If you’re writing a business plan, you’ve probably encountered the sections for industry analysis and market analysis. These sections are where you present your research on your market and your industry, but they can be confusing. Lots of people aren’t sure what goes into each section and why they’re different.
What’s an industry?
An industry is a group of businesses that make or sell similar products and services. The easiest way to think about your industry is to think about who your competitors are. For example, if you’re starting a restaurant, your competition is other restaurants. So, you’re in the restaurant (or food service) industry.
What to include in an industry analysis:
In your business plan, you’ll want to include an industry analysis. Your industry analysis should cover the following:
The best place to start finding information on your industry is to find your industry association. There are literally associations for virtually every industry, from produce marketing to commercial spaceflight. There are plenty of lists (see here, here, and here) out there to help you find the association for your industry. If you’re still struggling, just call some businesses like yours and ask them for the name of their industry association.
Another place to look for industry information (for the United States) is the U.S. Census. Start with their industry snapshots and also take a look at their industry statistics portal.
What’s a market?
A market is a group of potential customers. Markets can be defined by geography, demographics (like age or gender), or psychographics (like hobbies and interests). Markets can also be defined as any combination of these things.
Your business might target just one market to sell to, or it may target several different markets. For example, a company that makes athletic shoes might target both middle-aged walkers and young athletes. You define your markets as your customers and then group them by their similarities. You can learn more about defining your target market in our guide on the topic.
What to include in a market analysis:
Your business plan should also include a section that reviews your target market. This section essentially describes who your customers are and how your company is going to meet their needs. Your market analysis should include:
You can get additional help with your market research by reading our guide. We’ll walk you through all the steps that you need to take do a thorough analysis of your market and where to find the best market research resources.
You can also use the concept of target marketing as a strategy to grow your business. Learn more about that in our guide to target marketing.
While working on your market analysis and industry analysis can seem like a lot of work, it’s work that will pay for itself many times over once you start your business. Having the deep knowledge of how your industry works and how your target market behaves will help you develop smarter strategies for growth. Instead of just guessing or relying on hunches, you can make decisions that are backed up by real knowledge and increase your chances for success.