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Why should I research industries?
There are a number of very good reasons for doing industry research. Any one of the following would be reason enough, but put together, they just make good sense for anyone wishing to learn more about business.
- Industry research and information offer convenient benchmarks and guidance for creating company strategy and making good decisions.
- Industry research and information offer everyone a common basis for decision-making.
- Industry research and information make it easier to compare and contrast company performance, providing common performance indicators.
- Industry research and information is a key component of company valuation, allowing the analyst to determine if a company's performance is up to par and therefore worthy of consideration for investment.
- Industry research can help job seekers determine if a particular industry is growing or shrinking, helping the job seeker decide if it's worth seeking employment in a particular company operating within an industry.
- Knowing about an industry can help you answer questions in a job interview -- and impress the heck out of recruiters!
Industry research vs market research
Industry research and market research are often confused. Industry research and analysis is the weighing and measuring of the processes that make up a particular industry, while market research concerns itself with sales and marketing: market size, market share, the demographics of potential customers, and so forth. Be sure not to conflate the two when you do your research.
What am I looking for when I look for industry research?
Among other things, here is what industry research will tell you:
- Who are the most important/prominent/biggest companies within a particular industry?
- What are the growth prospects for that industry? Is it growing or shrinking?
- What are the major trends? For example, the trend in women's apparel is away from couture and named brands like Chanel, and towards "fast fashion:" inexpensive retailers offering trendy clothing like H&M.
- If you were to start a company in this industry, who would be your key competitors?
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