Key Elements of a Market Analysis - Assignment Example

The market can be worldwide or just three states. These boundaries are usually defined by the geographic areas in which the firm expects to be competing. The time component of the market is affected by the stage of a product or service in its life cycle and the specific needs of the data user. An assessment of long-term potential is needed because major financial decisions have to be made about long-term commitments for a plant, equipment, personnel, and the like. For existing products, market potentials usually cover shorter time periods because their primary purpose is to guide short-term decisions about production or promotion.

However, as a product or service enters the later stages of maturity, longer-term potentials might again be sought to determine if and when it should be withdrawn from the market (Eden, Ackerman 1998). Regional demographic characteristics and population growth can help to identify the number of potential consumers and main trends in sales. Slower population growth combined with increased competition (from both domestic and foreign sources) means that the market will become increasingly competitive.

The firms that will succeed will be those that make the best use of information. Using information effectively is not an easy task because of the vast amounts available. A firm that knows something about the demographics of its customers can use a clustering system to identify block groups that possess similar characteristics and are thus high potential candidates (Simonson, Schmitt 1997). The addresses of customers can be traced to block groups, and the demographics of these block groups can be used to gain greater insights about the customers.

Knowing the general demographics of groups will help a firm learn more about the characteristics of its customers. The information about income and lifestyles, the number of buyers and their geographical location allow the company to segment the market. Critics underline that a proper balance is needed when defining the market to be segmented. If the market is defined too narrowly, the emerging segments may be too specific to be of marketing value. Conversely, if the market is defined too broadly, the emerging segments are likely to be of little practical value from a marketing perspective.

Also, market analysis should take into account geographic limits, people or firms who might use the product, users and non-users, the size of the market, the emerging segments and regional differences. Stating the purpose of the segmentation activities at the outset establishes the amount of effort and expenditures needed in the remaining steps of the process. For Able Corporation, it is important to analyze new markets and assess their size and number of customers. In this case, the potentials for each segment (old and new markets), when combined, identify the overall market for PEPT (Simonson, Schmitt 1997).

Prices and competitor's products are also a part of market analysis. Most products or services are available in different sizes and varying price levels. There are also a variety of sizes and price ranges for PEPT. Thus the product or service component of the market should pertain to the market or market segment that is expected to be the focus of the firm's marketing efforts. Since durable products such as portable electric power tools are consumed over fairly long periods of time.