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The market analysis section of your business plan is required if you intend on gaining investor interest. But it is also a very useful exercise if you are not. It is in this section that you take a look at your industry, your competition and evaluate how your business fits in ... and will survive.
In many cases, your audience probably doesn't know anything about your industry, so start by defining your market in terms of:
* Growth prospects
* Sales potential
But even if this section is just for your eyes, researching these things may show you that you don't know your market as well as you thought and could save you some heart ache later on.
Define Your Target Market:
You need to define a narrow segment of the market that will be best served by your products and services. This help you create better marketing messages and will help you make your business more attractive to the right buyers. Keep this in mind: Make your target market too broad and you have a shotgun effect with poor results on sales. Make it too narrow, and you leave no breathing room for future sales.
Naturally, your price must cover your costs and leave some room for profit margin. The lower you can get your costs, the higher your profit. Your price should reflect demand for your product and value provided, as well as changes in your market as a whole.
In this part of your plan, define where and how you will distribute your product. Do you have geographical restrictions? Technological limitations?
How will you promote your product? Lay out how you will use advertising, packaging, public relations, promotions and sales to increase exposure of your product.