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Aggregate Market Factors.
The factors that affect position of the product category in the market ( size of market, market growth, profit, product life cycle, seasonality )
Category Size
Category size ( measured in both units and monetary value ) is an important piece of data about any market. It is clearly an important determinant of the likelihood that a product will generate revenues to support a given investment. The size of the market for the product will affect the product attractiveness. Large market is good and attractive for product and it will contribute revenue and profits. Company can segment the market and focus on each specific segment however it may attract large competitors ( unattractive for small firms ).
Market Growth
Market growth is a key market factor. Market growth is about current and future market growth of the product category. Not only the current growth is important, but growth projections over the horizon of the plan are also critical. Fast – growing categories are almost desired due to their abilities to achieve high margins and sustain profits in future years. It also has dynamic market structure in terms of competitors because large categories and fast growing also attract competitors. Slow market growth is an unattractive to the firm.
Product Life Cycle
Product life cycle is presumed to be S- shaped, this curve breaks down product sales into four segment; introduction, growth, maturity, and decline. The introduction and growth phases are the early phases of the life cycle when sales are growing rapidly, maturity represents a levelling off in sales, and the decline phase represents the end of the life cycle. In the introductory phase, both the growth rate and the size of the market are low, thus making it unattractive. When market growth and sales start to take off, the market becomes attractive. In the maturity phase, the assessment is unclear, while the growth rate is low, the market size could be at its peak.
The factors that affect position of the product category in the market ( size of market, market growth, profit, product life cycle, seasonality )
Category Size
Category size ( measured in both units and monetary value ) is an important piece of data about any market. It is clearly an important determinant of the likelihood that a product will generate revenues to support a given investment. The size of the market for the product will affect the product attractiveness. Large market is good and attractive for product and it will contribute revenue and profits. Company can segment the market and focus on each specific segment however it may attract large competitors ( unattractive for small firms ).
Market Growth
Market growth is a key market factor. Market growth is about current and future market growth of the product category. Not only the current growth is important, but growth projections over the horizon of the plan are also critical. Fast – growing categories are almost desired due to their abilities to achieve high margins and sustain profits in future years. It also has dynamic market structure in terms of competitors because large categories and fast growing also attract competitors. Slow market growth is an unattractive to the firm.
Product Life Cycle
Product life cycle is presumed to be S- shaped, this curve breaks down product sales into four segment; introduction, growth, maturity, and decline. The introduction and growth phases are the early phases of the life cycle when sales are growing rapidly, maturity represents a levelling off in sales, and the decline phase represents the end of the life cycle. In the introductory phase, both the growth rate and the size of the market are low, thus making it unattractive. When market growth and sales start to take off, the market becomes attractive. In the maturity phase, the assessment is unclear, while the growth rate is low, the market size could be at its peak.