                       Market Analysis


[]   For an overview of Market Analysis, refer to page 7-1
     in the BizPlanBuilder Reference Guide.


Market Definition

[]   This section describes the existing and projected
     marketplace in which you will introduce your company
     and products.

Industry Analysis

The [x] market is growing at a rapid rate. The market for
these products amounted to $[x] million in 19[xx]--
representing a [x]% growth over $[x] million in 19[xx].
Referenced sources agree that the major trend is for [x].
The trend has been toward the development of [products] and,
hence, the latest development of distributed or shared
resources.

Independent market research indicates that there is
currently only [x] [product] for every [x] customers. The
[market/industry], as a whole, is looking toward
[manufacturers/suppliers/retailers/experts] for use in the
expansion of existing [applications/product lines/services].

The overall [x] market for the [x] industry is projected to
be $[x] million/billion by the end of 19[xx]. The overall
market potential for [product category] is estimated to be
$[x] million by 19[xx], and the [additional products]
portion of this market is estimated to be $[x] million.

The area of greatest growth in the [x] market is in the area
of [x].

[]   Source: Industry Analysts, Census, Trade Journal
     Studies

Market Segment

Key points in defining the market segment for [product] are
[x], [x], and [x].

[]   By product feature, by lifestyle of target consumers,
     by geographical location, by season, etc.

[]   Include charts where appropriate.

Currently, the market is shared by [x] participants.

[]   How is the market distributed among major participants?

[]   What are the share gain and loss trends?

[]   Summarize your view of the trends and implied
     opportunities.

Users of [product] are looking for quality and productivity
improvements. [Past/current/recent/lack of] development of
[product] has resulted in the need to [changes, corrections,
applications of new technologies]. This innovation is called
"[x]", and allows [product] to operate efficiently as [x].

[]   For an existing business (your own or a recent
     acquisition) review:
     Sales History
     Market Share & Position
     Industry Trends
     Profits
     Marketing Methods

The stability of this market segment is [volatile,
uncertain, solid, etc.], based on [x] product category
performance over the past two years.

[]   What do industry forecasters predict for the next two
     years?

The major market segments are:

[Segment 1]

[Segment 2]

[]   List, by broad category, the types of customers you are
     likely to sell to. (Retailers, Electrical Contractors,
     Mail-order catalogs, etc.)

The [x] segment of the market is generally based on
[products] with retail prices in the range of $[x] to $[x].
The vast majority of sales in this category will be handled
by [OEM's, Retailers, Manufacturer's Representatives]. The
minority of sales will be through direct channels.

Over the past [x] years, [similar product manufacturers or
service providers] companies have proven that meaningful
features can be developed for this class of [product]: [x],
[x], and [x]. These companies have primarily focused on the
use [manufacturing technique, special materials, recipes,
chemicals, machinery] to improve the quality of [x] in a
[product]. These products have been successfully distributed
in many areas of the industry. Competitive products in this
market are [produced/provided] by [competitor 1],
[competitor 2], and [competitor 3].

In the next [x] to [x] years it is estimated that there will
be more than [x] [thousand/million] of [product]s
distributed by [company]. The market potential for [product]
in these quantities--with a current retail price of $[x] per
unit--is approximately $[x] million. This translates to a
market share of [x]% of the overall market.

[]   Source: Industry Analysts, Census, Trade Journal
     Studies

Of the [x] customers, approximately [x]% will [buy/use
want/expect] [x] to help them to [deliver their work,
maintain x, expedite their production, reduce costs]. [x] of
these [products] will have a [x] capability, and about [x]
of those [products] will require [other features].

[]   Repeat the above information for as many market
     segments as are required.

Strengths

[]   In covering your strengths, be sure to place at least
     as much emphasis on marketing as on your product, if
     not more.

In terms of product strength, [product] has several distinct
advantages over the competition. First is its marked
advancement in [x] technology.

[]   How else is the product/service favorably
     differentiated from the competition?

[]   In actual performance?

[]   In quality and reliability?

[]   In production efficiencies?

[]   In breadth of line and/or options?

In marketing, our most powerful assets are [x].

[]   In segmentation?

[]   In distribution?

[]   In pricing?

[]   In awareness/image?

In the corporate arena, [Company] is supported by [x].

[]   What are the corporate strengths?
     Size
     Financial resources
     People
     Reputation
     Business Relationships

Weaknesses

There is/are [x] handicaps inherent in our product. The only
notable marketplace disadvantages are [x] and those are
because [explanation].

By 19[xx] we should be able to position ourselves in order
to [x] and thereby reduce this weakness considerably.

Corporate weaknesses, at this time, consist only of [x].
However, we are taking steps to [x] which we feel should
alleviate this problem.

