Industry Research Versus Market Research
Writing a business plan necessitates analysts to include the Industry Research and Market Research sections. While they are used interchangeably, there is a difference in their actual definitions. Understanding this subtle variation differentiates between a good and a great research report.
Consider a person who wants to set up a restaurant. He will first analyze the competition around him to understand the trends and the challenges facing in this endeavor. So, he’s basically doing a research on his industry (i.e. the food/service industry).
The purpose of an industry analysis is to influence the company’s financial, marketing and operational strategies. The commercial success of the company is based on the structure of the industry in which it operates.
A company allocates resources to achieve certain goals and objectives according to the business plans to increase the profit potential. For this reason, an industry analysis is a critical element of any strategic planning process which reveals why and how a company will achieve commercial success.
Budget planning and investors’ investment depends on the industry analysis to determine potential profits.
Basically, top industries are the ones who produce and sell products and services to a target customer. Based on their interpretation of market trends, they tweak their products along those lines. The lower-tier companies supply the top tier with parts and raw materials. They are the innovators who drive new technologies, production methods to improve production efficiency and lower costs.
Another driving factor for industry research is Product differentiation and competition that forces companies to be aggressive in their market analysis. Technologically advanced companies are able to control their costs and present their products at prices the consumer wants.
A market is made up of individual and potential consumers (size of the market). They can be defined by location, behavior, trends, demographics (like age, profession, gender etc.) or psychographics (like hobbies and interests). Or else it could be a combination of all these.
Your business might target just one market to sell to, or it may target several different markets. For example, a company might target all locations and terrains when promoting their brand of watches. The market can then be further refined based on their customers and their similarities.
The purpose of a market research is to identify the potential problem areas and redirect the company’s efforts towards to producing better products or services which the consumer wants. It follows the pricing and production volume based on demand and supply curve. The present social media and advertisements on all media channels also influence the market research report.
Industry analysis and Market analysis are both used by companies to project their fiscal performance and is a vital component of their business plans
While an industry analysis confirms the existence of a strategic opportunity, the market analysis confirms the existence of a profitable market for a company's products or services. The market analysis serves as the basis of both a sales forecast, which confirms the commercial feasibility of the company, and production and operational targets for all other company activities.
Contact Infoholic Research for your Industry and market research requirements and avail our expertise in producing a comprehensive and detailed research report for your business.
– Shantha Kumari
Sr. Technical Writer