26 Marketing Dynamics Copyright Goodheart-Willcox Co., Inc. organizations with common characteristics or needs. The market may be segmented by lifestyle factors, habits, demographics, or another set of factors unique to the business. Market segments eventually become target markets for various products or businesses. By breaking the market into segments, messages can be targeted to specific groups. The way in which the message is delivered to each group may also change. LO 2.1-4 Competitive Analysis Understanding the competition is part of marketing research. Competition is two or more businesses attempting to attract the same customers. One of the most important parts of the marketing plan is the section that describes other businesses competing for customers. In order for a company to achieve sales goals, it may need to take business away from the competition. The sales team will be helpful in providing information about competitors. A competitive analysis is a tool used to compare the strengths and weaknesses of a product or company that competes with a busi- ness. In the analysis, competitors are listed with their physical locations, product lines, pricing, and market share. These grids are used to analyze the strengths and weaknesses of the competition. From this information, marketers can determine how the company will compete with others to gain its share of sales in the market. Learning about the competition includes esti- mating the portion of the market that each compet- itor holds. Market size is the total sales per year for a specific product held by all the competing busi- nesses. Market share is the percentage of total sales in a market that is held by one business. Market potential is the maximum number of customers and amount of sales that can be generated from a specific segment in a defined time period. Section 2.1 Review Check Your Understanding 1. Who is responsible for writing the marketing plan? 2. What are the components of a SWOT analysis? 3. What information does a PEST analysis identify? 4. List the characteristics of a target market. 5. List examples of information included in a competitive analysis. Build Your Vocabulary As you progress through this text, develop a personal glossary of key terms. This will help you build your vocabulary and prepare you for a career. Write a definition for each of the following terms and add them to your personal glossary. competition competitive analysis environmental scan marketing plan market potential market segmentation market share market size PEST analysis situation analysis SWOT analysis