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External Analysis

Industry & Sector Analysis — Learn

Simple explanation + practical steps + how to turn insights into decisions.

Tip: start with Learn, then run the Tool, then save actions/checkpoints.

What Industry & Sector Analysis is

This helps you define where you compete: the sector boundaries, growth drivers, key trends, regulation, and how value is created in that space.

Step 1: Define your industry correctly

  • Broad (too wide): “Tech”
  • Better: “B2B SaaS for retail inventory optimisation”
  • Best: “UK mid-market retailers using WMS + forecasting”

Step 2: Look at the forces shaping the industry

  • Market size and growth rate
  • Trends (tech, consumer behaviour, regulation)
  • Customer segments and buying process
  • Cost structure and typical margins
  • Distribution channels
  • Barriers to entry

Step 3: Build a “market view” you can act on

  1. Top 3 trends you will ride
  2. Top 3 risks you must reduce
  3. Top 3 “where value is created” insights
  4. Your positioning decision (who, what problem, why you)
If your industry definition is wrong, every other analysis becomes misleading.

Mini template

Industry: ____

Customer: ____

Problem: ____

Alternative: ____





Industry & Sector Analysis

Define where you compete, understand market dynamics, and turn industry insights into positioning + actions.


What it is
A structured way to define your industry, its dynamics, and where value is created.
What you get
A market view you can act on: segments, trends, profit pools, and positioning choices.
Where it fits
External → Industry → Segments → SWOT → Strategy → Finance.

What Industry & Sector Analysis is

Industry & Sector Analysis helps you define the real market context: sector boundaries, growth drivers, key trends, regulation, competition patterns, and how value is created and captured in that space.

If your industry definition is wrong, every other analysis becomes misleading.

Step 1: Define your industry correctly

A good industry definition makes competitors obvious, customers clear, and pricing comparable. A weak definition makes everything vague.

Level Example Why it matters
Too broad Tech No clear competitors, customers, pricing, or channels.
Better B2B SaaS for retail inventory optimisation Clearer customer type and problem domain.
Best UK mid-market retailers using WMS + forecasting (operations teams) Clear ICP, geography, workflow context, and buyer roles.

Use this template
  • Industry: category + niche
  • Customer: ICP + geography
  • Problem: job-to-be-done + pain
  • Alternative: what they use today
  • Trigger: when they decide to buy
Market boundary check
  • Can you name 5 direct competitors immediately?
  • Can you estimate price range realistically?
  • Do you know who decides and who pays?
  • Can you explain why customers switch?

Step 2: Map the forces shaping the industry

This step builds your “market view”: what changes demand, costs, and opportunities over time.

Define the industry

Set correct boundaries: what market you’re really competing in

  • Start broad → narrow: sector → category → niche → ICP
  • Specify geography (UK / EU / city / online only)
  • Specify customer type (B2B/B2C, size, maturity, budget)
  • Specify job-to-be-done (problem + outcome)

Map the market dynamics

Understand growth, cycles, and what forces shift demand and costs

  • Market size (TAM/SAM/SOM) and growth rate
  • Maturity: emerging vs growing vs mature vs declining
  • Demand drivers (income, demographics, regulation, tech adoption)
  • Macroeconomic sensitivity (rates, inflation, FX) if relevant

Identify segments & buying process

Who buys, how they decide, and what they value most

  • Top 2–4 segments (needs-based is best)
  • Buyer roles (user vs payer vs decision maker)
  • Buying triggers + objections + switching costs
  • Channel preferences (online, referrals, marketplace, distributors)

Value chain & profit pools

Where value is created and where money is made (or lost)

  • Key activities that create value (design, distribution, service)
  • Who captures margins (suppliers, platforms, brands, distributors)
  • Typical cost structure and margin ranges (rough guidance)
  • Profit pool shifts (where margins are moving over time)

Competitive landscape

Who matters, what they compete on, and how the market is shaped

  • Top player types (incumbents, challengers, low-cost, premium)
  • Main basis of competition (price, quality, speed, convenience, brand)
  • Differentiation gaps you can exploit
  • Porter’s Five Forces summary link (pressure map)

Trends & regulation

Changes that can reshape the industry in 6–24 months

  • Technology shifts (AI, automation, platforms, standards)
  • Regulation/licensing, compliance, consumer protection
  • Social/environmental expectations (sustainability, trust, privacy)
  • Supply chain or labour availability risks
Shortcut (best practice)
Pick the top 3 trends you will ride and the top 3 risks you must reduce. Do not list 50 items — it becomes noise.

Step 3: Build a market view you can act on

Your final output should create decisions and tasks, not just notes.

  1. Top 3 trends you will ride
  2. Top 3 risks you must reduce
  3. Top 3 “value creation” insights (where customers pay + why)
  4. Your positioning decision (who, what problem, why you)
  5. Your channel choice (where you acquire customers)
  6. Your pricing logic (what you charge and why)
Action rule
For each insight ask: What changed?So what?Now what? (implications and actions).

Quick scoring grid (optional)

If you are comparing multiple industries, score each area 1–5. This makes the decision more objective.

Growth
Is demand expanding fast or stable?
Margins
Are margins strong or crushed by price pressure?
Complexity
Is it hard to deliver? (ops, compliance, service)
Switching
How easy is it for customers to change provider?
Regulation
How much legal/compliance pressure exists?
Timing
Is the market ready now, or too early/late?

Mini example

Example (simplified): “UK mid-market retailers using WMS + forecasting” (B2B operations software).

Area Insight Decision / action
Segments Ops teams value reliability + integrations over “cool features”. Position on uptime, integrations, and measurable cost reduction.
Trends Automation and AI forecasting adoption is rising. Build forecasting features carefully + prove ROI with case studies.
Profit pools Platforms and implementation partners capture margin. Partner with WMS integrators; offer implementation packages.
Risks Long sales cycles and budget approval delays. Offer pilot plans and a clear “payback period” message.
Translate into outputs
Your Industry Analysis should produce: segment choice, channel choice, pricing logic, and 5–10 tasks.

Next steps

Next, break the industry into targets and pick the best one with Market Segmentation.
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