Industry Understanding - Industry Conditions - Demand Conditions

‘Industry’ is a type of economic activity. Understanding the knowledge conditions and demand conditions within industry provides:

Insights into the attractiveness of an industry for new entrants

Information on if and how to compete effectively within a chosen industry

Demand conditions:

Seek opportunities where market demand is sufficiently large and growing. 

Segment your market into smaller subgroups based on needs and wants, location, demographics etc. Aim for success in one segment, and then grow to subsequent segments as your reputation and brand grows.

Segments based on geography, age, gender, lifestyle, interests, income level.

Define market that is addressable, specific and probably unmet.

Three aspects of customer demand to examine:

1. Magnitude of customer demand
2. Rate of growth of that demand
3. Heterogeneity of that demand across customer segments

Purpose of market segmentation:

1. To determine who to serve
2. And who not to serve – like segments that are – too expensive, too time consuming, very ineffective to be all things to all people
3. In what order – pursue the most attractive niche first, then move forward to the second niche and so forth
4. And how to market to them – address what matters to their buying decisions

Degree of segmentation

The degree to which the customer base of an industry wants different features in the products or services it demands.

Market segmentation for small companies:

Think - how can you, as an entrepreneur, crave out a niche for you that is sizable enough to reach your goals, yet small enough to be unattractive to large companies?

Adopter categories:

This blog post is based on my learnings from the course on ‘entrepreneurship’ offered by Maryland Technology Enterprise Institute, University of Maryland through Coursera (2014).