What are the factors considered for doing an Industry analysis?

Industry is the group of organisations that offers products or services that serve the same needs and wants of the target market. These offerings can be similar to the company’s offering, or can be each other’s substitutes.  This concept is also referred as Brand competition wherein various brands with same product types compete against each other in the same market.

The factors to be considered are –

• Industry size and growth gives the marketer an idea of the demand. Information on the sales, profits, costs, number of firms and employees helps a marketer do the analysis on the growth of the industry in recent years. The life cycle of the industry, demand in the market, and industry size help in formulating strong marketing strategies. The organisation should have concrete data on –
• Why are successful businesses in the industry successful?
• Why are unsuccessful businesses in the industry unsuccessful?
• Industry structure is the nature and competition intensity among the firms basis their numbers, their size, and differentiation of the offerings.
• Entry, Mobility and Exit barriers refer to the barriers a firm faces at different stages in the industry.

Entry into a retail business is different as compared to an airline business. Major entry barriers are investments, brand image, access to resources like raw-materials, suppliers, distributors, skilled staff, legal or political environment, patents, and licensing.

Mobility is the entry of the firm within the segments inside the industry. For example, Samsung electronics entering into Laptop manufacturing. There can be challenges that a company can face from other competitors like manufacturing facility, opening service centres in target markets, skilled staff for presentations, distributor’s agreement, etc.

Exit barriers are in the form of legal issues, moral obligations to investors, customers, recovery on investments, government policies, etc.

Few exist barriers are-

Assets – plant, equipment, or other expensive assets are difficult to utilize for other operations. Sometimes the sale of these assets is not feasible or have less salvage value.

Relationships with other business unitsof the firm or intermediaries. For example, an IT company may have BPO operations in the same facility and may be serving the same customers. So if the firm tries to close the BPO facility, it will have impact of the IT operations.

Government regulations – There sometimes government intervention to ensure the customers or the staff of the organisation doesn’t suffers because of organisations exit from the market. For example, if an automobile manufacturer shuts down its operations, in some countries it is an obligation for that firm to provide the automobile parts for 15 years after shut down.

Social barriers – the organisation itself may feel an emotional attachment with its employees. For example, an Airline had to cut down its staff members because of market crunch. But later the same day, the owner of the airline re-inducted the staff basis emotional attachment.

• Cost structure refers to the costs involved in manufacturing, distribution, etc. The cost structure for an airline industry is different from that of a hotel industry.
• Degree of Vertical integration is the forward or backward integration within the supply chain. For example, a firm can have its own access to raw materials and distribution apart from manufacturing. This offers advantages as there is complete control on various functions
• Marketing strategies in the industry also help a marketer make correct decisions. These are the marketing objectives most relevant to the industry, target market segments (local, international, sub-segments, etc.), and marketing mix variables like product features and characteristics, commonly used terms, price variations, promotion tools used, and channels used.

The industry analysis provides framework for handling various market opportunities and designing a strong marketing strategy.