In the market analysis chapter of a business plan you are supposed to define and describe your target market and the type of market segmentation that occurs therein.
It is within the Market Analysis section of the business plan that you will cover aspects of the demographics, the purchasing patterns, the behavior and lifestyle description of these customers, and the market niche you intend to focus on.
The target market is composed of the persons or organizations that'll participate in buying and selling transactions involving your product/service. This target market is found in a well defined geographical zone, e.g. the stationeries market in Manhattan. Target markets are not always uniform in terms of the customers' requirements. When there are multiple client categories, there is a need for market segmentation whereby customers with similar interests, tastes, preferences and lifestyles are grouped together. For example, when writing the market analysis chapter of spa business plan it is possible to have four segments of customers making up the target market: The Amor Destination Spa will target the following clientele:
- Individuals with a need to experience revitalizing services including spa treatments, massages, yoga, etc.
- adults of varying ages, fitness levels, and states of health
- couples and
- groups of social or corporate orientation
Having identified the various customers that make up your target market, the next thing to do is to make a summary of the behaviors and needs of these customers. For the aforementioned fictitious Amor Destination Spa you can begin by describing the demographics of the target market. Here you can mention that your target market is composed of health-conscious persons who feel the need to live healthy lifestyles and that these persons have the requisite financial resources to enable them pursue their quests at high-end health facilities such as what you have in mind.
This part of your market analysis can also capture the age groups and purchasing patterns of your target customers to further show how critical the segmentation is. It is only by doing so that the reader will be clear on the gaps you have identified in the market with respect to the needs of the different customers. The reader will also see the logic behind your proposition to position products/services in response to these needs.
It is impossible to write the market analysis chapter of a business plan if you haven't done extensive research about the customers you plan to serve. You have to have a perfect understanding of the habits and behaviors of each segment that makes up the target market. This is the only way you can accurately identify the needs that the already present competition does not cater to.