Transcript Document 7323360

Business Plan Preparation
Frank Moyes
Leeds School of Business
University of Colorado
Boulder, Colorado
Market Analysis
1
Tonight’s Agenda
 Topics
Opportunity/Need
Market Analysis
Segmentation
Financial Comp
Model Company
 Evaluate MRP & Hecho en Casa business plans
 Hand-in Interview List
Market Analysis
2
Next Week
 Topics
Industry Analysis
Competitive Advantage
Value Chain
Business Model
 Read
BP pp 11-13, 27
Business Model Assignment
 In the Fire
Opportunity/Need
Value Proposition
Market Analysis
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Opportunity/Need
 What is the pain?
 What problem is being solved?
Dissatisfaction with current products/services
Poor quality or service
 Must be compelling
 Must be easily understood by TM
Market Analysis
4
Market Analysis
 Market: “group of current and potential customers
having the willingness and ability to buy
product/services to satisfy a need.”
 Industry: “group of sellers that offer product/services
that are similar and close substitutes for one another.”
JW Mullins, New Business Road Test
Market Analysis
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Market Analysis Sections
 Market size & growth
 Trends
 Target Market
 Channels of distribution
Market Analysis
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Market Analysis (Macro)
 What is the size & growth potential?
 Historic and future
 Must indicate sources
 Segment your market
Lot’s of numbers – show in tables
Market Analysis
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Market Segmentation (Macro)
 Groups of customers – demographics & psychographics
 Products – features, benefits, prices
 Geography – see Hecho en Casa
 Distribution channels
 Sector – industrial (see MRT), consumer, government
Objective is to identify potential entry points
Market Analysis
8
Environmental Market Table
$ in bn
Market Size
US Industry
Environmental Services
Environmental Equipment
Environmental Resources
Total
Global Industry
$
$
$
2000
98 $
54
52
204 $
480 $
Projected
10 Year
2002
2010 Growth Rate
99 $
104
6.1%
55
57
5.6%
55
67
28.8%
209 $
228
11.8%
487 $
517
0.75%
Market Size
US Marketplace
Environmental Equipment
Water Equipment & Chemicals
Process & Prevention Tech
All Other Segments
Total
$
$
2000
21 $
2
30
54 $
Source: Environmental Business International (EBI)
Projected
10 Year
2002
2010 Growth Rate
23 $
28
31.0%
3
4
83.0%
29
25
-18.4%
55 $
57
5.6%
Trends
 What changes are taking place – economic, sociocultural, political/legal, global, environmental,
demographic, technological
 Positive and negative trends
 Dissatisfied groups
 Must provide your sources
Market Analysis
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Target Segment (Micro)
 Best point of entry
 What is the size & growth potential?
Consumer - demographics & psychographics
Business – types of organizations, buying decisions
 Understand customer behavior
How are products used?
How are buying decisions made?
It’s not about you!
Market Analysis
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Target Market (Micro)
 Benefits are understood, compelling & differentiated
 Potential to grow & expand to other segments
 Evidence that the customer wants to buy
Customer research is key
Surveys provide credibility
Lurk & Listen
Market Analysis
12
Channels of Distribution
 What is normal for your market?
 Distributors, wholesalers, dealer, retailer, internet, system
integrator, Value Added Retailer (VAR) Original Equipment
Manufacturer (OEM)
 How are buying decisions made
Market Analysis
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Value Proposition - 3 Elements
 What are the features?
 Who is the target market?
 What are the benefits?
Market Analysis
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Value Proposition
“XYZ is a_______[describe] company. By its
_______[feature(s)], it provides ______
[unique benefit(s)] to ______[target market]”
Market Analysis
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Simple Value Proposition
SST Corporation
“SST is a stainless steel toothbrush company.
By its one bristle brush made of high tensile
stainless steel, it provides an exhilarating
tooth cleaning experience to thrill-seeking
X-gen consumers”
Market Analysis
16
Simple Value Proposition
Dell Computer
“Dell Computer sells personal computers to
consumers. Our build-to-order manufacturing
and customer-direct sales enable us to offer
custom built computers at very competitive
prices. Our customers get the computer that
they have always imagined and save money.”
Market Analysis
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Simple Value Proposition
Vic’s Coffee
“Vic’s Coffee is a Boulder based coffee house.
Its gourmet coffee, convenient and fast
service, provide a welcoming environment for
people who want to meet with their friends or
a stimulating morning coffee for on-the-go
business people.”
