Market Analysis Overview

Cite this article as:"Market Analysis Overview," in The Business Professor, updated July 15, 2014, last accessed June 6, 2020,
Video Thumbnail
Market Analysis
This video provides and overview of what is Market Analysis.

Next Article: Customer Segments & Target Market


Market Analysis

The next section of the feasibility analysis is the market analysis.  This portion may be the most important in determining whether an idea is a valid business opportunity. It focuses on determining whether there is a potential market for the product.  Every market analysis should contain the following five sections:

  • Customers (Segmentation) – Identifying the customer segment will allow you to understand who wants or needs your product and is qualified as a potential customer.
  • Price (determined for each customer segment) – You need to know how much a potential customer in a given customer segment would be willing to pay for your product or service (i.e., how much revenue you can expect from each customer segment).
  • Market Size – The market size (made up of all of the identified customer segments) will tell you how many of those people who want your product(s) are in the market.
    • Market Size = the number of potential customers  x  the quantity purchased by an average buyer  x  the price of the unit.
  • Priority – Priority shows the willingness of customers to purchase at a given level of information about the product (i.e., sales and marketing effort by the business).
    • In summary, the number of potential customers, market size, price, and customer priority, taken together, will allow you to make projections of how many sales you will make at a given price.  For example, grabbing 1% of the market value yields a specific amount of potential revenue.
  • Important Strategic Information About Market:
    • If you are unable to serve all segments, then you will choose the customer segment and corresponding price point that maximizes your value.
    • Customer trends give rise to increased demand for your product, higher prices at the level of demand, and new customer segments within the market.

Was this article helpful?