Market Analysis

There are two factors that we have to consider when analyzing a market, they are the customer and competitor.

In analyzing the market, the first step is to segment the population. Segmentation is the process of dividing the population into groups with similar characteristics. This can be divided into demographic (age, sex, religion), geographic (living areas) and psychographic (lifestyle, income, personality). After that, the next step is targeting, here we have to choose which portion of the segment are we going to cater to. This chosen target market should be the most suitable and potential for the company's offering. The last step is positioning where the company needs to compare the product to be launched to the products in the market, give it a competitive advantage that is distinctive from other products and can be remembered clearly by the customer.

The next process is value chain analysis. It consists of the primary and support activities involved in a company. Primary activities are the main activities that a company do everyday such as purchasing (and any other inbound logistics), operations, sales (and any other outbound logistics), marketing, sales and service. While support activities are the other things a company do to enhance the primary activities, such as firm infrastructure, human resources management, technology and procurements. These two activities will directly affect the profit margin that the company will generate in the end of accounting period. In order to gain more profit margin, a company with penetration pricing strategy will have to cut down the costs from these two activities so that a lower selling price may be set and higher market share may be obtained. However, for a company with market skimming approach, costs minimization may be done as long as it doesn't affect the product quality.