Market Analysis
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Value Proposition
 Proflowers serves the “price sensitive and convenience
oriented customers” with the “freshest cut flowers at a
competitive price”, because of their unique sourcing and
Fed/Ex shipping arrangements.
 FTD.com serves the “mid-to high-end market” by
providing the “easiest way to send flowers and gifts”
because of their strong brand name, market
communications and supplier network.
e-Commerce; Rayport & Jawroski
Market Analysis
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Financial COMP’s
 Company in your marketplace.
NAIC code
Publicly traded
Industry ratios – see Selected Resources Guide Library
 Key financial measures to compare when developing
strategy and projections
 Reality test
Market Analysis
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Financial COMP’s
Ratios
Accounts Receivable % of Rev
Inventory % of Rev
Accounts Payable % of Rev
Working Capital % of Rev
Net Fixed Assets % of Rev
Current Ratio
Debt to Capital (LT Debt + Equity)
Profitability
Gross Profit % of Rev
Sales & Marketing % of Rev
Research & Development % of Rev
General & Administration % of Rev
Operating Expenses % of Rev
Earnings from Operations % of Rev
EBIT % of Rev
Depreciation % of Rev
EBITDA % of Rev
Net Earnings % of Rev
Select Best
Company A Company B Company C Comparison
10.0%
15.0%
12.0%
10.0%
15.0%
10.0%
7.0%
15.0%
8.0%
9.0%
8.5%
8.0%
16.0%
18.0%
12.0%
16.0%
9.0%
8.0%
2.0%
9.0%
2.3
3.0
2.5
2.3
1.2
0
0.2
1.2
30.0%
30.0%
30.0%
30.0%
80.0%
12.0%
12.0%
3.0%
14.0%
5.0%
25.0%
20.0%
10.0%
10.0%
30.0%
7.5%
5.0%
5.0%
12.0%
-4.0%
22.0%
18.0%
11.0%
8.0%
35.0%
10.0%
10.0%
4.0%
10.0%
2.0%
30.0%
20.0%
10.0%
7.0%
30.0%
12.0%
12.0%
3.0%
14.0%
5.0%
Projections
Year 1 Year 2 Year 3 Year 4 Year 5
8.3%
8.3%
8.3%
8.3%
23.7%
4.3
0.00
8.3%
8.3%
8.3%
8.3%
11.5%
2.1
0.32
8.3%
6.7%
8.7%
6.3%
9.3%
2.0
0.18
8.3%
6.7%
8.7%
6.3%
7.3%
1.9
0.10
8.3%
6.7%
8.7%
6.3%
5.5%
2.1
0.04
-11.7%
22.9%
14.9%
17.2%
55.0%
-66.7%
-71.2%
4.3%
-66.9%
-71.2%
32.7%
19.0%
7.9%
8.9%
35.7%
-3.0%
-3.0%
2.5%
-0.5%
-4.2%
41.5%
18.5%
7.2%
8.1%
33.8%
7.7%
7.7%
2.5%
10.2%
7.2%
42.5%
17.9%
7.6%
7.3%
32.9%
9.6%
9.6%
2.3%
11.9%
6.2%
46.0%
18.0%
6.7%
6.8%
31.5%
14.5%
14.5%
2.0%
16.5%
8.7%
Model Company
 Identify company in your marketplace
 Different segment, products, target market
 Done just what you want to do
 Provides credibility
Market Analysis
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Business Plans
 Metal Removal Technology
 Hecho en Casa
Market Analysis
23
Features
 Describe the product or service - range, environment,
employees
 What are the key product/service attributes
(performance, cost, quality, social, availability, service,
and environment)?
 How is the product/service produced and delivered?
Does the process provide a competitive advantage?
Market Analysis
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Target Market
 Who is the target market? Why?
 Demographics
 Psychographics or life style
 Social status: infers certain behavior
 How are buying decisions made? What are the
criteria? Who makes the decision? Who influences the
decision?
Market Analysis
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What Are the Benefits?
 Emotional: ambition, power, independence, achievement,
ambition, pride of ownership, comfort, love, friendship, security,
style, self Improvement, etc.
 Social: status, image, popularity with friends or family members,
reputation of brand, personal relationships, style, fashionable,
etc.
 Health: stress, fitness, mental capacity, strength, sex life, quality
of life, muse, etc.
 Financial: revenue, costs, savings, productivity, pricing,
profitability, market share, save time, productivity, etc.
 Life style: convenience, saves time
Market Analysis
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