Start-up simulation – market analysis and competition
Note: This worksheet is part of the "Startup Simulation" series. This series includes eight different worksheets, each focusing on a specific thematic area, designed to guide your students as they develop their very own startup.
Objective
This worksheet enables students to understand the fundamentals of market analysis and competition in order to plan and strategically position their own startup project.
Content and Methods
Students will engage with theoretical concepts such as target audience analysis, market segmentation, competitive analysis, and the Unique Selling Proposition (USP). These concepts are then applied to their own startup project through practical exercises. An integrated glossary explains the most important technical terms.
Key Competencies
- Analytical thinking and strategic planning
- Collaboration and communication within a team
- Application of business management expertise
Target Level
Grade 9 and above
60 other teachers use this template
Target group and level
Grade 9 and above
Subjects
Start-up simulation – market analysis and competition
Note for the teacher
These worksheets are designed to guide students through a flexible, project-based unit focused on launching their own start-up. The materials are specifically structured for team collaboration, which is why the instructions and tasks are predominantly phrased in the plural form.
The documentation is organized by thematic focus areas such as Marketing, Financing, and Presentation. This modular approach allows for maximum flexibility: depending on the time available, teams can either focus on one key area in depth or complete all sections through a division of labor (collaborative team work), without having to adhere to a fixed sequence.
Each worksheet combines a concise theoretical input with practical exercises that students can directly apply to their own start-up concept. Furthermore, a glossary of essential specialized vocabulary is provided at the end of every worksheet.
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Introduction
On this worksheet, you'll dive into the world of market analysis and competition to ensure your start-up’s success. You'll learn how to precisely analyze your target audience and competitors in order to develop a truly unique product.
Defining the Target Audience
Who is going to purchase your product? A precise target audience analysis will help you better understand your customers and tailor your product optimally to meet their needs.
We typically divide a target audience into various categories:
- Demographic Characteristics
- Psychographic Characteristics
- Behavioral Characteristics
📝Did you notice anything after the target audience analysis that you would like to improve about your product or your marketing strategy?
Market Segmentation and Analysis
Market segmentation means dividing the total market into smaller, more manageable parts—known as segments. Each segment consists of customers who share similar characteristics and needs.
Why is this important? Because one product cannot be designed for 'everyone.' By concentrating on one or two segments, we can make our products and marketing strategies more focused and effective. For example, the total clothing market could be divided into segments such as 'Outdoor Enthusiasts,' 'Business Apparel,' or 'Young Adult Fashion.
Case Study
The start-up Re-Use aims to serve a market of users who want to purchase high-quality electronic items affordably while simultaneously protecting the environment. They do this by purchasing, repairing, and reselling used electronic goods.
The young company estimates its market size includes all individuals who would fundamentally consider buying used electronics. To determine the market size, they first looked at the total market for electronics and then filtered out a specific segment—for instance, students and young professionals with tight budgets, or environmentally conscious consumers who value sustainability.
This process clarifies which target audience is the focus and how many potential buyers are present in that segment.
👉 Example Calculation for Market Size:
- In Germany, there are approximately 2.9 million students.
- Assuming 20% of them are willing to purchase used electronics $\rightarrow$ approximately 580,000 potential customers.
- If each customer buys an average of 1 device per year, this results in a market volume of 580,000 devices per year.
- With an average price of €200 per device, this yields a total market size of €116 million per year."
📝Narrow your market down to a selected market segment and determine your approximate market size.
📝Document your considerations regarding the market's growth opportunities.
Competitive Analysis
No start-up operates in a vacuum; there is almost always competition. A competitive analysis helps you identify this competition and understand how you can strategically differentiate yourselves from them. We distinguish between two main types of competitors:
- Direct Competitors: These are companies that offer a very similar product or an almost identical service to the same target audience. Example: Coca-Cola and Pepsi.
- Indirect Competitors: These companies offer a different type of product but solve the same core problem for the target audience. Example: A train is an indirect competitor to a car because it solves the problem of 'mobility'.
Competitors and Rivalry in Entrepreneurship
In both the start-up landscape and established entrepreneurship, competitors significantly influence strategic decisions. Competition arises when multiple companies vie for the same consumer demand, prompting constant adjustments in pricing, quality, and innovation. A key concept in this dynamic is differentiation, which refers to the deliberate distinction of an offering through unique attributes that provide added value to customers.
