The market is the battlefield where the business plan may fight. Therefore, you may define the market for the new product: size, development state, typology of customers and competitors. Usually, we have a product and afterwards we look for the market. This is not the best procedure. The best procedure to get a success is to find a market need and the product that can cover it, the usual chance in the field of design of services.


In any case, you may wonder how many people are in the market, and what is their influence on it. For a titanium submarine there is maybe one customer, therefore, the price will tend to be high (although price is a variable with a lot of determining factors, that we will explain afterwards), whereas for other products (e.g. a soup) the market reaches millions of customers.

The market size, or product annual consumption, is defined depending on the size of our company. Product annual consumption can change in a certain city, in a certain country, group of countries or in the whole word. If the company have only resources to sell in a country, world market has to be ruled out. Then we may think about granting licences or creating joint ventures in other countries.  

It is also important to know the development state of the market. There is a natural cycle for the development of any market. Therefore, depending on the stage of the cycle in which the company will go in the market it will affect notably on the commercial strategy that the company will have to adopt. The stages can be summarized as it is shown bellow: 

1.  Development
2.  Growth
3.  Maturity
4.  Slump

Normally, companies working with technology go in for research in sectors placed in the two first stages; however, these markets can quickly reach the fourth stage (electronic typewriter has been replaced in 15 years by word processors).

In a normal project, besides studying the geographical size of the market, we may do what is called by "segmentation", provided that the product is addressed to a market segment (a potential customers group with uniform characteristics). Product consumption may be distributed depending on the different kinds of customers. They are not forced to be in a concrete traditional activity segment. If we commercialize a product in the car industry, we may not forget potential customers in aviation, civil engineering, shipbuilding, etc... 

The possible segmentations of a market are infinite. The appropriate market segment for the planned activity can be determined in several ways. The chosen segmentations reflect which are the target customers to attract. It could be appropriate to segment the market depending on customers' size regarding to volume of sales, above all when notoriety is needed - at the beginning of the commercial network activity - or the investment in advertising needed to achieve it. 

It is also important, in order to know the customers, to enumerate their needs. We may concentrate on the most valuable needs in spite of the fact that there are a lot of important ones. When we limit them, we are helping to concentrate the company resources to fulfil the most important needs and, at the same time, it helps us to stress the excellent commercial qualities of the product. 

Regardless of customer needs, it is important to fix their sales criteria. Besides the coverage of the needs, there are some other factors that our customers consider important: solvency, location and reputation, technical service offered, discount for buying wholesale, speed in delivery and the need that products may fulfil some standards of quality (international uses, ISO...).

The information related to the name and description of the competitors of the new activity is elementary. The new company can not afford to run alone. The probability that the existing companies react with our appearance or the appearance of new competitors is proportional to our project quality. The existing competitors simplest answer is to reduce prices. However, they can resort to different tactics depending on their circumstances, resources and experience. Therefore, knowing the group of existing competitors in the market will be really important in order to develop a convincing strategy. An appropriate classification of competitors could be, for example:

• Dominant/Leader
• Secondary/Firm
• Specialized/Regular
• Smallest/Weak   

The dominant company, as its name suggest, impose the key elements in the market, like price and quality of assistances. This company has the most assorted line of products and its price-list set the standard for the rest of the sector. It can demand higher prices provided its leadership . 

The secondary company has a variety of products lightly smaller, but in some sectors it can be a competitor for the dominant company.

The specialized company is a small but well managed company. It does not have enough products or resources to compete directly with dominant or secondary companies. Its strategy is to be the leader of the specialized hollow market* which are usually small.

The smallest company does not have strengths and is liable to trade flows created by the others; however, it can have a good basic control of the production expenses. 

Dominant

Product Lots of products with a sole or very competitive margin. Big distance from competitors. Regarded as a model in its sector.	Price Its prices set the level of the serious competitors. When these prices change, all companies do the same.	Distribution Great participation in all channels. Some channels belong to the company. Competence to impose the channel conditions.	Communication Any of its comments are expressed with great excitement. Normally its presence in the media is important. All its suggestions are accepted.

Secondary

Product  Products are at the same level that the best ones of its range. Wide variety for the majority of needs of the customer.	Price Prices can change over or bellow depending on the prices of the closest competitors but, normally, in a narrow fringe. There is margin to fix prices in a strategic way.	Distribution Partial presence in the majority of channels; important presence in the most important ones.	Communication Medium presence. Normally they are included in the media comparisons. Respectable image. Its suggestions are actively considered.

Specialized

Product  The majority of the products are specialized in its sector. Gaps in the range.	Price It can impose higher prices in the fields it predominates. It needs a price margin in the rest of fields. It has small flexibility margin.   .	Distribution It participates probably in some of the main channels. It has a minimum presence in the rest.	Communication Well-know and admitted above all in a limited specialized area. They are not in the same group that the main competitors.

Smallest

Product  Limited range of products and opportunities. The quality of provisions is under the average.	Price It must offer good prices in order to remain in the market. It has enough benefits but they are not important.	Distribution It can only participates in some channels and its participation is irrelevant. It is not interested in the adoption of new channels unless they offer it big discounts.	Communication They are know but their products or services are not taken into account. Their presence is low and irregular.

Marginal

Product  It offers few products. It is not specialized. Its quality is under the average. They are not taken into account.

Price Their prices are the lowest. Their margins are scarce. Discounts are important. Repulse effect that stress the low quality of products.

Distribution It fights to remain in any channel.

Communication Almost invisible, their presence is nearly non-existent. Their have a bad image because of an inappropriate and excessive advertising. A few important companies would be prepared to become allies of them.

Which is its the market geographic area: worldwide, European, local? Which is the market value in terms of unities and price? What is the market growth speed and where are the opportunities? In which sector will be the company centred? Why? Which participation is expected to be achieved in the market?  In the event of there is not a market or it is developing itself, What would be the appropriate date to present the new product? What influence would have in the market the start of the company? What is the market structure? Are there a lot of small customers...or a few big customers? What do the clients do with the product? What is the importance of the customers' activity? What are the key needs of the customers? How can these needs be satisfied, now and in the future?  Which are the main competitors? What is the position in relation to patents, potential, methods and profitability? What will be the company reaction if there is a new competitor in the market? What will be the company reaction if that happens in the near future? What is the originality of the company' activity and the company itself?             * Market holes for a special customers.