Market Research for Financial Services

Market Research for Financial Services

Business Plan for Financial Services Website

Market Research and Analysis

Definition of Target Market and Customer Overview

The target market for the proposed mid-tier financial news service is individual and institutional investors who can afford to pay the monthly premiums. Individual investors will have a net work of over $300,000 and also have an existing portfolio of stocks, bonds and annuities they are managing. The target market for the proposed service is shown in Figure 1, Demographic Profile of Individual Subscribers. This data was derived using the Quantcast online tools to analyze Bloomberg.com, which is considered a primary competitor to the new service.

Figure 1: Demographic Profile of Individual Subscribers

The target market is male (74%), predominantly over 50 years of age (48%), no children (85%), income over $100,000 a year (45%) and they have completed graduate school (37%). This is a serious investor who is nearing retirement and is willing to pay for insightful analysis. Investors in this segment are also interested in seeing how news aggregation outlines are customizing financial data to their unique needs and also interested in the financial analysis tools they are making available to individual investors (Muntermann, 2009). They are also interested in how the consolidation of the financial reporting industry will impact their ability to make investment decisions (Davis, 2009) (Edgecliffe-Johnson, 2009).

B. Market Size and Trends

Based on an analysis completed using Inside Market Data sources (Bowie, 2009) the following table of industry revenue, gross product, number of establishments and enterprises has been created. As can be seen this market is flat in terms of growth and facing continued consolidation. The most critical differentiator is the ability to deliver content quickly and effectively over the Internet at a low cost. By accomplishing this level of efficiency a new market entrant could gain significant market share despite the low growth of this market.

2006

2007

2008

2009

2010

Industry Revenue

2,360

2,515.6

2,490.4

2,390.8

2,414.7

$Mil

Industry Gross Product

1,287

1,318

1,265.1

1,202.4

1,214.4

$Mil

Number of Establishments

Units

Number of Enterprises

Units

Employment

11,624

12,535

12,034

11,552

11,668

Units

Exports

$Mil

Imports

60.1

61.4

62.2

63.2

64.1

$Mil

Total Wages

$Mil

Domestic Demand

2,030.1

2,202.8

2,193.2

2,109

2,130.3

$Mil

Source: (Bowie, 2009)

C. Buyer Behavior

The buyer behavior in this market is cautious as there are active restrictions being placed on news and analysis in China (Browne, 2006) and throughout other regions. There is a very high aversion to risk as a result throughout the primary customer base.

D. Market Segmentation and Targeting

The following pie chart illustrates the market segmentation and need for targeting by service area in this market. Figure 1, Market Segmentation by Outlet and Service illustrates the percentage of revenue by product and service within the financial news market.

Figure 1: Market Segmentation by Outlet and Service

Product/Services

Share

Audio

1.0%

News reporting text

50.0%

Photographs and graphics

30.0%

Video

19.0%

Outlet

Share

Newspapers

50.0%

Television (free-to-air)

20.0%

Cable and satellite TV

10.0%

Magazines

10.0%

Radio

5.0%

Internet

5.0%

Sources: (Buxton, 2005) (Browne, 2006) (Davis, 2009)

E. Competition and Competitive Edges

Competitors in this market are highly fragmented and many have financial services in addition to financial news analysis. Bloomberg has seven lines of business and each addresses the need for a varying approach to delivering financial data. AP is a syndicated news service which strives at broad market research, yet does not concentrate on depth of analysis as much. All competitors have econometrics-based modeling systems for interpolating market direction, and all have specific approaches and formats that serve to differentiate their services. The need for a simply-designed user interface, which none of them have, combined with a simple pricing model would serve to be an effective differentiator.

F. Estimates Market Share and Sales

The following table provides an analysis of market share by provider. Bloomberg's biggest rivals are Thomson-Reuters in the U.S. And globally, Agencie and News Corp.