4. Market Analysis

This business will adopt a fairly intently focused market strategy. A logical segmentation breaks the market down into the following: Home Office Businesses, Small Businesses, Medium Businesses and Large Businesses.

The largest and most logical target markets are the Home Office and Small Businesses. These businesses mostly have a need for temporary technical aid, usually billed at an hourly rate. Some opportunity does exist, however, for retainer and/or specific project contracts.

While there are a fair number of competitors in the local area, they seem to be widely specialized and widely sized, leaving ample opportunity to create and expand a niche in the chosen market segments.

4.1 Market Segmentation

Home Office Businesses - The largest and fastest growing segment, this segment is obviously defined as small businesses that are based primarily out of the owner's home.
Small Businesses - Defined by the government as businesses with 1 to 99 employees.
Medium Businesses - 100 to 499 employees.
Large Businesses - 500 or more employees.

4.2 Target Market Segment Strategy

Entrepreneur Magazine suggests six market segments as a starting point:

· Businesses not using computers
· Small entrepreneurial businesses using one or more computers
· Small to medium sized corps using computers on networks
· Large corps seeking problem-solving assistance (trouble-shooting) with specific projects
· Government agencies, corporations, and other organizations in search of computer training
· Businesses in search of custom computer programming services

4.2.1 Market Trends

Three primary market trends seem to be most important in this industry:

Trend #1 - most important -rapid growth in technology, need for continuous upgrades in both hardware and software.
Trend #2 - moderately important -predicted continued growth in consulting/outsourcing - companies being unwilling to pay fixed costs of salaries, choosing instead to treat computer upgrades and repair as variable costs.
Trend #3 - least important - rapid growth in ratio of SOHO businesses to traditional medium sized businesses.

4.2.2 Market Growth

Several factors are predicted to continue, not the least of which are the growth rates for this market:

· Growth rate citation - Entrepreneur Magazine says that the consulting industry in general will continue to grow at an annual rate of 9.1%

· Growth rate citation - Census data for each identified segment in the Lane County area roughly parallel this growth rate.

· Growth rate citation - Chamber of Commerce published data supports the Federal Census data, predicting continued and rapid growth particularly in the small office/home office market segment.

4.2.3 Market Needs

According to Entrepreneur Magazine, experts in the consulting industry have identified three different opportunities that exist for computer consultants:

1. Temporary Technical Aid = Short term assignments finding solutions for businesses - this is noted as the largest market

2. Specific Skill - the largest area is software specialty, the second largest area = System setup & purchasing guidance, Systems reengineering/optimization, Network Admin, Training Repair, Database/Application development, Data Storage, Disaster Recovery, Security/Data Protection, Telecommunications

3. Bail-Out (Trouble shooting) According to Entrepreneur Magazine, private home computer users are NOT a viable market for computer consultants

4.3 Service Business Analysis

The computer consulting business for the local area is already well established, yet still allows ample opportunity for entry and growth for new participants. This is supported by the following points:

While there already exists a large number of consultants, there is also a wide range of sizes and specialties. This leaves plenty of opportunity for this business to find and develop a particular niche.

Customers in this industry tend to be loyal, relying on the same consultant for future needs once a relationship has been established.

An analysis of main competitors shows no overwhelming strengths that would be significant barriers to the business success. Likewise, identifying competitor's weaknesses has illuminated several areas that the business can target as marketing strategies.

In short, this business arena, while no longer brand new, is far from exhausted as an opportunity for a new and aggressive company or sole proprietor. By utilizing a logical and comprehensive marketing approach, this business should easily find success in the computer consulting business.

4.3.1 Business Participants

A search of the local Yellow Pages revealed the following:

· Under the heading Consultants - Computer & Data Processing there were a total of four listings

· Under Computers - Service & Repair there were 51 total listings, the majority of which seemed to be stores or companies

· Under Computers - Software & Services there were 88 total listings. Thirteen of those were large companies such as [name omitted], [name omitted], and [name omitted]. Sixteen were specialists in accounting software that listed CPA's on their staff.

· Under Computers - System Designers & Consultants there were 45 total listings. About half had larger listings and/or company names that implied larger size. Throughout all the listings, only four were clearly listed as individual practitioners. The most unique (and catching) name amongst all listings was "[name omitted]."

The conclusion is that while there a fair number of competitors in the geographic area, they are widely specialized and widely sized. Many of the larger participants appear to cater to larger clients, thus leaving plenty of opportunity for this business to focus on its chosen market segments.

4.3.2 Main Competitors

Below are examples of a brief analysis of this business's main competitors.

1. Competitor 1 [name omitted]

· Top strength - A very memorable name that will stick in customer's minds.
· Primary weakness - a focus primarily on one operating system (not used by businesses).

2. Competitor 2 [name omitted]

· Top strength - Longevity and experience, someone who has been in the business locally a long time.
· Primary weakness - Slow response and an unwillingness to take on new customers.

A more comprehensive discussion of these strategies is presented in the this business Marketing Plan.

4.3.3 Competition and Buying Patterns

As noted above, the local computer consulting industry is fragmented, with a wide variety of sizes and specialties. Two general factors of competition immediatly show up in the analysis:

· The larger competitors seem to be grouped into two main categories: those who provide network expertise to large companies, and those who provide "consulting" service to products they sell.

· Of the smaller sized companies, about half still seemed to favor larger businesses as their clients.

Customer buying patterns also highlight the opportunity for this business. While larger companies tend to hire larger consulting firms, the home business/small business owner tends to favor the personal relationship that can develop with the smaller consulting firm. Several small business owners interviewed for this research admitted being intimidated and overwhelmed by the prospect of calling a larger firm to come "rescue them." They much preferred calling a person they already knew for help.

This leads to another very important buying pattern. Customers who have established a relationship with a computer consultant tend to stay very loyal as long as the service and results remain acceptable. This will be critical to the success of a new company

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