Strategic market analysis and definition: An integrated approach

Abstract

Two distinct approaches to market analysis and definition have evolved. Those approaches which adopt a top-down persepective, tend to specify markets in terms of competitive capabilities and resource transferability. The alternative bottom-up perspective emphasizes customer requirements or usage patterns when defining markets. An integrated approach begins with a common model of the principal dimensions of a market. The second element is the recognition that different market definitions are needed for different strategic purposes. Next, the strategic planning framework which links business units and product-market units should be compatible with these purposes and reflect a strategically relevant balance of cost and demand factors. A procedure for forming business units from groups of product-markets is shown to be effective for achieving this balance.