A compelling example can be seen in the streaming platforms Netflix and Amazon Prime. Both companies offer a similar core service: access to films and series for a monthly fee. However, they differ in their approach to strengthening their market positions. Netflix heavily invests in original productions, known as "Originals," which are exclusively available and shape the brand's identity. Amazon Prime, on the other hand, integrates its streaming services into a broader ecosystem that includes e-commerce and additional digital services. This strategy creates varied incentives for consumers to subscribe, based on the comprehensive benefits offered.
The example illustrates that competitors engage in rivalry not only through price or offerings but also through the structuring of their value chains—the sequence of activities involved in creating and marketing a product. Start-ups can learn from such cases the importance of clear market positioning. Competition thus becomes a driver for innovation and efficiency, compelling companies to continually review and refine their strategies, thereby transforming rivalry into a catalyst for progress in the business world.
📌A Competitor Matrix is a practical tool used to visually and structurally capture your own position in the market. It helps you quickly identify the strengths and weaknesses of your key competitors and draw strategic conclusions for your own business. Complete the table about your start-up's potential competitors, and finally, record the details for your own start-up as well.
| Competitor / Criteria | Price Level | Quality | Innovation | Brand Awareness | Customer Service | Unique Features |
|---|---|---|---|---|---|---|
📝Evaluate the matrix. Are you successfully differentiating yourselves from your competitors? Document your conclusions and thoughts in writing.
Developing a Unique Selling Proposition
Now that you understand your customers and your competition, you must ask yourselves: Why should a customer choose to purchase your product specifically? The answer to this is the Unique Selling Proposition (USP).
The USP is the factor that sets your product or service apart from all others. It must communicate a clear benefit that is relevant to the target audience. A strong USP is:
- Unique: The competition cannot simply copy it.
- Relevant: It solves an important problem or fulfills a key desire for the target audience.
- Concise: It is easy and straightforward to communicate.
Task: Determine Your Start-up's Unique Selling Proposition (USP)
Imagine you meet a potential customer who asks you:
👉 'Why should I buy your product and not your competitor's?'
Your task: Formulate a clear answer in the form of your Unique Selling Proposition (USP).
Step 1: Analysis
- Which problems or desires of your target audience does your product solve particularly well?
- What strengths set you apart from the competition?
- What advantage do you have that others cannot offer?
Step 2: Formulation
- Summarize your USP in one concise sentence.
- Example: 'Our product saves time because it automatically connects all work steps.'
Step 3: Review
- Review your USP using the three criteria:
- Unique?
- Relevant?
- Concise?"
📝 Analysis: Analyze your product using the questions from the first step of the info box.
📝 Formulation: Now document your final USP in one sentence.
📝 Review: Check whether your USP is unique, concise, and relevant. Make improvements where necessary.
📌Glossary
🔍 Here you will find the most important specialized terms from the worksheet. You also have space to note down additional terms and their definitions.
The most important specialized terms
Terms and Definitions
- Target Audience: The specific group of people who are most likely to purchase your product. This includes demographic, psychographic, and behavioral characteristics. Example: Students and young professionals with tight budgets.
- Market Segmentation: The process of dividing the total market into smaller segments with similar characteristics and needs. This helps in targeting specific groups effectively. Example: Segmenting the clothing market into 'Outdoor Enthusiasts' or 'Young Adult Fashion.'
- Market Size: The total potential sales volume for a product within a specific market segment. Example: In Germany, 580,000 students are potential customers for used electronics, resulting in a market size of €116 million per year.
- Competitive Analysis: The assessment of competitors in the market to understand their strengths and weaknesses. This helps in differentiating your product or service effectively. Example: Coca-Cola vs. Pepsi as direct competitors.
- Direct Competitors: Companies offering similar or almost identical products to the same target audience. Example: Netflix and Amazon Prime both provide streaming services.
- Indirect Competitors: Companies offering different products but solving the same core problem for the target audience. Example: Trains and cars both address the issue of mobility.
- Differentiation: The process of distinguishing a company's offerings through unique attributes that provide added value. Example: Netflix invests in original productions, while Amazon Prime offers a broader ecosystem of services.