Environmental threats [declining markets, trade barriers,
consumer trends, changing economy] include [x].

Other known threats include [x].

Opportunities

The upside potential for [x] and [our products] in [each of
the currently addressed markets] over the next two years is
[x].

Based on [existing conditions], introduced in the Product
Strategy section in the analysis above, it is apparent that
[justify potential with logical rationale].

Unexploited Opportunities

An altogether new application for this product would be
tapping [x] markets.

Further opportunity for our product exists in [x] market(s).

[]   Can the current line of products and technological
     capabilities be leveraged effectively?

[]   What is the estimated cost of entry, time-frame, and
     risk?

Still another possibility for development involves [x].

[]   Alternative distribution, technology licensing,
     creating up/down market brands, etc.


Customer Profile

[]   Use information from industry reports, census data,
     trade journal studies, etc.

[]   Knowing exactly who you're selling to is crucial to
     obtaining favorable response from your investors--they
     know that all the sales talent in the world is wasted
     unless it's directed at the proper person.

[]   What kind of profile does your customer fit?
     Innovator
     Early Adopter
     Early Majority
     Late Majority
     Laggard

[]   What current economic factors influence your customer's
     spending?

[]   Who is buying products or services?
     By Demographics: age, income, sex, family, location,
     occupation
     By Psychographics: lifestyle, motives, needs, interests
     (sports, etc.), purchase history (recent buyers of your
     product)

[]   Who influences the final decision to purchase?

The most typical customer for our product is someone who is
in the [x] field, and who currently uses [product] for
[give/application/purpose].

It is likely that potential customers are going to be
familiar with [similar products, products that your new one
will replace, your type of product] and that they will
readily accept our new [x], provided that we
[approach/educate/contact].

Complementary products already in use by our customers are
[other products that work with yours] and are seen as a
tremendous help in [compelling customers to acquire our
product/use our product].

It is easy to understand why the people are motivated to buy
[x] because [x].

[]   What motivates people to buy your product? (example;
     practical and emotional reason)?

[]   Ask your customers--telemarketing, warranty cards, ad
     inquiries, etc.

[]   How are the key competitors perceived?

[]   How do these people perceive your company and products?
     and how will they receive your [new] product?

[]   How sensitive are they to pricing differences?

Demographics

[]   On a separate page, list different types of customers,
     title, power, viewpoint, position, emotional and
     practical influences, and education.

[]   Listed below is a sample template to list the
     demographics of your customers. You may want to include
     several types of customers in your demographics to
     include Homemaker, Young Married Couple, Wealthy Rural
     Family, Older Couple, or Elderly.

[]   Psychographics--you may wish to include a psychological
     profile of your target customer.

Corporate Executive

Title:    [President, VP Finance, VP Manufacturing, Office
          Manager, Advertising Manager]

Power:    [Permitter, Decision Maker, Influencer, Technical
          Consultant, Initiator]

Viewpoint:    [Big Picture, Financial, Department,
              Personal]

Position:     [Responsibilities--daily activities]

Emotional Influences:    [Status, power, empire building]

Practical Influences:    [Saving money, efficiency]

Education:    [Ph.D., MBA, College, Technical School, High
              School]

Limitations:    [Geographical, Purchasing Approval]

Young Professional

Age:    [25-35]

Income:    [Medium to high]

Sex:    [Male or Female]

Family:    [Bachelor or married]

Geographic:    [Suburban]

Occupation:    [White collar]

Attitude:    [Innovator]

Customer List

[]   On a separate page, list your major existing customers
     alphabetically.

[]   If appropriate, state their application of your
     product.


Competition

[]   Discuss your key competitors with regard to product or
     service, price, location, promotion, management, and
     financial position.

[]   Look in your telephone book's yellow pages.

[]   Look in the industrial directories at your local
     library. Search on-line databases that provide
     competitive profiles of other companies.

[]   Read industry magazines and look for advertisers.

[]   False or incomplete information here translates as
     dishonesty and negligence to investors, bankers, etc.

[]   Do not delude yourself (or your investors) regarding
     competition.

[]   If you are well-known in your industry, survey your
     competitor's order line anonymously and ask how their
     product are better than yours.

[Company]'s product[s] offer [x] in [x] situations.

Companies that compete in this market are [competitor 1],
[competitor 2], and [competitor 3]. All companies mentioned
charge competitive prices [list examples and range of
prices].

The major strengths and weaknesses of our competitors are
[example: price, location, quality].

The major competitors' objectives and strategies are [list].

The major competitors' most likely response to current
[economic, social, culture, demographics, geographics,
political, governmental, technological, and competitive
trends] affecting our industry will be [list response of
competitors].

