External Analysis(Aggregate Market Factors)
EXTERNAL ANALYSIS
I. Aggregate Market Factors
Aggregate factors are important indicators of the attractiveness of a product category.
A. Size
The market size is defined through the market volume and the market potential. The market volume exhibits the totality of all realized sales volume of a special market. The volume is therefore dependent on the quantity of consumers and their ordinary demand.
Market volume is either measured in: Quantitative and Qualities
The following are examples of information sources for determining market size:
- Government data - Trade association data - Financial data from major players - Customer surveys
B. Growth
A simple means of forecasting the market growth rate is to extrapolate historical data into the future. While this method may provide a first-order estimate, it does not predict important turning points. A better method is to study market trends and sales growth in complementary products.
Important inflection points in the market growth rate sometimes can be predicted by constructing a product diffusion curve. The shape of the curve can be estimated by studying the characteristics of the adoption rate of a similar product in the past.
What is Product Diffusion?
Diffusion of Innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures.
The diffusion of innovations according to Rogers. With successive groups of consumers adopting the new technology (shown in blue), its market share (yellow) will eventually reach the saturation level. In mathematics the S curve is known as the logistic function.
C. Life Cycle Stage
Development Stage
I. Aggregate Market Factors
Aggregate factors are important indicators of the attractiveness of a product category.
A. Size
The market size is defined through the market volume and the market potential. The market volume exhibits the totality of all realized sales volume of a special market. The volume is therefore dependent on the quantity of consumers and their ordinary demand.
Market volume is either measured in: Quantitative and Qualities
The following are examples of information sources for determining market size:
- Government data - Trade association data - Financial data from major players - Customer surveys
B. Growth
A simple means of forecasting the market growth rate is to extrapolate historical data into the future. While this method may provide a first-order estimate, it does not predict important turning points. A better method is to study market trends and sales growth in complementary products.
Important inflection points in the market growth rate sometimes can be predicted by constructing a product diffusion curve. The shape of the curve can be estimated by studying the characteristics of the adoption rate of a similar product in the past.
What is Product Diffusion?
Diffusion of Innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures.
The diffusion of innovations according to Rogers. With successive groups of consumers adopting the new technology (shown in blue), its market share (yellow) will eventually reach the saturation level. In mathematics the S curve is known as the logistic function.
C. Life Cycle Stage
Development Stage