Strategic Market Management, 10th Edition

CHAPTER FOUR

Market/Submarket Analysis

As the economy, led by the automobile industry, rose to a new high level in the twenties, a complex of new elements came into existence to transform the market: installment selling, the used-car trade-in, the closed body, and the annual model. (I would add improved roads if I were to take into account the environment of the automobile.)

—Alfred P. Sloan, Jr., General Motors

Vision is the art of seeing things invisible.

—Jonathan Swift

To be prepared is half the victory.

—Miguel Cervantes

Market analysis builds on customer and competitor analyses to make some strategic judgments about a market (and submarket) and its dynamics. Should a firm invest, and what should the level of commitment be? Or should it disinvest? One of the primary objectives of a market analysis is to determine the attractiveness of a market (or submarket) to current and potential participants. Market attractiveness, the market's profit potential as measured by the long-term return on investment achieved by its participants, will provide important input into the product-market investment decision. The frame of reference is all participants.

A second and related objective of market analysis is to understand the dynamics of the market. It informs the investment decision but also sheds light on what it would take to be a winner in the space. The need is to identify emerging submarkets, key success factors, trends, threats, opportunities, and strategic uncertainties that can ...