Our products or services are positioned relative to our
major competitors by [example: price, delivery, location].

New firms entering and old firms leaving this industry
affect our product (list how this affects your product].

Key factors of [list top factors] have resulted in the
present competitive position in this industry.

Sales and profit ranking of major competitors in the
industry have changed over recent years. These rankings have
changed because [list reasons for ranking change].

The nature of supplier and distributor relationship in this
industry is [the supplier and distributor effect on your
product].

Competitive threats today come from [other companies,
industries, new/entrenched technologies, foreign countries],
and [x].

[Company]'s products perform in virtually all situations
where [your features, benefits, your customers are likely to
be].

The ability to [what it can do] with full capability on
[list of applications, machinery, people] is unique to
[Company]'s products.
The ability to [what it can do] is unique to this product,
and our research indicates its performance is superior to
anything else on the market today.

In all comparisons, [Company]'s products provide more
features and have superior performance than do competitive
products. In most cases, the number of differences is
substantial. A complete technical comparison is available.

[]   Put all comparisons and test results in Supporting
     Documents.

[x]'s [competitive] product does not provide the same
capabilities in a situation where [describe circumstances].

This is the only way [your product] and [their product]
compete.

The [competition] advertises in [x], [x], and [x]
publications.

[]   Discuss results--if they advertise consistently and
     continuously there, then it must be working.

[Competitor] products only operate in a [limited, etc.] way.

[]   - OR -

This market segment is not shared with any direct
competitors. Competition does exist, however, in the
[industries, countries]. Competitors in this area are [x],
[x], and [x].

[]   To perform an in depth analysis of your major
     competitors, complete the chart below. Columns have
     been provided to describe up to three competitors. If
     needed, add more columns.

Competitive Roundup

The following chart illustrates how [Company]'s product
compares to the competition in several different key areas.

Competitive Roundup--Company

Product                       [x]       [x]       [x]

Company                       [x]       [x]       [x]

Estimated 19[xx] Sales $[x]   $[x]      $[x]      $[x]

Estimated Share of Market     [x]%      [x]%      [x]%

Estimated Advertising Budget  $[x]      $[x]      $[x]

Rank: 1=Weak to 5=Strong

Product Line                  [x]       [x]       [x]

Quality                       [x]       [x]       [x]

Technology                    [x]       [x]       [x]

Advertising Effectiveness     [x]       [x]       [x]

Sales Force Excellence        [x]       [x]       [x]

Distribution                  [x]       [x]       [x]

Manufacturing Efficiency      [x]       [x]       [x]

Standing in Industry          [x]       [x]       [x]

Future Potential              [x]       [x]       [x]

Seriousness of Competition    [x]       [x]       [x]

Number of Employees           [x]       [x]       [x]

Greatest Strength             [x]       [x]       [x]

Key Weakness                  [x]       [x]       [x]

Competitive Roundup--Product

Price                         [x]       [x]       [x]

Size                          [x]       [x]       [x]

Capacity                      [x]       [x]       [x]

Ease of Use                   [x]       [x]       [x]

Installation                  [x]       [x]       [x]

Range                         [x]       [x]       [x]

Appearance                    [x]       [x]       [x]

Quality                       [x]       [x]       [x]

Design                        [x]       [x]       [x]

Useful Life                   [x]       [x]       [x]

Trade-in Value                [x]       [x]       [x]

Technology                    [x]       [x]       [x]

Responsiveness                [x]       [x]       [x]

State-of-the-Art              [x]       [x]       [x]

24-Hour Availability/Support  [x]       [x]       [x]

Technical Expertise           [x]       [x]       [x]

Repair Service                [x]       [x]       [x]

Efficiency                    [x]       [x]       [x]

Guarantee/Warranty            [x]       [x]       [x]

Complete                      [x]       [x]       [x]

On-Time Capability            [x]       [x]       [x]

Upgrades                      [x]       [x]       [x]

Observations and Conclusions

It appears, from the above information, that [x].

[]   Are there market niche opportunities we have
     overlooked?

[]   Are our resources being deployed against the most
     serious competitors?

[]   If significant, place competitors' advertisements and
     brochures in the Supporting Document, or have them
     available upon request.


Risk

Business Risk

[]   Progress always involves risk; you can't steal second
     base and keep your foot on first.  -- Frederick Wilcox

Cost Structure

[Company] opened a [x] in [month/year]. This new
[facility/division] doubled our capacity and increased our
potential capacity by a factor of [x]. In conjunction with
this expansion, [Company] significantly increased our
marketing expense and overhead. Although [Company]'s
[products] were well accepted by the market at former levels
of production, there is no assurance that we will be able to
continue successfully marketing our increased production. If
the market acceptance of our increased production slows,
margins and profitability may suffer. While we operated
profitably in the first [x] months ended [date] (unaudited),
[Company] is unable to predict whether its operating results
for the full fiscal year ending [date] will be profitable.

