A key core of a business plan is market analysis. The financial operations of the market have to be focused upon.

What is a market analysis?

A market analysis is no doubt a quantitative and qualitative assessment of a market. It does assess the size of the market both in terms of volume and its value, the various customer segments as well as buying patterns, the competition, and the economic environment in terms of barriers to entry and regulation.

How to do a market analysis?

The objectives of the market analysis section of a business plan are to show to investors that:

  • It is important to know one’s market
  • The market is also large enough to build a sustainable business

Demographics and Segmentation

The type of business and investors are also taken into consideration.

Volume & Value

The number of potential customers and the value of the market need to be taken into consideration.

Potential Customer

A survey has to be conducted of the potential customers.

Market Value

Estimation of the market value is quite difficult than assessing the number of potential customers. One has to go by the data available publicly and whether it is available or not. If not then you can either buy some market research or try to estimate it yourself.

Methods for Building an Estimate

There are 2 methods that can be used to build estimates: the bottom-up approach or the top-down approach.

The bottom-up approach concerns itself with the building of a global number starting with unitary values.

Once market scenarios are estimated then one has to view the target market.

Target Market

The target market focuses on the type of customers one target within the market. One focuses on the qualitative and quantitative side of the market and studies the mindset of the customers. The demand scenario for product or service is assessed.

Market Need

The needs of the market are assessed and what the demands of the customers are studied.

The sale value of product and service are studied in order to enhance sales and also revenue. A tactical strategy is thus formed to promote product or service.


Competition among the sellers is also assessed and companies bring about required changes according to the competition levels. The weaknesses and strengths of the competitor are observed. The price, quality, and other add-on services are studied.


For every business to be successful the market conditions have to study and based on the analysis decisions have to be taken. The progress of business much depends upon such an analysis. Professionals are often hired to do so as in almost every sphere of activity the market is analyzed and the customers are studied.

Major business decisions can be taken based on the findings of the market conditions and both small as well as large set-ups take decisions accordingly. The fluctuations of the market conditions have to observe and then one has to decide how to put the product or service in the market.