An industry analysis study is conducted in order to understand the key characteristics of a particular industry that may be critical to various business applications and decision making, such as new market entry. Typically, an industry analysis study is conducted as a sub-component of the larger opportunity assessment study, but in certain cases, businesses may wish to conduct preliminary assessments by stages, and this is where the industry analysis study can be conducted independently. As extensions to the preliminary assessment, market sizing and market share information are usually added as well.

In terms of business application, industry analysis is applied much in line with the business application associated with opportunity assessment studies, i.e. new product penetration, new market development, due diligence for M&A, new market entry, and business diversification purposes. In addition, an industry analysis study can also be conducted with a much more specific purpose in mind, such as distribution optimization and supply-side innovation.

  • Distribution optimization. A business may wish to evaluate (or reevaluate) its current distribution chain partners to meet different optimization objectives, such as improving distribution coverage, distribution services, or explore feasibility of new distribution channels.
  • Supply-side innovation. A business may wish to evaluate (or reevaluate) its current supply chain partners to reduce operating costs, explore new value generating activities, or explore open innovation partnerships.

Industry Analysis Research Approaches

An industry analysis study is more dependent on primary research for data collection compared to some of the other marketing studies, hence relatively more resource dependent. This is due to the fact that industry structures are almost always complex, with various players, actors, and stakeholders situated along interconnected value chains, and sufficient touch-points must be established before a robust and reliable view of the industry can be established. This typically makes it difficult for businesses to carry out the study in-house without dedicated resources. However, depending on management’s requirement, the scope of the study can be scaled down just like any other research, thus making it more feasible for smaller in-house research teams.

An effective industry analysis study needs to address the following key elements.

  • Industry Value Chain. The industry value chain refers to both the supply chain and distribution chain. Mapping out both sides of the chain provides critical information about the entire flow of goods, starting from procurement of raw materials to the sales of finished products. The industry value chain should also cover the various procurement and distribution channels, their weightages (in terms of flow of goods), and import/export potential where necessary.
  • Industry Structure. Once the entire value chain has been mapped out, the key players, actors, and stakeholders along the value chain are identified and their roles are profiled. The mapping should include both regulatory and non-regulatory roles.
  • Supply-Side Intelligence. Supply-side intelligence provides insights into the supply side of the value chain. Coverage may include the number of suppliers, supplier hierarchy (direct from factory, wholesalers, distributors, dealers, agents), main supply mechanisms, partnership opportunities, etc.
  • Demand-Side Intelligence. Demand-side intelligence provides insights into the distribution side of the value chain. Coverage may include the number of distributors, distribution hierarchy (direct to market, wholesalers, distributors, dealers, agents), distribution channels, partnership opportunities, etc.
  • Competition Intensity. Refers to the relative competitiveness of the industry, covering both direct and indirect (i.e. directly substitutable) competition. Indicators for competition intensity may include the number of competitors, industry revenue growth, industry profitability growth, substitute products, entrants of disruptors, etc.
  • Trend Sensing. Identify key development trends in the industry over short and medium term horizons. Findings are based on industry drivers and barriers in the areas of socio-economic, demographic, regulatory, technology, and environmental aspects.