ABCD Analysis

The ABCD analysis is an examination of the external business environment combined with the meso environment in which an organization operates. The external business environment consists of various factors beyond the company's control. The meso environment is a term used to indicate the industry (or market) in which the organization operates. This can include suppliers, customers, competition and other interest groups. These are factors that an organization can only influence in an indirect way. Therefore, the letters ABCD stand for Buyer Analysis, Industry Analysis, Competition Analysis and Distribution Analysis, respectively.

Objective of conducting an ABCD analysis

Performing an ABCD analysis is of great importance because it can be used to visualize the attractiveness of an industry. The analysis therefore provides insight into the main opportunities and threats from the organization's environment. An ABCD analysis gives direct input to the SWOT analysis and can indirectly contribute to the strategic decisions to be made.

An ABCD analysis covers the following factors:

• The buyer analysis covers several segments. This analysis examines both the influences of manufacturers, traders and consumers. Here, a division can be made based on geographical criteria, socioeconomic criteria, demographic criteria and intensity of use. Buyer analysis is an important criterion for identifying the needs of a target group and shaping an aligned marketing mix on this basis.
• The industry analysis covers several aspects namely: macro environment analysis, general market factors research and competitive analysis. For the macro environment analysis, a DESTEP study can be applied. Here it is important to focus mainly on the future factors that may affect the organization. The analysis of general market factors is consistent with this. After all, this involves painting a picture of the potential/attractiveness of the industry in view of market development and possible trends. The competition analysis applied within the industry analysis focuses primarily on the presence of competition without looking at the content of the distinguishing factors.
• The competitive analysis conducted separately within an ABCD analysis does focus on the distinguishing factors of competitors. This involves identifying factors such as the main competitors' offerings, objectives and strategies.
• The distribution analysis views the opportunities and threats within the distribution channel being used. In addition to the method of distribution, factors such as the distribution function (i.e., value creation), the forms of distribution and the interrelationships within the distribution channel are depicted.