The purpose of a market analysis is to determine the attractiveness of a market and to understand its evolving the opportunities and threats as they relate to the strength and weakness of the firm. Dimension of a market analysis:
Four factors that influence the market profitability are buyer power, supplier power, threats to substitute products and rivalry among competing seller in the industry. i.Buyer power
The buyer’s power is significant in that buyer can force prices down and decrease in demand of higher quality bicycle, all resulting in potential loss of BBC profits. If buyers exercise more power, the products of bicycle are a significant and the products are standard within an industry. Buyers also have negotiation power, if larger buyers tend to have more leverage with the BBC, and can negotiate lower prices. When there are many small buyers of a product, all other things remaining equal, the BBC supplying the product will have higher prices and higher margins. ii.Supplier power
BBC might be able to make up for incremental materials costs by credit deal with supplier and provide the short team profitability decisive to maintaining supplier relationship. iii.Threats to substitute products
House brands already established in many products. If bicycle manufactures do not accept offer, BBC may simply establish offer in other popular sporting goods segments because the skateboards exploding in popularity in the early 1980. iv.Rivalry among competing seller in the industry
Karl Knnot, Hi Valu stores given hints to other providers (BBC) likely to accept the Challenger offer with the evidenced by little leeway in $ 92.29 price per unit of bicycle. Depressed in bicycle market when BBC does not accept the proposal, the other producers may accept offer from Hi Valu. If BBC accepts the contact, BBC may lose about 3000 unit sales. Market trends
BBC shows that market trends are...