Difference Between Industry & Market Analysis

Christopher Robbins/Photodisc/Getty Images

Industry analysis and market analysis are two different ways to look at the environment in which a company competes. Although related, these two types of analysis differ in their scope.

Industry analysis

Business man
George Doyle/Stockbyte/Getty Images

Industry analysis looks at long-term trends and economic forces that affect the overall industry. Industry analysis is commonly performed within the framework of Michael Porter’s "Five Forces," a theory used to assess the structure of an industry.

Five Forces

Supplier
Jupiterimages/Stockbyte/Getty Images

Porter identified the following forces that affect an industry: bargaining power of suppliers; bargaining power of buyers; threat of new entrants; threat of substitutes (products or services that may be used instead of those in question; also called replacement products); and rivalry among competitors.

Market Analysis

Market analysis
Francesco Ridolfi/iStock/Getty Images

Market analysis considers the “market” the company operates in. It asks questions like, “ What features are important to the target customer?” “How can I cause the target customer to buy this company’s product, instead of another’s?” “What marketing vehicles will attract and engage the target customer?”

Finding a Niche

iPad
Justin Sullivan/Getty Images News/Getty Images

An integral part of market analysis is identifying “who” the target customer is, meaning the sort of person the product or service appeals to most. Also called a “niche”, it is typically expressed as a demographic. For example, the niche market for iPads could be young professional urbanites in two-income homes.

Competition

Candle
Creatas/Creatas/Getty Images

Competition is examined in both industry and market analysis, and both types of analysis are important in understanding the competition a company faces. However, the scopes differ. In industry analysis, competition is examined at the industry level in terms of all the possible competition out there: companies that make the same product (i.e., candles), or make a product that fills the same need (i.e., gifts). Market analysis looks specifically at the competition that exists relative to the target market (i.e., designer candles, Yankee candles and scented candles).

References

About the Author

Renee O'Farrell is a freelance writer providing valuable tips and advice for people looking for ways to save money, as well as information on how to create, re-purpose and reinvent everyday items. Her articles offer money-saving tips and valuable insight on typically confusing topics. O'Farrell is a member of the National Press Club and holds advanced degrees in business, financial management, psychology and sociology.

Photo Credits

  • Christopher Robbins/Photodisc/Getty Images