Market Analysis

Effective market analysis is imperative for the development and sustainability of a business. Surveys of the market provide details on a large range of factors that affect the company, such as the environment it operates in, the competitive situation, the size of the market, the potential market share etc. An entrepreneur will use this information to determine if the industry is accessible. In other words, he or she must figure out whether the market is a realistic place for a new venture to enter. The entrepreneur will also use the information to identify whether the industry contains niche markets that are currently underserved, or whether they are ripe for innovation. Equipped with this information, the entrepreneur will be able to position a product or service relative to the competition.


This unit begins by discussing the concept of market analysis and some of the unique challenges that entrepreneurs face in this regard. The remainder of the unit focuses on specific tools for analysing the market. More specifically, the unit explains how to segment the market and evaluate its effectiveness; how to analyse the external environment using tools such as PEST, Porter’s Five Forces model and a competitive analysis audit; and how to analyse the internal environment using tools such as the SWOTframework and the TOWS matrix. The unit concludes by explaining how to position a product relative to others.


Learning Objectives

When you have successfully completed this unit you will be able to:

  • Explain the purpose and importance of market analysis. 
  • Identify specific problems that entrepreneurs face regarding market analysis.
  • Describe how to segment a market.
  • Use appropriate tools to analyse the external environment.
  • Use appropriate tools to analyse the internal environment.
  • Determine how to position a product.

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Unit Elements

How to set up a company in your country

National case studies on Entrepreneurship






Ent-teach- Entrepreneurship Teaching - project code 2011-1-NL1-LEO05-05202. This project has been funded with support from the European Commission through the Leonardo da Vinci - Lifelong Learning Programme. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.