Let''s take a look at the Market Analysis section of a business plan for Steep Brew , a coffee shop that plans to
open in a small, Midwestern college town. Put yourself in the shoes of a potential investor in the coffee shop and look at the Market Analysis with a critical eye.
Take a moment to read Steep Brew''s Market Analysis and to respond to the following questions. You may want to print the document for your reference.
An Investor''s Perspective
"After reading your Market Analysis, I should be able to step out of my office and point to one of your
customers ."
Question 1: What do you think of the competitive analysis presented by Steep Brew ? Based on the market analysis, what is Steep Brew''s competitive advantage?
Click the arrow beside your choice below to get feedback.
Choice 1: The Market Analysis identifies all of Steep Brew''s direct and indirect
competitors and convincingly describes an underserved market—cash-strapped college students. Steep Brew plans to offer the benefits important to this market—inexpensive coffee and a relaxed, social atmosphere.
Choice 2: While Steep Brew''s Market Analysis examines most of Steep Brew''s competitors, it seems to overlook some potential competitors—such as brew-at-home coffee and sandwich shops. Because of this oversight, Steep Brew does not present a clear competitive advantage in the Market Analysis. I''m not persuaded that Steep Brew would offer any unique features and benefits to its customers.
Tips for Writing a Winning Market Analysis: Demonstrate your understanding of the industry.
Identify and address business risks.
Include a detailed description of your target customer.
Identify all direct and indirect competitors.
Discuss your market position relative to competitors.
The Marketing and Sales Plan
The Marketing and Sales Plan section of the business plan puts the market analysis into action. In this section, you will describe how you will implement the marketing plan to achieve the expected sales performance.
A complete and convincing Marketing and Sales Plan will outline the following strategies:
Pricing. Here you need to document the cost of goods sold, explain why you are choosing to offer your product or service at a particular price, and elucidate why you think the market will support that price. You might also want to consider outlining the impact that changes in price would have on the expected gross margins of the company.
Distribution. Your distribution strategy describes the process of actually getting the product into the hands of customers. Will you sell your product directly to customers? Will you sell through retail outlets? Explain why the distribution channels you''ve selected will contribute to your success.
Promotions. A key component of your Marketing and Sales Plan is anticipating how your product will be promoted in the marketplace. How will you use what you know about the market to ensure that your target customers know your product and prefer it over the competition’s product? You should include a description of your advertising strategy, detail your plans for sales and distribution, and create a marketing budget.
An Investor''s Perspective
"Show me that you''ve thought about the dynamic of selling your product and considered alternative ways of selling."