Filling Out the Text

Chapter 12: Your Target Market Forecast - Page 12.3

Filling Out the Text

After you find out about your market for a business plan, you also want to communicate that knowledge to the readers of your plan. Keep your explanations clear and concise. The depth of detail in market analysis will depend a lot on the type of plan. You may not need to provide a complete market study in a plan developed for internal use, when all of your team knows the market well. Maybe you'll just cite the type of customers you attract, and the part of town you serve. The market analysis section in a business plan is the section that is most likely to require research for information from outside your business, while most others require thinking and analysis of factors within your business.

This is a good point to add a word of caution about the level of detail required. Please remember that planning is about making good decisions, applying focus and enforcing priorities. A useful business plan doesn't necessarily include a market analysis suitable for a Ph.D. candidate in market research. Planning is not about testing your knowledge. If you are looking for investment, then you may have to use this section to display your wisdom and understanding of your industry, but don't overdo it. If you are planning an internal plan and have no audience other than your own team, I recommend enough market research to make sure you're not missing key points.

The value of information is limited by its impact on decisions. If more market information is not going to help you do something better, then don't bother.

Explain Your Segmentation

Make sure to explain and define the different segments in your table, particularly since you refer to them and they are the basis of your strategy. What distinguishes small business from large business, if this is part of your segmentation? Do you classify them by sales, number of employees, or some other factor? I've seen segmentations that define customers by the channels they buy in, as in the retail customer compared to the wholesale or direct customer, also compared to the Internet download customer. Have you defined which segment is which, and why?

As you deal with segmentation, you should also introduce the strategy behind it and your choice of target markets. Explain why your business is focusing on these specific target market groups. What makes these groups more interesting than the other groups that you've ruled out? Why are the characteristics you specify important? This is more important for some businesses than others. A clothing boutique, for example, might focus on one set of upper-income customers instead of another, for strategic reasons. An office equipment store might focus on certain business types with needs that match the firm's expertise. Some fast food restaurants focus on families with children under driving age. Strategy is focus; it is creative and it doesn't follow pre-written formulas.

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