[Company] had planned to add equipment to further increase
production capacity over a period of time from cash flow.
However, market opportunities for [Company] products have
encouraged us to accelerate our expansion plans. [Company]
believes the net proceeds from an [investment/loan] and cash
flow from operations will be sufficient to allow [Company]
to meet the expected growth in demand for our products.
However, there is no minimum investment which must be
raised. There can be no assurance that sufficient capital
will be raised or that future product sales will meet our
growth expectations. Should either of these fail to occur,
[Company] may elect to (i) reduce the expansion to a level
consistent with our former slower growth plan, or (ii)
pursue other financing alternatives. Implementation of
either of the foregoing options could delay or diminish
[Company]'s growth and adversely affect our profitability.

Competition

[Company] competes with national [product] companies,
several of whom dominate the [product] market, and are based
primarily in [list states]. [Company] and [Company] have
greater sales, and financial, production, distribution, and
marketing resources than [Company]. Although we believe that
in [state] most of the our market share has come from
displacement of the brands of the [x] companies, there can
be no assurance that competition in the future will not
increase from the national brands or from present or new
regionally-based [product] companies, many of which, like
[Company], have recently completed or are planning
significant [facility/capacity] expansions. Furthermore, if
the market for [product] continues to grow, the major
national [product] companies will likely devote greater
resources to this segment.

Industry Growth

The sale and consumption of [product] has increased
dramatically over the past [x] years and [Company] and other
[product makers/providers] are increasing their capacity in
order to meet this growth. There can be no assurance,
however, that the growth will continue at the present rate,
or at all, and the demand for [product] may not keep up with
increases in supply, in which case [Company] may face
heightened competition and be unable to sell sufficient
quantities of our product to maintain our volume and profit
margin.

Product Liability

[Company] has [x] Liability Insurance and will continue such
coverage if available at a reasonable cost. However, future
increases in insurance premiums could make it prohibitive
for us to maintain adequate insurance coverage. A large
damage award against [Company], not adequately covered by
insurance, would adversely affect our financial position.

[]   Other risks that may affect your business include
     profit margin, seasonality, volatility of industry,
     substitution, limited suppliers, dependence on major
     customer and the performance of your management team.
     To evaluate the risk factors for your business, see
     Elements of Risk on the following page .

Environmental Risk

Economic

The economic risks affecting [Company] are [x]. The best
strategy for [Company] is [diversification, offering
numerous products or services to multiple market segments].

Weather

[Company] has provided [planning, good management, x
insurance coverage] to protect against catastrophic weather
such as fire, floods or drought. Despite these precautions,
a major natural disaster could affect our business by
causing [x].

Legal & Government

The State and Local ordinances or zoning laws that may
impact our product are [x]. [Company] will staying abreast
of legal issues facing [industry] through [industry
publications] and [x].

Elements of Risk

[]   This table shows an example of how risk may be
     evaluated, where it stems from, and which areas are
     most dangerous. It allows you to compare your exposure,
     given various assumptions. This is a suggested list of
     risk. Add other risk elements specific to your product.

[]   The total Overall Risk should always total 100%.

[]   Assign degrees of risk to each area; low=1, medium=5 or
     high=10. Next assign a risk percentage to each area; 0%
     - 100%. The total risk percentage of all areas must not
     exceed 100%. Finally, multiply the element of risk
     factor X the weight percentage to calculate the degree
     of risk. The elements of risk that receive the highest
     totals should receive the most explanation in your
     business.

Elements                      Degree    Weight    Total
of Risk                       of Risk   of Risk   in %

Business Risk

Cost Structure                [x]       [x]       [x]

Competition                   [x]       [x]       [x]

Industry Growth               [x]       [x]       [x]

Product Liability             [x]       [x]       [x]

Profit Margin                 [x]       [x]       [x]

Seasonality                   [x]       [x]       [x]

Complementary Industry        [x]       [x]       [x]

Substitution                  [x]       [x]       [x]

Suppliers                     [x]       [x]       [x]

Customers                     [x]       [x]       [x]

Personnel and Management      [x]       [x]       [x]

Environmental Risk

Economic                      [x]       [x]       [x]

Weather                       [x]       [x]       [x]

Legal & Gov't                 [x]       [x]       [x]

Overall Risk                  [x]       100%      [x]

Rationale

[]   List information to support your risk assumptions.
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