different solutions that compete for the same customer's money.
    • Example: A restaurant vs. frozen meals.
    • 4. Potential Competitors:
    • Definition: Businesses outside the current market that could enter it later.
    • Example: A new tech startup.