Selecting the Best Industry – Demand Conditions

In addition to understanding all the knowledge conditions of a particular industry, the social entrepreneur should identify the demand conditions to determine the chances of success in that particular field. There are three aspects to demand:

Size of the demand

Growth rate of demand

Similarity of that demand across segments of the under-served population

It wouldn't be smart to start a foundation or non-profit in a dying industry like newspapers or bookstores because technology has replaced these industries and there is no growth and very little current demand. However, Inc Magazine identifies top industries to start and grow a business:

Mobile app design

Exam prep and tutoring

Home health care

Safety and quality testing

Tea and healthy beverages

When we look at the IRS filings for large non-profits, the largest two sectors are healthcare (60%) and education (16%).

Social entrepreneurs can develop a niche within a specific market segment. The goal is to find a sizable enough segment to serve the mission, yet small enough to be unattractive to large non-profits. Segmentation refers to the different wants and needs of the under-served population base. We use market segmentation to determine:

Who to serve?  This would be the most attractive niche.

Who not to serve?  Because it would be too expensive, time consuming and ineffective

In what order? Starting with the first niche, then the 2^nd and so on

How to market to them? Serve their consumer decisions

Market segments can be divided classically by demographics like geography, age, gender, lifestyle, interests, income level and stage of life. However, they can also be segmented by their wants and needs, like reduction in household or personal expenses, improved household or personal income, improved productivity (the ability to do more with fewer resources), improved quality or service for goods and services that already use, need for education, involvement with social trends like environmental protection, green tech, anti-bullying.

The social entrepreneurs’ formula for considering demand conditions is to seek opportunities where demand is large and growing, segment the market and begin targeting one niche at a time as the reputation and brand grows.