Strategic market analysis and definition: An integrated approach

Two distinct approaches to market analysis and definition have evolved. Those approaches which adopt a top‐down persepective, tend to specify markets in terms of competitive capabilities and resource transferability. The alternative bottom‐up perspective emphasizes customer requirements or usage patterns when defining markets. An integrated approach begins with a common model of the principal dimensions of a market. The second element is the recognition that different market definitions are needed for different strategic purposes. Next, the strategic planning framework which links business units and product‐market units should be compatible with these purposes and reflect a strategically relevant balance of cost and demand factors. A procedure for forming business units from groups of product‐markets is shown to be effective for achieving this balance.